|Lender||APR range||Minimum loan amount||Maximum loan amount||terms||Recommended credit score|
Best online loan
|9.95% to 35.99%||$ 2,000||$ 35,000||24-60 months||600+|
|First Tech Federal Credit Union
Best maximum loan amount
|Starts at 6.7%||$ 500||$ 50,000||24-84 months||580+|
|Federal Navy Credit Union
Ideal for small loans and veterans
|7.49% to 18.00%||$ 250||$ 50,000||Up to 60 months||580+|
Best post-bankruptcy personal loan
|9.99% to 35.99%||$ 2,000||$ 36,500||24-60 months||585+|
Better in-person lending experience
|18% to 35.99%||$ 1,500||$ 20,000||24-60 months||580+|
|PenFed Credit Union
Best credit union
|From 5.99%||$ 500||$ 35,000||Up to 60 months||580+|
Ideal for quick financing
|5.97% to 29.99%||$ 2,000||$ 45,000||36 or 60 months||580+|
Best peer-to-peer loan
|8.05% to 35.89%||$ 1,000||$ 40,000||36 or 60 months||600+|
Best personal loan with a co-signer
|5.94% to 35.97% with automatic payment||$ 1,000||$ 50,000||36-60 months||620+|
|Local credit unions
Best Alternative Payday Loan
|up to 28%||up to $ 1,000||1 to 6 months|
Loan amounts, APR and repayment period may vary depending on the purpose or type of loan.
What is considered bad credit?
The credit scores used by most lenders range from 300 to 850. If you have a FICO score below 670, you are considered a subprime borrower with a “fair” credit score, according to Experian. The credit reporting company classifies a FICO score below 580 as “very bad.”
It is important to understand that taking out a personal loan with bad credit can be quite expensive. Interest rates can often climb into the upper 30% range, depending on your credit rating. Other hurdles you might face when trying to borrow with bad credit include lower loan amounts and shorter repayment terms. To help you compare the best loan options available, we’ve researched over a dozen bad credit personal loans. We compared the interest rates, fees, qualification requirements, and other features of the loan.
How do you know which credit score range you are in?
- Excellent credit: 800 – 850
- Very good credit: 740 – 799
- Good credit: 670 – 739
- Fair credit: 580 – 669
- Bad credit: less than 580
What Interest Rate Can I Expect If I Have Bad Credit?
As a reminder, when you have a FICO score below 670, you are considered a risk borrower. If your FICO score is below 580, your credit falls into the “very low” range.
Each lender sets their own criteria (including credit score thresholds) for loan approval and pricing. It is therefore difficult to predict with precision what APR you will be offered for a personal loan if you have bad credit. The interest rates on personal loans can range from about 5.5% to 36%. If your credit rating is bad, you should expect rates to be offered at the higher end of that scale.
You may also come across lenders who promise “guaranteed approval” or “no credit check” for bad credit personal direct lender loans. Promises like these should be a red flag. Legitimate lenders never make these guarantees, according to the Federal Trade Commission, or even say that you are likely to qualify for a loan before you apply.
Where can I get a personal loan with bad credit?
Getting a personal loan with bad credit can be a challenge. Nonetheless, you can find several lenders willing to do business with you (although usually at a higher interest rate). If you are looking for personal loan options with bad credit, there are two main sources of loan that you can consider.
- Online Personal Loans For Bad Credit: Online loan networks take your loan application and connect you with lenders who might be willing to approve you for a personal loan. Often times, you can submit an initial form and compare offers from multiple lenders.
- Direct lenders for personal loans for bad credit: Direct personal loans come directly from the financial institution where you are approved. These can include local banks and credit unions, online banks, and online direct lenders. If you have bad credit, it is usually best to only apply to direct lenders who are willing to do business with borrowers with challenged credit.
You can find a combination of the best personal loans for bad credit from both types of sources in the guide above.
Personal loans vs payday loans
When you have poor credit, small payday loans can be easier to obtain. But they come at a very high cost. The average APR on a typical two-week payday loan of $ 100 is almost 400%, according to the CFPB.
If you qualify for a personal loan with bad credit, you may be able to borrow money at a much more affordable price instead of using a payday loan. Even an interest rate close to 36% – the upper end of the range for most personal loans – costs much less than the average fees a payday lender can charge.
In addition, many local credit unions now offer Alternative Payday Loans (ALP). These loans can help borrowers with bad credit access more affordable short-term financing. The maximum interest rate on a PAL is 28%.
Personal loans vs personal installment loans
In most cases, a personal loan and a personal installment loan are one and the same. While it is possible to take out a personal line of credit (LOC) when you need to borrow money, a LOC is a revolving account. Most financial experts would not classify an LOC as a personal loan. (Also, if you have poor credit, you might have difficulty qualifying for an LOC.)
Installment loans, like personal loans, get their name from the way they work. You borrow a fixed amount of money and pay back the funds you borrow (plus interest and fees) in fixed installments or payments to the lender. If the lender reports the account to the credit bureaus, a personal loan will usually show up on your credit reports as an installment account.
Personal loans vs peer-to-peer loans
A peer-to-peer (P2P) loan is another way to borrow money that is similar to a traditional personal installment loan. However, if you are eligible for a P2P loan, the money you borrow is not necessarily issued by a bank or lender. Instead, funds are usually loaned to you by an investor or a group of investors. Like personal loans, many P2P lenders will report your account to the credit bureaus. Additionally, you may need a credit score of 600 or higher to be approved (although each P2P network and investor may have their own criteria for approval).
To apply for a P2P loan, you will need to submit an application through a website that connects potential borrowers with potential investors. Yet, before you commit (or even apply), you should do some research. It is wise to find out more about the rates, fees and terms that may be offered to you and compare them to your other available options. While P2P loans can sometimes have more flexible approval criteria than traditional bank loans, you might face higher interest rates and fees in return.
The bottom line
Just because you have bad credit doesn’t mean you should turn to a predatory payday lender when urgent expenses arise. Even with credit problems, you should always compare all of your available options, as a more affordable solution may be available.
How we choose the best personal loans for bad credit
Investopedia is committed to providing consumers with unbiased and comprehensive personal lender analysis for all borrowing needs. We have collected over twenty-five data points from over fifty lenders, including interest rates, fees, loan amounts, and repayment terms, to ensure our content helps users take the right borrowing decision for their needs.