Best Bad Credit Loans of April 2021

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Getting a Bad Credit Loan

Even with bad credit, getting a personal loan is still possible, without using payday loans.

Expensive medical, home or car emergencies can come up unexpectedly, and when these unexpected expenses happen, it can be difficult to find the money to pay the bills for the services you need. Only about half of Americans could afford to pay for a $1,000 emergency, while 1 in 4 Americans have no savings to rely on at all.

Luckily, getting personal loans with bad credit are an option you have to fund these emergency expenses — and personal loans can be a lifesaver when you have an unexpected bill or emergency come up and you don’t have the savings to cover it. If you have no credit history or a bad credit score, though, getting approved for a credit card or personal loan can be tough.

Fortunately, there are several lenders that offer loan rates for bad credit available nationwide, and in most cases, you can apply online and get approved in a matter of minutes.

Before you jump into a loan agreement, though, you need to make sure that the loans you’re considering have fair interest rates and terms. You can start by checking out the list of the best bad credit loans below.

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5 best bad credit loans rates of October 2020

  • OneMain Financial: Best for emergencies
  • Upgrade: Best for building credit
  • Avant: Best for high loan limits
  • OppLoans: Best alternative to payday loans
  • Rise Credit: Best for low amounts

OneMain Financial — Best for emergencies

OneMain Financial is one of the largest lenders of personal loans, and this lender can put the funds in your bank account on the same day. You can complete the process from start to finish online, and once you submit your application, it’s possible you’ll receive an answer in 10 minutes or less.

Once you’re approved, you can request same day funding on weekdays and opt to receive a check, which you can pick up at your OneMain Financial branch. Or, you can provide your bank details to request an electronic payment instead, which takes one to two business days to receive. To request an electronic payment, you’ll need to provide your bank account and routing numbers.

Aside from the speed of the application, approval and funding process, another perk to using OneMain Financial is that this lender has no minimum credit score requirement — your chances of getting approved for funding are high, regardless of past mistakes you may have made that negatively affected your credit score.

Upgrade — Best for building credit

Having no credit history can be just as bad as having poor credit. The credit bureaus review your payment history and the length of time you’ve had your open credit cards and other accounts to determine your creditworthiness. If you don’t have any payment history for them to review, it can be difficult to get a lender to approve you for a loan since they can’t weigh your likelihood of paying it back.

But how can you build credit if traditional lenders and credit card providers don’t give you a chance? That’s where Upgrade comes in. Upgrade is the best provider of loans for applicants who have little credit history or poor credit because the loan provider is willing to approve applicants with credit scores as low as 600 with a loan in many cases — and a loan from Upgrade will help you in your credit building process. Furthermore, Upgrade has a credit health mobile application to help borrowers monitor their credit scores and track the progress they’re making on credit-building.

Avant — Best for high loan limits

There are times when you need to borrow more than a couple of thousand dollars. Perhaps you’re trying to consolidate several debts with high interest rates, such as credit cards or personal loans, into one payment to simplify your life. Or, maybe you want to purchase a car and prefer to finance the purchase. Perhaps you need money to pay for an expensive medical procedure or need to make some pricey but essential home repairs.

Avant is the best choice in this case because the lender provides loans from $2,000 to $35,000 with rates from 9.95% to 35.99% — on par with many bad credit loan providers. These higher limit loans will make it easier to pay for those heftier expenses, and you might even be able to get a low interest rate on the money you borrow depending on your financial profile.

OppLoans — Best alternative to payday loans

If you’re in need of some cash to tide you over until your next payday, OppLoans should be on your shortlist of providers of loans for bad credit. When you’ve exhausted all your options and you have nowhere else to turn aside from a payday lender, OppLoans is likely to approve you, regardless of your credit score. The loans offered by OppLoans aren’t the cheapest, but if you’re in a real emergency, OppLoans is likely to provide you with better terms than payday loan providers would.

OppLoans will only provide you with a shorter-term loan, but interest rates on these loans are high, so you’ll want to pay down your loan as quickly as possible. There’s no need to be embarrassed or worried about your credit history when you’re applying for a loan — OppLoans doesn’t check your credit.

You will need to prove you have steady employment, though, by providing your last few paystubs. If you can’t borrow from friends or family and other lenders have denied you, check with OppLoans. Remember, though, that these loans are only a good option if you’re able to pay the money back quickly to save on those high interest charges. You can get a loan for as little as $500 from OppLoans and can borrow up to $4,000, at APRs ranging from 99% up to a whopping $199%.

RISE Credit — Best for low amounts

RISE Credit is a good option when you need some emergency cash fast as long as you only need to borrow a small amount of money – since RISE Credit only lends up to $5,000. It’s the most expensive borrowing option before heading to a payday lender, as the interest rates for these loans can go up to 299%.

The upside is that your chances of qualifying for a small loan with RISE Credit are high due to how RISE qualifies its customer’s creditworthiness. The loan provider has its own system that examines income, bank account information and credit history to assign customers a RISE credit score, which will determine how much the provider is willing to lend.

Once you’re approved, you can choose an amount and the length you’ll need to pay back the loan — terms range from 4 to 26 months. Once you’re approved and the paperwork is done, you’ll receive your funds as soon as the next business day.

Compare the 5 best bad credit loans of October 2020

LenderLoan AmountAPRTermsKey Benefit
OneMain Financial$1,500 – $20,00018% – 35.99%24 – 60 monthsGet a decision in as little as 10 minutes
Upgrade$1,000 – $35,0007.99% – 35.97%36 – 60 monthsImprove credit as you repay
$2,000 – $35,0009.95% – 35.99%24 – 60 monthsConsolidate large debt
$500 – $4,00099% – 199%Up to 36 monthsHigh chance of approval
Rise Credit $500 – $5,00050% – 299%4 – 26 monthsBest for low amounts

Rates updated as of 10/4/2020

Can I get a loan with bad credit?

You can get a loan with bad credit from the lenders that are willing to work with you. If you have bad credit, some lenders look at other factors to make a decision on whether they’re willing to lend you money. You’ll probably need to show your income and banking history in place of your poor credit history to qualify. Keep in mind that the cost of a loan is usually related to how much risk you may be to the lender. Bad credit loans are often more expensive than a regular loan, so make sure you’re able to pay off the loan as quickly as possible to avoid getting into further financial trouble.

How do you know if you fall in the bad credit range?

Experian is one of the major credit reporting agencies. Like the other credit agencies, they use a credit scale to classify consumers. Refer to Experian’s credit score range to know where you stand:

Excellent800 – 850
Very Good740 – 799
Good670 – 739
Fair580 – 669
Poor 300 – 579

How to improve your credit to get a better loan? 

The higher your credit score, the better terms you may receive for your loan. Don’t be discouraged if you fall into the poor or fair credit score category — there are some steps you could take to improve and build your credit:

Step 1: Dispute inaccuracies 

Order your free credit report and check it for errors. Mistakes happen — if you find a company has reported you for late payments or for a loan you never applied for, you can dispute the hit on your credit file. The credit bureau will investigate the error and remove it if it doesn’t belong to you.

Step 2: Keep paying your bills on time

Make sure you’re paying your bills on time to ensure you don’t get reported to the credit bureaus. If you’re having trouble making your payments on time, contact your creditors to ask for an extension or a reduction on the payment due so you can continue making your payments on time. 

Step 3: Lower your credit utilization ratio

If you have any credit cards, make sure that you keep the month-to-month balance lower than 30% of your total credit line. Credit reporting bureaus tend to reward accounts that keep a credit utilization ratio below this 30% threshold. For example, if you have a credit card with a $10,000 limit, don’t spend over $3,000 on that card or allow the month-to-month balance to exceed that. 

Reasons to take out a loan while having bad credit

Even people with bad credit need to take out a loan sometimes. Here are some reasons you may need loans for poor credit: 

  • Debt consolidation
  • Home Improvement
  • Moving Expenses
  • Buying a car

Is now a good time to take out a loan? 

  • It can be a little tricky to know the best time to take out a loan. You’ll want the lowest interest rate you can get so your payments are reasonable. You won’t want the extra burden of a loan if your job is uncertain or you’ve recently become unemployed. 
  • If you’ve taken on other debt recently, it’s a good bet that another loan will only add to your troubles. Likewise, if you’ve recently changed jobs, your income has taken a hit or you’ve had an unexpected emergency, it’s probably not the time to incur added debt. 
  • If you’ve just gotten a raise, your job is secure, you don’t have much debt and you’ve socked away an emergency fund, taking out a loan now can help with remodeling your home, making a downpayment on a new home, consolidating debt, paying for your wedding and many other things. 
  • Bottom line? Take out a loan if you feel you can comfortably pay it back on time and have a back-up emergency account in case of an unexpected emergency. 

Do I need collateral to get a bad credit loan?

Whether you need to put up collateral to get a bad credit loan depends on the type of loan you decide to go with. You’ll have the choice of either secured or unsecured. 

A secured loan will require collateral in case you default on your payments. This can take the form of your house, your car, or some other high-value asset you own.

An unsecured loan, on the other hand, does not require collateral, but your approval will be heavily dependent on your credit score. If you have bad credit, you could have a challenging time getting this type of loan as opposed to a secured loan, which is easier to get approved for with a bad credit score. 

Don’t let the collateral aspect scare you away from a secured loan, though. It’s not necessarily a bad thing. With collateral in place, a secured loan can offer better rates, terms, and higher loan limits in some cases since you’re more incentivized to pay back the loan on time.

Can you get a loan if you’re unemployed? 

Employment is one of the many important factors lenders take into account when you apply for a loan. If you’re unemployed, getting a loan can be challenging — but it may not be impossible. If you’re unemployed and in need of a loan, you’ll have to show a high credit score and a source of income such as child support or social security checks to have a shot at being approved. If you don’t have either of those, securing a loan may prove even more challenging.

Is there a risk in bad credit loans?

When you take out a loan there is always some level of risk involved — whether you have bad credit or not. However, if you take out a bad credit loan, the risks can be a bit more steep. Beware of scammers and predatory lenders in particular. 

Predatory lenders specifically go after those who have a hard time getting loans, so it’s best to always do research on a lender offering bad credit loans. Those taking out bad credit loans should also be aware that if they default on a loan, the lender can seize your collateral. This can result in an even bigger toll on your credit score, so be sure you’re in a stable position to pay off any loan you take out.

Super high interest rates are another risk. If your credit score is very bad, you may be offered a loan with a sky-high interest rate — which can sometimes be as high as 200% or 300%. Unless you’re in dire need of cash, you may want to steer clear of those loans. They’ll be tough to pay off, and there’s a lot at risk if you can’t. 

The final word 

Personal loans can help pay for things when you don’t have the funds readily available in your bank account. They are typically paid back in monthly installments over a set period of time. Applications for personal loans are usually subject to credit approval, but some companies will offer loans at higher interest rates to people with little or no credit.

There are steps you can take to improve your credit prior that will make it easier to get a loan with bad credit. If you’re not sure when to take out a loan, take a look at your current finances and only apply if you’re certain you can make the payments. Otherwise, your credit will suffer.