5 best loans for bad credit in April 2024

Lenders typically consider your credit history and score for a personal loan. So if you have bad credit, you might pay more to get a loan or struggle to get approved.

However, some lenders offer loans with less stringent qualifications. These loans can be better suited for applicants with bad credit. If you’re looking for a bad-credit personal loan, here are a few options to get your search started.

Compare bad credit loan rates in April 2024

Best loans for bad credit

The Fair Isaac Corporation (FICO) has the most commonly used credit scoring model in the U.S. The model rates credit scores under 580 as “poor”. If this sounds like your credit predicament, the lenders below offer bad-credit loans, including secured loans or cosigned loans, that you may be able to qualify for. (Lenders that offer cosigned loans may have higher credit score minimums — which your cosigner must meet.)

Methodology

We evaluated the best personal loan lenders for bad credit based on factors such as minimum credit score requirement, customer experience, maximum APR, maximum loan amount, funding time, loan terms, fees, discounts, whether secured loans are available, and whether cosigners are accepted. Our team of experts gathered information from each lender’s website, customer service department, directly from our partners, and via email support. Each data point was verified by a third party to make sure it was accurate and up to date.

Where can I get a personal loan with bad credit?

Personal loans for bad credit can be found through some banks, credit unions, and online lenders. Most will require a credit check, and a full application, which triggers a hard pull on your credit report. But fortunately, you can prequalify without any impact to your credit score, which can give you an idea of which lenders will consider your application and may approve your loan. 

Personal loans are available from under $1,000 to $50,000, or more, and repayment terms typically last from one to seven years. Personal loan interest rates generally range from around 6% to 36%, but with bad credit, you should expect a rate at the higher end of that range. 

If you need a small loan amount, you may be able to get a small bank loan as an existing customer. For example, Wells Fargo and Chase offer loans up to $500 to eligible customers without a credit check.

Also, many credit unions offer payday alternative loans (PALs) to existing and new members that are designed to be used instead of payday loans, which can often be predatory. PALs are available up to $2,000, have repayment terms up to 12 months, and cap APRs at 28%.

Learn more: Where can I get a personal loan?

How to get approved for a personal loan with bad credit

When you apply for a personal loan, lenders look at a combination of factors related to your ability to pay the loan back. For example, they consider the amount you’d like to borrow, your monthly income and outstanding debts, your past borrowing behavior, and other details.

Through your credit score and credit report, lenders gauge the likelihood that you’ll repay the loan. If your credit score is low, it suggests you’ve had difficulties making payments on time or in full. This is why it’s crucial to apply with a lender that has a minimum credit score requirement lower than yours. For example, Universal Credit requires a minimum credit score of 560, while OneMain Financial doesn’t have a minimum credit score requirement.

Learn more: What is personal loan pre-approval?

A poor credit background can make lenders less willing to lend you money. However, you can increase your chances of approval for a personal loan with a cosigner or by securing the loan with collateral.

What is a cosigner?

A cosigner is a person with good credit who doesn’t receive rights to the loan money. Instead, if you don’t make your monthly payments on time, a cosigner accepts legal responsibility for repaying the loan.

This individual is typically someone whom you have a close and trusted relationship with, like a family member or long-term friend. However, keep in mind that since they’re also liable for the debt, their credit can be adversely affected by nonpayment and late payment.

Cosigners undergo a credit check and must meet the lender’s other borrower requirements. Additionally, the lender might ask them to supply documents proving they can support the loan payments if necessary.

How to get a secured loan with bad credit

If you don’t have a willing cosigner who can help you get an unsecured loan, another option is to find a secured personal loan. Secured loans require that the loan is tied to collateral, like a bank deposit, car, or other value-based asset.

Since the loan is secured from risk with the collateral, it reduces the financial risk for lenders. As a result, you have a better chance at getting approved.

Your annual percentage rate (APR) can be lower than that on an unsecured loan. The APR is your annual cost of borrowing the loan, including upfront fees, like administrative and origination fees. The lower your interest rate, the less you’ll spend on the loan overall.

Just know that if you don’t make your full, on-time monthly payments, the lender can use your collateral to pay off your loan.

How to apply for a loan with bad credit

If you need a personal loan with bad credit, follow these steps:

1. Confirm how much you can afford: Review your income, existing debt, and monthly expenses to determine your disposable income. With this in mind, determine a maximum monthly payment that you can comfortably afford. This will help you choose a repayment term.
2. Check your credit: See where your credit stands by checking your credit score and requesting your credit report. Errors on your report can drag your score down. Request a free credit report from each credit bureau on AnnualCreditReport.com.
3. Line up a cosigner or collateral: If your credit history confirms that you’re unlikely to qualify for an unsecured loan on your own, use this time to identify your collateral or who you can ask to cosign on the loan. For cosigners, be clear about expectations regarding repaying the loan so the relationship isn’t compromised. If you’re planning on a secured loan, research lenders that offer them.
4. See if you prequalify: Many lenders let you see if you prequalify for a loan online without impacting your credit. Although prequalification isn’t a guaranteed approval, it can help you understand how likely you might be to be approved for a loan, and it can give you a sense of the rates and loan amounts you might qualify for. Just know that when you formally apply for a loan, the lender will conduct a hard credit inquiry, which can temporarily lower your score by a few points for up to a year.
5. Compare loans: To find the best personal loans, compare prequalification results between lenders. Note the amount you may be approved for, potential APRs, fees, term, collateral or cosigner criteria, and repayment options.
6. Fill out a loan application: Complete an application for the loan offer you’d like to proceed with. If you’re applying with a cosigner, the application will ask for their personal and financial details too.
7. Provide supporting documents: The lender may require additional documents before it makes its loan decision. Fulfill requests quickly to avoid delaying the process.

Learn more: How to get a personal loan

FAQ

What are good loans for bad credit?

Secured and cosigned personal loans can be good options for bad credit. Both allow lenders to mitigate risk of nonpayment, which makes them more likely to approve your application and/or give you a lower rate. If you default, the bank can use the collateral on a secured loan to cover the debt; for cosigned loans, the cosigner is legally responsible for the debt if you don’t pay.

How to get a debt consolidation loan with bad credit?

You can get a debt consolidation loan with bad credit by seeking a lender with a low minimum credit score requirement and by securing the loan with collateral, such as your home. You should also consider a range of loan types, including personal loans and home equity loans, to consolidate debt.

How to get a loan fast with bad credit?

The best fast loans for bad credit may be small loans offered by your bank or credit union, since these are most likely to have reasonable APRs. For example, credit unions offer payday alternative loans that are designed for borrowers with bad credit who need same-day funds — APRs are capped at 28%. Another option is applying for an emergency personal loan with a lender that has a low minimum credit score requirement.

Related articles:

• Best debt consolidation loans
• Best personal loan rates
• Best installment loans for bad credit
• Best emergency loans for poor credit