Legit Loans for Bad Credit: 5 Best Online Personal Loan Lenders for Poor Credit (2023)

If you have bad credit, you may find it difficult qualifying for a personal loan unless you apply with a co-signer. Luckily, there are some online loan companies that cater to borrowers with bad credit. The best bad credit loans offer fast funding, an easy online application process, and flexible terms.

In this guide, we’ve reviewed the best online loan options for people with bad credit. Each personal loan company below was evaluated on a variety of key factors including reputation, loan amounts, repayment terms, speed of funding, and fees.

Best Online Loans for Bad Credit

  • BadCreditLoans: Best loans for bad credit overall
  • LendYou: Best for small personal loans under $2,500
  • ClearViewLoans: Best for fast and easy online loans
  • Upstart: Best for borrowers with little credit history
  • Upgrade: Best for debt consolidation and credit score over 600
  • Prosper: Best for no prepayment penalties and fast funding

#1. BadCreditLoans: Best Bad Credit Loans Overall

First up on our list is BadCreditLoans, an online marketplace with an extensive network of lending partners. Since 1998, BadCreditLoans has been helping people with less-than-perfect credit connect with reputable loan providers to gain the financial help they need.

You can apply online in minutes to compare offers from multiple lenders in real-time. The service is 100% free, with no obligations or cost whatsoever. BadCreditLoans offers several loan types, including:

  • Personal loans
  • Mortgages
  • Auto loans
  • Business loans
  • Student loans
  • Debt consolidation loans

Loan Amounts and APRs

You can apply for a loan between $500 and $10,000 through the BadCreditLoans lending marketplace. Your interest rate, or annual percentage rate (APR), is another vital consideration when applying for a loan with bad credit.

BadCreditLoans isn’t a direct lender and holds no influence over your available rate quotes. Instead, your rate depends on your credit score, financial history, and the particular lender offering you a loan. However, interest rates through the BCL marketplace range between 5.99% and 35.99%.

Repayment Terms

Again, your loan terms will depend on your chosen lending provider. Your desired loan amount and credit score will also affect the term lengths a lender offers you. However, BadCreditLoans and its lending partners specialize in short-term loans, ranging from three months to 36 months (three years).

Credit Score and Eligibility Requirements

Every online lender has different eligibility requirements for potential borrowers. BadCreditLoans offers a free service for people with low credit scores, but the company doesn’t disclose the minimum credit score that borrowers need to qualify.

Despite the lack of information regarding credit score requirements, BadCreditLoans does disclose its eligibility criteria. Here’s what you’ll need to apply for a loan with bad credit through the company’s lending marketplace:

  • Contact information
  • A personal bank account
  • Proof that you’re over 18 years old
  • Financial information and proof of income (W-2s, paystubs, etc.)
  • Social Security number
  • Proof of your citizenship

Key Features

We love the fact that BadCreditLoans doesn’t charge customers to connect them with its lending partners. While there’s no guarantee that you’ll receive a loan offer after applying, that doesn’t mean all hope is lost. Instead, BadCreditLoans will show you advertisements for other lenders or alternative credit-related services, such as credit repair or debt consolidation.

You can also find plenty of resources and educational information on the official website about taking out a personal loan with bad credit. For example, you can find tips for applying, how to spend your loan proceeds responsibly, and advice on budgeting your future income to pay off your loan as quickly as possible.

Click Here to Check Rates or to Apply Online With BadCreditLoans

#2. LendYou: Legit Loans for Bad Credit and Fast Funding

LendYou is another free lending marketplace that connects borrowers who have poor credit to online lenders specializing in short-term personal loans and payday loans. Borrowers with all different credit scores can apply, even those with poor or very bad credit. Here are the types of loans available from LendYou:

  • Payday loans
  • Personal loans
  • Installment loans

LendYou doesn’t charge a fee to connect consumers with lenders, and you are under no obligation to accept any offers you might receive from its lending partners.

Loan Amounts and APRs

LendYou works with lenders who only offer short-term loans in small amounts, from $100 up to $2,500. Your loan offer comes in real-time, so if you accept the lender’s terms, you should have your loan proceeds as soon as the next business day. Minimum interest rates from LendYou’s network vary based on the specific type of loan:

  • Payday loans:17.5% minimum APR
  • Personal loans: 4.99% minimum APR
  • Installment loans: 6.63% minimum APR

Your specific interest rate and maximum APR will also depend on your chosen lender. Additionally, some states have laws that limit the amount of APR a lender can charge on your loan. However, payday or cash advance loans often have astronomically high rates, sometimes up to 1,386%! Installment loan APRs range from 6.63% to 485%, and personal loan APRs range from 4.99% to 450%.

While LendYou only facilitates loans from $100 to $2,500, it may be able to connect you with other loan providers that offer higher loan amounts, including:

  • Payday loans from $100 to $1,000
  • Installment loans up to $5,000
  • Personal loans up to $35,000

Repayment Terms

Although LendYou specializes in short-term loans for bad credit, borrowers have a decent range of terms from which to choose. The online lenders in the LendYou network offer loan terms ranging from a mere 30 days up to 60 months.

Credit Score and Eligibility Requirements

The great news about using a service like LendYou is that your credit score doesn’t have much impact on whether you’ll get approval because the loans are short-term. Plus, LendYou’s minimum credit score requirement is low: only 300. Instead, it’s your ability to repay that matters the most. In terms of eligibility criteria, applicants must:

  • Be at least 18 years old
  • Have a valid personal bank account (checking or savings) with direct deposit
  • Must have a minimum income of $1,000 per month
  • Not be a resident of
    • West Virginia
    • Arkansas
    • Vermont
    • New York

Key Features

One of the best features of LendYou is the swiftness of the application and loan approval process and its generous borrower qualifications. It’s an excellent, non-traditional option for people with very bad credit because there’s no minimum credit score you have to meet.

Instead, it’s all about your current income and ability to repay your loan that determines whether you’ll receive approval. Plus, LendYou goes above and beyond to ensure that your private information stays just that – private.

Click Here to Check Rates or to Apply Online with LendYou

#3. ClearViewLoans: Bad Credit Personal Loans Up to $5,000

ClearViewLoans is a comparison tool that helps you connect with approved lenders for your borrowing needs. You’ll notice in nearly any ClearViewLoans review that users can easily find an offer that meets their desired term lengths, APRs, and loan amounts in just a few minutes. Rather than giving your personal information to many different lenders and waiting for offers, you can complete a simple questionnaire to receive quotes from all your top choices.

The ClearViewLoans process is simple. The website walks you through a few basic questions to understand your financial situation and borrowing needs. You’ll answer questions regarding the following:

  • Your preferred loan amount ($1,000 to $5,000)
  • Your credit score range
  • Your email address, name, and phone number so lenders can contact you with quotes
  • More personal information, like your address and military history
  • Rental or homeowner statuses
  • Your car payment status
  • Your marital status and any children
  • Debt consolidation offers
  • Driver’s license information
  • And more

After you submit all the required information, you’ll receive quotes from approved lenders for your desired loan. APRs and terms can range based on your financial history, debt-to-income ratio, and credit score.

ClearViewLoans is not a lender but helps you receive quotes from other lenders. Loan amounts vary based on the lender you choose and your location. Because ClearViewLoans caters to borrowers with lower credit scores requiring immediate cash, most of the lending amounts are relatively low.

When going through the steps we discussed above in this ClearViewLoans review, you will see that you can select loan amounts ranging from $1,000 to $5,000. These figures represent the maximums you wish to borrow. ClearViewLoans lenders offer loans as low as $100.

ClearViewLoans offers a few advantages over traditional lenders. You can enjoy the following:

  • Fast funding: You can receive your desired loan amount in as few as 24 hours to cover immediate financial needs.
  • Versatile spending: ClearViewLoans connects you with personal loan lenders, which means you can use the funding for any needs, ranging from debt consolidation to vacations.
  • Loose credit requirements: ClearViewLoans helps you receive lending offers, regardless of your credit history. Review the eligibility requirements below.
  • Easy, secure online application process: Applying online for a loan from all the top lending options takes only a few minutes. The ClearViewLoans platform uses iron-clad encryption technology to keep your information safe.

To qualify for funding from a ClearViewLoans lender, you must meet the following requirements:

  • A minimum of 90 days of employment with your present job
  • U.S. citizenship or permanent residency
  • A minimum $1,000 monthly income
  • An eligible checking account in your name
  • A valid email address and phone number

All applicants also must be 18 or older to qualify. The ClearViewLoans lending tool is an excellent option for anyone needing an immediate, smaller personal loan.

Click Here to Check Rates or to Apply Online With ClearViewLoans

#4. Upstart: Best Bad Credit Loan Company for Debt Consolidation

For borrowers with little to no credit rating but a promising future, Upstart is an excellent choice for an unsecured personal loan. The company has helped over two million people get the finances they need to buy a new car, pay for unexpected expenses, fund their business, or consolidate debt.

Even if your credit history is so new that it’s not yet enough to produce a FICO credit score, you still have a good chance of receiving approval for a personal loan from Upstart’s partner banks.

Another bonus? Upstart has an ultra-fast application process. Apply online to check your rate in just minutes. After verifying their information, most borrowers receive instant approval. Then, 99% of those approved borrowers get their loan proceeds just one business day after signing.

Loan Amounts and APRs

Upstart and its partner banks offer minimum loan amounts of $1,000, with a maximum of $50,000. Your interest rate will fall between 5.42% and 35.99%. Actually, 5.42% is relatively low considering Upstart works primarily with people who have poor credit.

Repayment Terms

Upstart only offers two choices for repayment terms: three or five years. However, the top-rated loan company stands out for its flexible payment options: You get to choose your payment date or change it an unlimited number of times using Upstart’s online portal. You also have multiple payment options. You can set up autopay or pay manually online, via check, or over the phone.

Credit Score and Eligibility Requirements

Upstart doesn’t have a minimum credit score requirement, making it ideal for young borrowers with limited credit histories. However, you must have a minimum gross income of $12,000. Applicants must be at least 18 and have a:

  • Full-time job or job offer starting within six months, or a part-time job with an additional income source
  • Primary residence in the U.S.
  • Valid email account and contact information
  • Bank account with a U.S. routing number

Key Features

Upstart is a lending marketplace featuring a network of personal loan providers that cater to borrowers with no credit score or a limited financial history. One of Upstart’s best features is how fast you’ll get your loan funds after approval. You can apply online to check the specific bad credit loan rates you qualify for in about five minutes. After you receive approval and sign the agreement, your loan funds should be in your account within one business day.

Upstart offers direct payments to creditors, which is a convenient feature for people who want to consolidate debt. Plus, the personal loan lenders in Upstart’s network don’t just look at your credit score when determining your approval status. Instead, the lenders use alternative data, such as your college major, work history, and ability to repay. Even better, there are no prepayment penalties!

Click Here to Check Rates or to Apply Online With Upstart

#5. Upgrade: Best Bad Credit Lender for Low Fixed Rates and No Prepayment Penalties

Upgrade is another company offering some of the best personal loans for bad credit. You can borrow money from Upgrade to use for a variety of financial issues, including:

  • Credit card refinancing
  • Debt consolidation loans
  • Major purchases
  • Home improvement loans

Conversely, Upgrade’s loan funds are not eligible for certain uses, including:

  • Gambling
  • College expenses
  • Investing

Upgrade has an excellent reputation as a bad credit loan company. Since its inception, it has loaned over $15 billion to more than one million customers and maintains a near-perfect rating on Trustpilot.

If you’re still shopping around for the best rates, you can opt for prequalification with only a soft credit check (with no impact on your credit score) even if you don’t receive pre-approval. Borrowers can apply for both unsecured and secured personal loans from Upgrade. However, a secured loan offers a better chance of getting a lower interest rate.

Loan Amounts and APRs

Upgrade offers bad credit borrowers a lot of flexibility regarding loan amounts, which range from $1,000 up to $50,000. However, you can expect to see high APRs, from 6.55% up to 35.97%.

All borrowers are subject to an origination fee between 2.9% and 8%, although your chosen lender will deduct the fee right from your loan funds. Borrowers who qualify for the lowest interest rates must also enroll in autopay.

Repayment Terms

Upgrade offers some of the best options for long-term online personal loans, with repayment terms ranging between 24 and 84 months.

Here’s a quick example: Let’s say you borrowed $10,000 over 36 months at an interest rate of 17.98% (including a one-time 5% origination fee and 14.32% yearly interest rate). Your loan funds would be $9,500 and monthly payments of $343.33. Over the lifetime of your loan, you would end up paying back a total of $12,359.97.

Credit Score and Eligibility Requirements

Borrowers must meet Upgrade’s minimum credit score requirement of 560 to receive approval. However, the average credit score for borrowers is around 670 to 700.

Fortunately, there’s no minimum income requirement, but you’ll need some serious cash flow to get a bad credit personal loan from Upgrade: its average income for borrowers is $78,000 annually. You’ll also need:

  • A minimum of two accounts on your credit report
  • A maximum debt-to-income ratio of 45% or less, including the new personal loan and your mortgage (if applicable)

Key Features

Upgrade is a wise choice for borrowers with bad credit because it offers flexible loan amounts and terms. You can also take advantage of direct payment services to creditors if you have a debt consolidation loan, and borrowers receive a 0.5% discount for setting up autopay. Upgrade also offers lines of credit ranging from $500 to $25,000.

Click Here to Check Rates or to Apply Online with Upgrade

#6. Prosper: Best Bad Credit Loans for Home Improvement and Auto Financing

Prosper is a peer-to-peer online lending marketplace – the first in the United States – that has facilitated more than $21 billion in loans to over one million people since its inception in 2005.

Once you apply for a personal loan, Prosper assigns you a numerical rating using factors like your debt-to-income ratio and credit score. Then, private investors decide whether they want to fund your loan.

However, there’s a catch: If investors haven’t funded at least 70% of your loan amount within 14 days, your application will expire. Luckily, Prosper reports that most borrowers receive funding within three days.

Here are the types of online loans for bad credit available from Prosper:

  • Personal loans
  • Home equity lines of credit
  • Investments and IRAs
  • Short-term and bridge loans
  • Automobile/vehicle loans
  • Debt consolidation loans
  • Home improvement
  • Healthcare financing
  • Emergency expenses
  • Small business loans

Loan Amounts and APRs

The minimum loan amount on Prosper is $2,000, and the maximum is $40,000. You can expect your interest rate to range from 7.95% up to 35.99%. Due to its unique peer-to-peer lending method, borrowers may find that it takes a few days longer to receive their money than it would from direct lenders.

Repayment Terms

Unfortunately, Prosper only offers two options for repayment terms: three or five years. However, the company is a well-established and reputable bad credit lender, even if they don’t offer direct-lender connections to institutions like banks or credit unions. You’ll also have to pay an origination fee ranging from 2.41% to 5% and a late fee if you miss a monthly payment.

Credit Score and Eligibility Requirements

Although Prosper is best for people with fair credit, the minimum credit score requirement for borrowers is 600, with an average of 722. Also, there’s no minimum income qualification, but the average borrower makes $106,000 a year. Before you apply for an unsecured loan on Prosper, you must also have:

  • No bankruptcies within the past year
  • A maximum debt-to-income ratio of 50% (excluding your mortgage)
  • Proof of age (18+)
  • A Social Security number and U.S. bank account
  • At least three open accounts on your credit report
  • Minimum credit history of two years

Key Features

Prosper is a pioneer in the field of online lenders, and there’s no denying that the company’s peer-to-peer lending system is an innovative ode to capitalism. However, if you have bad credit, you may have trouble finding investors to fund your loan.

Once you apply, you’ll see a range of different loans for which you prequalify. Prosper reports your monthly payments to all three major credit bureaus, making it an excellent choice for people who want to rebuild their credit scores.

Click Here to Learn More About Prosper Loans

What Is a Bad Credit Personal Loan?

A bad credit personal loan is a type of loan that is specifically designed for individuals with a low credit score or a poor credit history. When someone has a low credit score, it indicates to lenders that they may have had difficulties managing their finances in the past or have defaulted on previous loan payments.

Traditional lenders, such as banks and credit unions, typically rely heavily on credit scores when determining whether to approve a loan application. If an individual has a bad credit history, they may find it challenging to secure a loan from these institutions. However, some lenders specialize in offering personal loans to individuals with bad credit.

Bad credit personal loans often have higher interest rates and less favorable terms compared to loans offered to individuals with good credit. This is because lenders perceive borrowers with bad credit as higher risk, and the higher interest rates help offset that risk. Additionally, bad credit personal loans may have lower borrowing limits and shorter repayment periods.

While bad credit personal loans can provide access to funds for individuals with poor credit, it’s important to carefully consider the terms and conditions of the loan. Borrowers should ensure they can afford the monthly payments and explore options to improve their credit score over time, as this can help them qualify for better loan terms in the future.

How We Ranked the Best Loans for People with Bad Credit

Now that you’ve finished reading our reviews on the best bad credit loans, you’re probably curious about how we ranked the multiple lenders on our list. Keep reading as we break down the individual ranking factors used to determine the best bad credit loan companies and why they stand out in today’s competitive marketplace.

Eligibility Requirements

Every lender offering bad credit personal loans has varying eligibility requirements for borrowers. The most common factors include:

  • Credit history
  • Credit score
  • Existing debt
  • Debt-to-income ratio
  • Open accounts
  • Financial history (delinquencies, bankruptcies, etc.)
  • Collateral (secured loans only)
  • Employment

In addition, most lenders offering loans for bad credit require borrowers to:

  • Be at least 18 years old
  • Have a U.S. residence and bank account
  • Provide valid contact information
  • Show proof of employment (i.e., pay stubs, W-2s)

Loan Amounts

Another factor we used to rank the best bad credit loans was each lender’s loan amount limits. Most of the companies we reviewed had minimum loan amounts ranging from $500 to $2,000 and maximum amounts between $5,000 and $50,000.

LendYou works with short-term and payday lenders, which means its loan amount options are relatively limited: between $100 and $2,500. Plus, payday loans have insanely high interest rates, sometimes in the hundreds or thousands of percentages.

However, the other lenders in our review had much higher limits for borrowers. For example, Upgrade offers loan amounts ranging from $1,000 to $50,000 and lines of credit that start at $500 and max out at $25,000.

Term Lengths

When comparing personal loans for bad credit, several factors can impact the term lengths available to you, including your desired loan amount and credit score. The online lenders we reviewed had term lengths ranging all over the map.

For example, LendYou can connect borrowers to a lender offering a 30-day payday loan, as its lending network specializes in short-term, unsecured personal loans (but with sky-high interest rates). At the other end of the scale, Upgrade offers loan terms of up to seven years.

Remember, numerous factors affect the loan terms a lender may offer you. For example, unsecured loans and secured loans have different term lengths, and your credit score and chosen lender will also affect which offers and rates you receive.

Costs and Fees

You should always compare personal loan rates and fees before choosing a lender. If there’s one thing we hate, it’s paying exorbitant fees, and bad credit loans are no exception. Unfortunately, charging borrowers fees is perfectly in line with industry standards and normal practice for almost every lender.

Some companies that connect borrowers with multiple lenders through a partner network don’t charge any fees; instead, the company receives a commission for referring potential customers to direct lenders. However, you’ll find that most lenders do charge fees.

For example, the most common is the origination fee, which usually is either a flat rate or a percentage of the loan. In fact, the majority of lenders charge an origination fee, which comes directly from your loan amount.

In addition, many lenders charge late payment penalties and subject borrowers to NSF fees for returned checks. You may also come across annual fees, loan application fees, or prepayment penalties, where lenders charge you extra money to pay off your loan early.

Application Process

Applying for a bad credit loan when you’re in desperate need of emergency finances is already nerve-wracking. However, the ultimate annoyance is companies with a long, complex, or confusing application process.

When we evaluated the six companies in our review of the best loans for bad credit, the swiftness and ease of the application process were crucial factors. After all, who wants to spend an hour answering intricately detailed questions on the phone or computer? Even worse is the hassle of searching for those ever-elusive financial documents.

Fortunately, all six companies in our review have fast, simple applications you can complete online in minutes. First, enter your personal information to compare interest rates in real-time and see if you prequalify, then find the loan that works best for you. Plus, most of the lenders in our review offer approvals within one business day.

Tips for Comparing Bad Credit Lenders

We’ll give you some essential advice: Don’t rush into any loan agreement, especially if you’re not amenable to the terms. Instead, research and compare lenders thoroughly, whether you plan to apply over the phone, at a credit union, or via an online lending marketplace. Here are our top three tips to help you find and compare the best personal loans for bad credit:

Interest Rates

Unfortunately, people with a bad credit score or poor financial history often settle for higher-than-normal interest rates just to receive loan approval. Don’t make the same mistake by signing up for the first offer you receive!

Start your research by using sites that offer free rate comparisons that won’t negatively affect your credit score. Then, compare lenders until you find the best personal loan with the lowest possible rate. In doing so, you’ll pay less interest over the lifetime of your loan.

Prequalify First

Many providers offer potential borrowers a valuable tool: prequalification for personal loans. It’s an invaluable tool because it only uses a soft credit check, which won’t harm your credit score. It’s easy: just submit personal information like your desired loan amount and terms, monthly income, existing debt, etc., and receive your answer within minutes. It lets you safely explore available loan offers without a hard credit check and the resulting score drop.

Check for Fees

You wouldn’t sign anything without reading it first, right? The same principle applies to loans for people with bad credit. Before entering a loan agreement, check if your chosen lender charges fees, and if so, what kind.

Origination fees are basically a given in today’s lending market. As we mentioned earlier, most are either a flat dollar amount or a percentage of your total loan amount. Lenders may call origination fees something else, like “administration fees” or “processing fees,” but it’s the same thing.

Finally, don’t forget to check if your lender charges late fees for missed payments, NSF fees for returned checks, or prepayment penalties.

Eligibility Requirements for Legitimate Loan Companies

Every bad credit lender, from peer-to-peer companies like Prosper to direct lending providers like OneMain Financial, has unique criteria for evaluating potential borrowers. So, before you apply, check your credit score and credit report, and gather necessary documents ahead of time, like W-2s, paystubs, tax returns, valid identification, etc.

Remember, every lender is different, but most use the same general factors when determining eligibility, including your:

  • Credit score
  • Total credit usage
  • Credit report
  • Annual income
  • Payment history
  • Existing debt
  • Field of employment
  • Desired loan amount
  • Monthly cash flow

However, it’s your credit score and payment history (which makes up a massive 35% of your FICO score) that have the most influence on whether you’ll receive loan approval. Finally, before you sign, ask yourself:

  1. Do I really need a personal loan, or am I trying to compensate for overspending or poor budgeting?
  2. Can I afford to take on another monthly payment for a personal loan on my current income?

A personal loan may not be the best option if you’re overspending or can’t afford another monthly bill. You can also increase your chances of approval by improving your credit score before applying.

Types of Bad Credit Loans

As we mentioned earlier in our reviews of the best bad credit loan companies, there are numerous different loan types for borrowers with bad, poor, or fair credit. Stick with us as we discuss the four most common types of loans for people with bad credit.

Secured Loans

A secured loan is a personal loan that requires a form of collateral from the borrower, such as a house or car. If the borrower fails to meet the loan’s original terms, the lender can seize the collateral to recoup any financial losses.

Although the borrower accepts the chance of losing their collateral if they don’t repay, secured personal loans offer lower interest rates and better terms than unsecured loans. Most people who apply for secured loans use the funds to pay for a home equity loan, car, or mortgage.

Unsecured Loans

Unsecured loans are loans that are not backed by any collateral or asset. Unlike secured loans, which require borrowers to provide an asset (such as a house or a car) as collateral, unsecured loans are granted based on the borrower’s creditworthiness and ability to repay the loan.

Here are some key features of unsecured bad credit loans:

No Collateral: An unsecured loan does not require any collateral. This means that if a borrower defaults on the loan, the lender cannot seize any specific asset to recover the funds. Instead, the lender may take legal action to recover the outstanding amount.

Based on Creditworthiness: Lenders assess the borrower’s credit history, income, employment stability, and other relevant factors to determine their creditworthiness. A strong credit profile, including a good credit score, can increase the chances of loan approval and more favorable loan terms.

Higher Interest Rates: Since unsecured bad credit loans carry more risk for the lender, they generally come with higher interest rates compared to secured loans. The higher interest rate compensates the lender for the risk they assume by providing funds without collateral.

Fixed Repayment Terms: Unsecured loans typically have fixed repayment terms, meaning borrowers must repay the loan over a specified period, usually through regular installments (monthly, bi-monthly, etc.). The repayment period for online personal loans can range from a few months to several years, depending on the loan amount and the lender’s terms.

Versatile Use: Unsecured loans can be used for various purposes, such as home improvements, medical expenses, education, or even personal events like weddings. The lender usually does not impose restrictions on how the funds are used, unlike some specialized loans (e.g., auto loans or mortgages).

It’s important to note that due to the absence of collateral, unsecured loans pose a higher risk for lenders. As a result, lenders may have stricter eligibility criteria, require a higher credit score, or provide lower borrowing limits compared to secured loans. Borrowers with good credit history and stable income are more likely to qualify for favorable terms and interest rates.

Before taking out an unsecured loan, it’s crucial to assess your financial situation, compare loan offers from different lenders, and ensure that you can comfortably meet the repayment obligations.

Payday Loans

We won’t mince words: A payday loan (also known as a cash advance loan) is usually a bad idea and often counterintuitive to achieving financial health and stability. However, there are certain circumstances where borrowing from a payday lender can provide a feasible solution to your financial problems.

For example, cash advance loans are a common choice for people who need a small unsecured personal loan but don’t want to undergo a credit check or disclose their credit score. But there’s a huge catch: APRs that rise into triple and even quadruple digits, although the maximum rate depends on your state of residence. Plus, most payday loans have caveats that you must repay the loan amount in full upon receiving your next paycheck.

HELOCs for Poor Credit

HELOC, or home equity line of credit, is another type of bad credit loan with a variable interest rate similar to a standard home equity loan. However, home equity loans give you one large lump sum of cash up front, whereas HELOCs allow you to borrow as much money as you need (within your lender-approved credit limit) whenever you find yourself in dire financial straits.

While HELOCs are suitable for borrowers who only require a small loan amount, those who fail to repay could lose their homes. Plus, the HELOC application process can be long and complex, often requiring a professional home appraisal.

How to Spot Bad Credit Personal Loan Scams

Spotting bad credit personal loan scams can be challenging, as scammers are often skilled at appearing legitimate. However, there are some red flags and warning signs you can look out for to help protect yourself from falling victim to scams. Here are some tips to spot bad credit personal loan scams:

Upfront Fees: Be cautious if a lender asks for upfront fees or charges before approving your loan. Legitimate lenders typically deduct fees from the loan amount or include them in the repayment plan, rather than requiring upfront payment.

Guaranteed Approval: No lender can guarantee approval for a loan, especially if you have bad credit. If a lender claims to guarantee approval regardless of your credit history, it’s likely a scam.

Unsecured Websites: Check if the lender’s website is secure. Look for “https://” at the beginning of the website URL and a padlock symbol in the address bar. A lack of security measures may indicate a scam.

No Credit Check: Reputable lenders typically conduct credit checks to assess the borrower’s creditworthiness. If a lender claims to offer loans with no credit checks, it may be a scam.

Pressure Tactics: Be cautious if a lender uses high-pressure tactics to rush you into making a decision or signing loan documents. Legitimate lenders will give you time to review and understand the terms and conditions.

Unprofessional Communication: Poor grammar, spelling mistakes, and unprofessional emails or phone calls can be signs of a scam. Legitimate lenders typically communicate professionally.

No Physical Address or Contact Information: Check if the lender provides a physical address and legitimate contact information. If they only have a generic email address or a P.O. Box, it could indicate a scam.

Requests for Payment via Untraceable Methods: Scammers often ask for payment through wire transfers, prepaid cards, or cryptocurrency. Legitimate lenders usually accept payments through verifiable and traceable methods.

Missing or Fake License: Research the lender’s license and credentials. If they claim to be licensed but you can’t find any evidence or their license seems suspicious, it’s a warning sign.

Research the Lender: Before engaging with any lender, research their reputation. Check for online reviews, verify their licensing and registration, and look for any complaints or scams associated with their name.

Remember, it’s essential to exercise caution and do your due diligence when dealing with unsecured personal loans, especially if you have bad credit. If something seems too good to be true or you feel uncertain about a lender, trust your instincts and consider seeking alternatives.

Frequently Asked Questions about Bad Credit Loans

Can You Use Personal Loans for Debt Consolidation?

Great news: if you’re struggling with high-interest credit card debt, you can easily apply for a personal loan to help you consolidate your debt by logging online. In fact, many online lenders specialize in debt consolidation loans, giving consumers with both bad credit and good credit the chance to refinance their credit card debt into a lower rate or more manageable payment plan.

Consolidating your credit card debt into one simple payment offers numerous benefits, including:

  • The opportunity to rebuild your credit
  • Lower interest rates
  • Faster payoff
  • Simpler financial budgeting
  • Decreasing your credit usage ratio

How Much Money Can I Borrow With Poor Credit?

Few banks, credit unions, or online lenders let people with a bad credit score take out large personal loans, particularly without collateral. In fact, most lenders only allow people with poor credit to borrow the minimum loan amount or require them to take out a secured loan. Therefore, if you need to borrow a large sum of money, consider working to improve your credit for a few months before applying.

Can I Get a Loan with No Credit Check?

While it is possible to find personal loan lenders who offer loans without conducting a traditional credit check, they are typically not reputable or trustworthy lenders. Most legitimate bad credit loans will require a credit check as part of their loan approval process. Your credit history and credit score are important factors that lenders use to assess your creditworthiness and determine the terms and conditions of the loan.

Lenders who advertise “no credit check” loans often target individuals with bad credit or those who have difficulty getting approved for loans through traditional channels. However, these bad credit loans often come with high interest rates, unfavorable terms, and may be associated with predatory lending practices.

It’s important to be cautious when considering loans that don’t require a credit check. These lenders may take advantage of individuals in need of funds, and the loans can lead to a cycle of debt and financial instability. It’s advisable to explore other options, such as improving your credit score, seeking alternative lenders who consider factors beyond credit history, or exploring secured loan options that require collateral.

Remember, responsible borrowing and maintaining a good credit history are important for your long-term financial well-being.

What Are Bad Credit Loans Mostly Used for?

Bad credit personal loans are suitable for various financial emergencies. The most common uses for bad credit loans include:

  • Debt consolidation
  • Automotive repairs or vehicle purchases
  • Auto refinancing
  • Medical bills
  • Unexpected financial obligations
  • Home improvements
  • Mortgage refinancing
  • Moving expenses
  • Vacations

While the terms and regulations of each lender vary, most lenders prohibit borrowers from spending personal loan funds on:

  • Gambling
  • Illegal activities
  • Investments
  • College expenses
  • Making a home down payment
  • Business expenses

What Is Considered a Bad Credit Score?

The major credit bureaus – FICO, VantageScore, Experian, TransUnion, and Equifax – all use different formulas to calculate a person’s credit score. Generally, most scores range between 300 (abysmal) and 850 (outstanding).

Each bureau uses several factors to calculate your score, such as income, payment history, total debt, credit utilization, open accounts, etc. The two most common credit-reporting agencies are FICO and VantageScore, which have different score breakdowns:


  • Bad: <579
  • Fair: 580-669
  • Good: 670-739
  • Very Good: 740-799
  • Excellent: >800


  • Very bad: 300-499
  • Bad: 500-600
  • Fair: 601-660
  • Good: 661-780
  • Excellent: 781-850

What Interest Rate Can I Expect on a Bad Credit Loan?

You can try prequalifying to get a rate comparison or using a free loan calculator on a lender’s website for a more accurate idea of how high your interest rate will be. However, it’s generally true that people with a bad credit score or poor financial history have higher interest rates on personal loans than people with good credit.

Only the most qualified and least risky applicants can access the lowest rates and best loan offers. Usually, the high end of the APR scale for personal loans is around 20% to 36%. However, adding a co-signer or putting up collateral can often result in a lower APR. Remember, your best bet is to compare rates using a prequalification tool that won’t negatively affect your credit score.

Can I Get a Loan With No Credit History?

While most lenders don’t offer loans to people with no credit or limited history, some do. For example, Upstart is one such loan company that accepts people with little credit.

Instead of just evaluating the applicant’s credit score, Upstart places the most emphasis on their ability to repay. In addition, Upstart uses more than just a person’s financial information to determine loan eligibility, including their field of employment, educational history, and college major, and annual income. So if you’re a young adult (over 18) or struggling to find a lender due to a lack of credit, Upstart is an excellent place to begin.

Final Thoughts on Bad Credit Loans

Now that we’ve discussed every aspect of how to apply for a personal loan with bad credit, it’s time to wrap it up. In this post, we reviewed the best bad credit loans for 2023 from the most reputable and top-rated lenders, including BadCreditLoans, Upstart, Prosper, LendYou, ClearViewLoans, and Upgrade.

All six lenders in our review provide a fast and convenient solution for people who need a loan, even if they have bad or poor credit. Be sure to take the time to compare rates and research lenders—and never sign a loan agreement without reading the fine print. However, with some hard work, smart budgeting, and discipline, you can rebuild your credit and secure a brighter, more stable financial future.

Summary of the Best Bad Credit Loans

  • BadCreditLoans: Best loans for bad credit overall
  • LendYou: Best for small personal loans under $2,500
  • ClearViewLoans: Best for no minimum credit score
  • Upstart: Installment loans with affordable monthly payments
  • Upgrade: Best for debt consolidation and credit score over 600
  • Prosper: Best for no prepayment penalties and flexible loan terms

Related Content:

  • Top Payday Loan Companies
  • Best Loans Without a Credit Check
  • Easiest Personal Loans to Get
  • 10 Best Low-Interest Loans


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