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How to Get a Loan With Bad Credit

Before lending you money, financial institutions usually check your credit rating. They can tell you how well you can manage your finances, whether you pay back your loans on time, and whether you are a reliable borrower.

If you have a high FICO score, your chances of borrowing money are excellent, as you can apply to almost any bank and get a loan. But what if you have a low credit score, below 629 FICO points? Most likely, banks will turn you down, but there are many financial institutions and apps like instant loan apps where you can borrow money on favorable terms. We’ll tell you more about them in this article.

Top Bad Credit Loan Companies

Hundreds of companies are willing to lend money to borrowers with low FICO scores, but you must be careful not to fall for bad credit loan scams. Our team has analyzed dozens of offers in the financial market and found five reputable companies that lend money on favorable terms to people with a FICO score above 550-600 points and, in some cases, even lower.

Lending Club

If you need from 1500 loan to 40 000 dollar loan, you can turn to LendingClub. Here you can get money for 3 or 5 years at 5.66%-35.89% interest.

Loan terms are as follows:

Of the disadvantages of this organization, users highlight only the lack of a mobile application and many additional fees. At the same time, borrowers point out the advantages of the lack of a hard credit check and the opportunity to change the payment date.

Overall, this is one of the best options for those who want to take a small personal loan or borrow a large amount with a co-signer.

Penfed Credit Union

One of the oldest credit unions in the U.S. has over 2 million members and accessible terms and conditions for joining. This is the best option for you if you want to get a bad credit personal loan or home equity loans at a low interest rate.

To get into Penfed, you must open a savings account with them and put a small amount of $5 or more on it. After that, you can get a personal loan with no origination fees for 1-5 years ranging from $500 to $50,000.

Of course, the main advantage of this option is the low APR of 5.99%-17.99% and minimum credit score of 600 FICO points. However, it also has a few downsides – no joint application possibility and late fees of $20-$25.

Generally, this is a great option compared to online lenders who lend money at 35% APR.


This online platform helps 95% of applicants get unsecured personal loans. If your score exceeds 600 FICO points, your credit history is over two years old, and you have not had a bankruptcy, you can get $1,000-$50,000 for 3 or 5 years in one business day.

Among Upstart’s minuses, the main ones are the ban on bad credit loans with a co-signer, hefty origination (0%-8%) and late fees (5%). On the other hand, the APR of the platform is standard and does not exceed the limits set by law – the maximum rate is 35.99%.

To qualify for the loan, you must be over 18, have an income of 12,000 or more per year, and reside in the United States. In addition, you will have to provide your bank account and Social Security number when filling out the application.

Upstart is an excellent option for those who need a small amount to cover urgent expenses. If you lose your job or are in financial hardship, you can put your payments on hold through the hardship program.


Payoff is an excellent low-cost personal loan option for those who want to do debt consolidation. But unfortunately, this is also the main disadvantage of this lender because debt consolidation is the only permitted purpose of the credit.

Payoff personal loan terms are as follows:

If you want to pay off old credit and take out a new one on better terms, you should choose Payoff. Note that joint applications with a co-signer are prohibited for debt consolidation loans.


This company offers unsecured personal loans ranging from $1,000 to $50,000 at 5.94%-35.97% APR. It only takes one business day to get the money, and you can repay the personal loan over the next three or five years.

Unlike the previous company, Upgrade allows you to apply with a co-signer and lends money to borrowers with a FICO score of 560 points. In addition, there is no minimum income requirement, but your cash flow must be about $1,000 per month.

Note that origination fees are included in the personal loan amount and are pretty high – from 2.9% to 8%. In addition, Upgrade removes a late fee of $10, but it can be the best option for those with low credit scores.

What Is a Bad Credit Score?

As you know, credit use history is significant to all Americans. You can easily borrow money from a bank at a low interest rate if you have a high credit score. At the same time, studies by financial experts show that people with bad credit scores (less than 580 FICO points) were delinquent on their loans 61 percent of the time.

Your credit score is affected by the following indicators:

Because your credit score combines so much information, lenders are more likely to look at it, not just your income.

Types of Loans You Can Apply for with Bad Credit

There are many credit options for those with a low FICO score. However, it is worth noting that they are all less favorable than the options available to people with good credit.

Since a person with a low FICO score is not considered a reliable borrower, lenders try to cover their risks and only lend against property at a higher interest rate or for a shorter term.

Secured Loans

You secure the loan if you provide your property (a car, an apartment, or an investment account). This is the most popular way to borrow money for those with no credit use history or bad credit.

The pros of this option are as follows:

At the same time, it is crucial to understand that the main disadvantage of this kind of borrowing is that you may lose your assets. If you fail to repay the loan, the financial institution will take possession of your property.

In addition, very often, the amount of your credit is determined by the amount and value of your assets. So, for example, if your car is worth $10,000, you may only be able to borrow $5,000 or less. It is also essential to remember that the process may take several weeks, rather than one or two days, like with unsecured bad credit loans, because the financial institution has to evaluate your assets.

A secured loan may be your option only if you do not have any other variants because it is risky.

Guarantor Loans

People just starting to build their credit use history often take advantage of the help of family or friends, who act as guarantors for these kinds of personal loans. How does it work?

You submit a joint application to a bank or credit union, giving all the information about yourself and your guarantor (they must have a high credit score). If you cannot repay the loan, your co-signer will have to do it for you. The most considerable risk in this situation is losing a loved one amidst financial difficulties.

The pros of this type of borrowing are as follows:

As we said before, the main disadvantage of this option is that you can worsen your relationship with a loved one if you fail to pay back the money on time. In addition, these loans for bad credit come with higher rates than regular ones, so think carefully about whether you need this particular method of borrowing.

Personal Loans

This is the most popular type of loan, which is paid back in fixed payments over 1 to 10 years. There are a lot of types of personal loans, for example, student loans, title loans, etc. You can borrow money for almost anything, from buying a car to paying medical bills, but should you know about this type of borrowing?

At the same time, personal loans have disadvantages. For example, if you have bad credit, you can only borrow money at high interest rates of up to 36 percent APR. In addition, these loans often come with extra fees and penalties, which can make them much harder to pay back.

All in all, it is a good option. The main thing is to analyze as many options as possible and find the most favorable conditions for yourself.

What to Consider When Taking Out a Loan With Bad Credit

Before you take out a loan, you should consider the following points:

If you aren’t pressed for time, you might try saving the same amount from your salary for a month or two to see if you can afford it.

If you don’t have a Plan B and C in case you lose your job or temporarily lose your ability to pay back the loan, you may find yourself in a situation where fees and penalties will drive you into debt.

Carefully calculate how much money you need so you don’t seek another loan.

Remember that you should always try to keep your score as high as possible so banks can lend you money on good terms in an emergency.

How to Get a Loan With Bad Credit

To get credit funds into your bank account in as little as 1-3 days, use the following plan:

1.Check your FICO score.

This will help you avoid losing points due to credit checks and understand which financial institutions you can apply to.

2.Calculate how much you need.

Be sure to budget an extra 15% of your needed amount in case unexpected expenses arise.

3.Find a few options that work best for you.

To do this, you can apply on several lender sites to see the final terms available.

4.If you want an immense amount, add a co-signer.

Gather all the information about your guarantor, including proof of identity, residency, and income level.

5.Submit your final application and sign the contract if all the terms are right for you.

From now on, you are officially a borrower; your main task is to repay the loan on time. Make a repayment plan and stick to it to not ruin your relationship with your guarantor and not lower your FICO score.

Why Improve Your Credit Score

Your score is the primary indicator lenders use when deciding whether to give you money. The higher your score, the better your chances of getting a loan on favorable terms.

You could save thousands of dollars in fees and APRs if you take six months or more to increase your FICO points. In addition, the process is uncomplicated and does not require the intervention of financial experts.

For example, you can download your credit report for free today and see what marks are on it. Next, you can set reminders on your phone, so you don’t miss your monthly loan payments or pay off one of your loans to see a significant improvement in your FICO score soon.


  • What is the lowest credit score for a loan?

The lender always sets the minimum threshold, so you may see loans for those with less than a 610 score and a 540 FICO score. But, of course, the higher your score, the better your chances of getting a loan on the best terms.

  • Is it possible to get a loan with bad credit?

Hundreds of investors are willing to lend money to people with a minimum credit score of 550 points and below. But remember, they are trying to protect themselves as much as possible so they can offer you secured loans, unfavorable APRs, or short repayment terms.

  • Where can I get a loan with the worst credit?

You can use various apps that connect investors and borrowers if you have a bad credit score. They usually do not conduct credit checks and help 95% of applicants to get money by taking installment payday loans. However, remember that the lower your score, the worse the loan terms will be.

  • Can I get a loan with a credit score below 500?

You can get a loan with any FICO score because plenty of financial institutions on the market do not conduct credit checks. However, remember that it will most likely be a payday loan with a very high APR and a short repayment period or a secured loan requiring you to pledge property as collateral.

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