Best Personal Loans for Bad Credit: Online Financing Offers for Bad Credit Scores

Sometimes we’re just down on our luck and we need a loan–even with bad credit. If you think that you’re not going to find any lenders that’ll grant you a personal loan, think again. In fact, there are a number of lenders that’ll approve personal loans for those with bad credit, though you may not get rates and terms like someone with a higher credit score.

Once you get a sense of where you stand with your credit, you’ll be able to narrow down a list of lenders that might be able to help you out. Lucky for you, we’ve done a lot of the legwork–take a look at some of the best personal loans for bad credit.

Best Personal Loans for Bad Credit

• Best referral site: LendingTree
• Best peer to peer loans: LendingClub
• Best for debt consolidation: Prosper
• Best for no prepayment penalties: Monevo
• Best for unsecured loans: Avant

LendingTree

LendingTree isn’t technically an online lender. Rather, it’s an online lending marketplace that helps you populate results based on your credit profile. You can enter your personal details like your name, credit score and email address and LendingTree will see what you can qualify for (it won’t affect your credit score). That way, it makes it easier for you to shop around for the best lender instead of having to fill out individual applications for each one.

LendingClub

One of many peer to peer lending companies popping onto the scene, you’ll get a chance to borrow money from individuals instead of a lender. You’ll have to go through LendingClub’s qualification criteria first and once approved, the details for your loan will go onto their website. In many cases those with stellar credit have a better chance here than traditional banks. Borrowers can consider filing a joint application to increase your chances of getting approved (it’ll increase your income profile).

Prosper

Although you need a higher credit score to qualify for Prosper, those with bad credit might be able to if you can demonstrate other healthy financial behaviors such as on-time payment history and a higher income. You can find out your rate within minutes online without hurting your credit score. If you want to pay it off early, Prosper doesn’t charge early payment fees.

Monevo

Monevo is a personal loan marketplace, giving you the opportunity to compare deals from 30+ lenders. Although it favors fair to excellent credit scores (600 to 850) they say there are deals across the spectrum – there’ll just be fewer if you have bad credit. Applications use a soft credit check that won’t harm your score (until you proceed with a formal application) and it’s free to use. Monevo is a quick way to compare deals between a lot of lenders at once.

Avant

Those with fair credit might want to consider Avant since it’ll deliver loan funds pretty quickly–it can be as soon as the next business day. You can also contact their support team 24/7 should you feel you need the extra hand-holding.

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What Does Having Bad Credit Mean?

Having bad credit means your score is lower than 600–most lenders use this number to determine how risky a lender you are. The lower your score, the more perceived as someone who is less likely to make on-time payments (if at all) or not responsible with debt. That’s why people with bad credit tend to be denied loans or have to agree to higher rates and less favorable terms.

How Do I Get a Personal Loan With Bad Credit?

It’s possible to take out a personal loan even if you have bad credit. Getting one should be the same as someone with average or excellent credit.

Here’s what you need to do:

• Find out your credit score – There are many free places online you can check your credit score. You can also get a free copy of your credit report to make sure all information is correct, as inaccurate information may negatively affect your score. If something’s wrong, it’s best to get it fixed as soon as possible. Knowing your score can help you when you’re shopping around for loans, especially on lending comparison websites.
• Gather all relevant information – Lenders will typically look at information such as a state or government-issued photo ID, proof of income and Social Security number. Having all of this on hand will make it easier when it comes time to fill out an application.
• Shop around – Take time to compare different lenders’ terms, rates and other factors like early payment penalties. When you’re ready, then fill out an application. Before agreeing to the loan make sure you understand the terms and conditions fully (read the fine print).

Can I Get an Unsecured Personal Loan With Bad Credit?

Yes, it’s possible for someone with bad credit to get an unsecured loan. However, you may be subject to higher rates compared to someone taking out a secured loan. That’s because someone taking out a secured loan is putting down collateral which the lender can use to recoup its costs.

How Can I Improve My Bad Credit Score?

The best way to improve your credit score is to exhibit behavior that shows lenders you’re not a risky borrower. That starts by making on-time payments (it’s one of the most heavily weighted factors when it comes to calculating your credit score). As you keep on doing so over time, you should see an increase in your credit score.

In addition, take a look at what else is affecting your credit–your credit report should give some clues. For example, you have used up a large chunk of your credit card balance–reporting bureaus look at what’s called your utilization ratio which is your balance versus your overall credit limit. Pay it down and ideally keep it down to 30% and you can increase your score that way.

All of these above steps can take a little patience but if you’re responsible for your loans, hopefully, your score will go much higher.