Best Loans for Bad Credit of December 2024

Learn more about the best loans for bad credit

Upgrade: Best overall bad-credit loan

Why it made this list: Upgrade offers a superior personal loan compared to other lenders that target bad-credit borrowers. Wide ranges of loan amounts and repayment terms, as well as relatively low starting rates, make Upgrade ideal for most loan purposes. Some of Upgrade’s other perks, like rate discounts, extended repayment terms on home improvement loans and direct payment to creditors on debt consolidation loans are usually only available to borrowers with good or excellent credit, but the lender’s low minimum credit score requirement means those features are available to borrowers with bad to fair credit scores (300 to 689), too.

» MORE: NerdWallet’s review of Upgrade personal loans

• Recommended loan uses:

  • Debt consolidation.

  • Credit card refinancing.

  • Home improvement.

  • Emergencies.

Upstart: Best for thin credit

Why it made the list: Upstart is known for its alternative underwriting model, which it says makes a difference for consumers with fair and thin credit scores looking to get a personal loan. Unlike traditional banks, Upstart considers factors beyond credit score, including education and work experience, to determine whether a borrower qualifies. This lender also offers low starting rates, a secured loan option and flexible payments.

» MORE: NerdWallet’s review of Upstart personal loans

• Recommended loan uses:

  • Home improvement.

  • Emergencies.

  • Medical expenses.

  • Business expenses.

Universal Credit: Best for credit-building tools

Why it made the list: Universal Credit has one of the lowest minimum credit score requirements among bad-credit lenders but still provides loans up to $50,000. Because it’s owned by Upgrade, borrowers get access to many of Upgrade’s features, including free credit scores and a mobile app. Universal Credit offers direct payment to creditors on debt consolidation loans, which isn’t available from many bad-credit lenders.

» MORE: NerdWallet’s review of Universal Credit personal loans

• Recommended loan uses:

  • Debt consolidation.

  • Emergencies.

  • Medical expenses.

Avant: Best for fast funding

Why it made the list: At 550, Avant has the lowest minimum credit score requirement of the lenders that NerdWallet reviews and, unlike some other bad-credit lenders, starting rates are in the single digits. Repayment terms and loan amounts are typical compared to other bad-credit lenders, but Avant shines in its ability to approve and fund a loan the day after you apply.

» MORE: NerdWallet’s review of Avant personal loans

• Recommended loan uses:

  • Emergencies.

  • Credit card refinancing.

  • Medical expenses.

Best Egg: Best for secured loans

Why it made the list: Best Egg is a strong debt consolidation lender for borrowers in all credit bands, offering to directly pay your debts and providing fast funding. Its unique secured personal loan allows borrowers to use household fixtures, such as cabinets and vanities, as collateral. This lender provides free credit score access, so borrowers with low scores can monitor their score as they repay their loan.

» MORE: NerdWallet’s review of Best Egg personal loans

• Recommended loan uses:

  • Debt consolidation.

  • Home improvement.

  • Emergencies.

  • Business expenses.

Prosper: Best for joint loans

Why it made the list: Prosper offers a solid all-purpose loan, with loan amounts up to $50,000 and repayment terms up to five years. The lender’s joint loan offering means borrowers can add a co-applicant for a better chance at qualifying or getting a lower rate. With a minimum credit score requirement of 560, instant approval and a mobile app, Prosper’s personal loan may be a good deal for many different expenses.

» MORE: NerdWallet’s review of Prosper personal loans

• Recommended loan uses:

  • Home improvement.

  • Debt consolidation.

  • Business expenses.

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What are bad-credit loans?

A bad-credit personal loan is for borrowers with low credit scores (from about 550 to 630) or thin credit histories. Bad-credit loan amounts range from about $1,000 to $50,000 and annual percentage rates are capped at 36%.

Like all personal loans, bad-credit loans have fixed interest rates and are repaid in fixed monthly installments over a period of one to seven years. These loans typically aren’t backed by collateral — they're unsecured.

Though you may qualify for a personal loan with bad credit, your rate will likely be on the high end of a lender’s range, and your approved loan amount may be smaller than what you request.

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Bad-credit loan interest rates and fees

Current rates

The average pre-qualified personal loan rate for a bad-credit borrower was 20.28% in November 2024, according to aggregate, anonymized data from NerdWallet.

Common fees

One of the most common bad-credit loan fees is an origination fee, which is often 1% to 10% of the loan amount. The fee is included in your APR, but a lender may take it before sending you the funds, effectively reducing your loan amount, or add it to your monthly payment.

A two-year, $10,000 loan with a 20% interest rate and a 5% origination fee has an APR of 25.14%. If the lender takes the origination fee before sending you the loan, you’d receive $9,500 and the lender would keep $500.

Lenders also usually charge late payment and non-sufficient funds fees.

Calculate personal loan payments

Use this personal loan calculator to determine your monthly personal loan payment, based on the loan amount, rate and repayment term you enter. Refer to the data above if you aren’t sure what APR you’d get, and add an origination fee to see how it affects loan payments.

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Types of bad-credit loans

Bad-credit borrowers may qualify for multiple types of bad-credit loans, including co-signed, joint and secured loans.

• Unsecured personal loan

  An unsecured loan doesn’t require collateral. Instead, a lender determines whether you qualify based on factors like your credit score, income and cash flow.

  When to use an unsecured loan:

  • To make large purchases, debt consolidation and home improvement projects.

  • If you get a low rate.

• Secured personal loan

  A secured loan requires you to pledge collateral — usually a vehicle or bank account — to borrow money.

  When to use a secured loan:

  • The rate is lower than with an unsecured loan.

  • Pledging collateral is worth the risk.

• Co-signed personal loan

  A co-signed loan requires someone to vouch for your ability to repay the loan.

  When to use a co-signed loan:

  • The rate is lower than without the co-signer.

  • The co-signer understands the risk.

• Joint personal loan

  A joint loan is one you get with another person, meaning they share responsibility for payments and can access the funds.

  When to use a joint loan:

  • You get a lower rate than without a co-borrower.

  • You and the co-borrower need equal access to the funds.

• Home equity financing for bad credit

  Home equity loans and credit lines allow you to borrow money against the equity in your home. Home equity loans are fixed-rate, lump sum loans while HELOCs usually have variable rates and allow you to draw on the funds as you need them. Because they’re secured by your home, you risk losing your house if you default.

  When to use a HELOC or home equity loan:

  • For home improvement projects and repairs.

  • You have enough equity to borrow against.

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Bad-credit loan pros and cons

» MORE: Pros and cons of personal loans for bad credit

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Where to get a personal loan for bad credit

Online: Some online lenders offer personal loans specifically for bad-credit borrowers. These lenders may consider information beyond your credit and income to qualify you, though those are still major factors in a loan decision.

Credit unions: Credit unions rely more on traditional information like credit and income but may also consider your history as a member. A member in good standing may qualify for a personal loan from a credit union despite a low credit score.

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6 steps to get a personal loan for bad credit

Here are the steps to get a bad-credit personal loan:

1. Check your credit

Review your credit reports from the three major credit bureaus to ensure the information is accurate and up to date. Fixing errors on your report before applying may improve your chances of qualifying. You can get your credit reports for free on NerdWallet or at AnnualCreditReport.com.

2. Review your budget

Check your monthly income and expenses to see what you can comfortably afford to pay toward a personal loan each month. A missed loan payment can damage your credit score, so take this chance to determine how much you can commit to paying.

3. Check lenders’ borrowing requirements

Bad-credit lenders consider many factors on a loan application, including:

• Credit score: If a lender has a minimum credit score requirement, you’ll need at least that score, but ideally a higher one, to qualify.

• Debt-to-income ratio: This is the percentage of your monthly income that goes to debt payments. Lenders typically like to see that you can cover your monthly bills, including any other loan or credit card payments, and have money left over after your new personal loan payment.

• Co-applicant and collateral: If the lender offers a co-signed or secured loan, the person or item you add to the application becomes a factor in deciding whether you qualify.

4. Pre-qualify with multiple lenders

Many lenders let you pre-qualify online to preview potential loan offers without affecting your credit score. You provide some information about yourself, like your income, desired loan amount and loan purpose, and the lender does a soft credit pull to determine your potential loan rate, amount, repayment term and monthly payment. No two lenders have the same borrowing requirements, so it pays to pre-qualify with multiple lenders.

5. Submit an application

Once you’ve found the right lender, gather documents, including proof of income and employment, a government-issued ID and bank statements. Many lenders have online personal loan applications, but your local bank or credit union may require an in-person application. The lender will do a hard credit check when you apply, causing your score to temporarily drop by a few points. If approved for the loan, you can usually expect to receive funds within a few days.

6. Add the new loan payment to your budget

On-time loan payments can build your credit. Add loan payments to your monthly budget and set up autopay to avoid missing any.

» MORE: How to manage personal loan payments

Other tips to qualify for a bad-credit loan

Include all your income. Many lenders accept income from employment, alimony, retirement, child support and social security payments. Showing a lender that you have enough income to make the payments is crucial to approval, so be sure to include all sources of income when you apply.

Don’t ask for more than you need. Asking for a smaller loan won’t guarantee approval, but the larger your requested loan, the riskier it may look to a lender. Requesting a loan amount you can comfortably repay goes a long way with a lender.

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Bad-credit personal loan application checklist

Most lenders tend to request similar information, though the specific application requirements may vary. Gather your personal and financial information before applying to cut down on follow-up questions from the lender and get an approval answer faster.

Here’s what you usually need to apply for a personal loan with bad credit:

• Your annual income — including non-employment income — and proof, such as a paystub or proof of income letter for Social Security payments or disability benefits.

• Your most recent W-2 and tax return.

• An email address where the lender can reach you.

• A physical address in the United States.

• Your date of birth.

• The amount of your monthly mortgage or rent payment.

• Your Social Security number.

• The above information for a co-applicant if you’re applying for a joint or co-signed personal loan.

Double-check the information you entered on the application to avoid being denied due to inaccuracies.

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How to compare the best loans for bad credit

Annual percentage rate. A loan’s APR consists of the interest rate plus any fees and is one of the best ways to compare loan costs. The highest APR an affordable loan should have is 36%, according to most consumer advocates.

Legitimacy. Read online reviews from other borrowers, verify the lender’s state license and physical address to ensure the lender is providing fair, legal loans.

Monthly payments. Review your budget to determine what you can afford to pay toward a personal loan each month. That way, you can rule out lenders that only offer higher monthly payments.

Additional loan features. Some lenders offer perks like rate discounts, fast funding or the ability to change a payment due date. These loan features can help you choose between two or more competitive offers.

Compare APR range

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How to spot a bad-credit loan scam

The lenders on this page offer legitimate personal loans. Here are a few red flags to look out for when you're shopping for a personal loan for bad credit.

• No credit check or guaranteed approval. Reputable lenders dig into your finances, including your credit and income, to determine whether you can repay the loan. A lender that doesn't do this may charge exorbitant rates that could land you in a debt trap.

• No state license. The Federal Trade Commission requires lenders to register in states where they do business. Many lenders list state licenses on their websites.

• Asking for a gift card. No legitimate lender asks for a gift card in exchange for a loan. If you're asked to provide a gift card — even by someone who says they work for a popular lender — consider it a scam.

• No fee disclosures. The Truth in Lending Act requires lenders to disclose the loan's APR, total interest and total repayment amount before you sign a loan agreement. Ask to see this information before signing and walk away if the lender refuses.

» MORE: How to spot a personal loan scam

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Alternatives to personal loans for bad credit

A personal loan may not be the right option if you have bad credit. Even if you’re approved, you’ll likely pay a high APR. Consider these alternatives before borrowing.

Family loan

Borrow from a trusted friend or family member. It may help to have a plan for interest, repayment terms and payment frequency in mind when you ask for the loan. Then you and the lender can formalize the details in a family loan agreement.

Payment plans for bills

If you’re struggling to cover rent, utilities or credit card payments, consider asking for an extension or getting on a hardship program. Your credit card issuer, mortgage lender or utility company’s website may have an online application for hardship assistance, but you may have to ask a landlord directly.

Local financial assistance programs

For help meeting basic needs, consider a local food pantry, religious organization or nonprofit. Some organizations can provide food, clothing or bus tickets. NerdWallet’s database of local financial assistance programs lists resources in each state.

Medical bill assistance

Medical bill negotiators, medical credit cards or a payment plan with your provider may help take some of the stress and urgency out of paying a steep medical bill. These options may come with fees or interest, so compare medical bill payment options to find the most affordable one.

Buy now, pay later loan

“Buy now, pay later” is an at-checkout financing option that lets you split a purchase into smaller installments. It’s typically best for necessary purchases that will otherwise stretch your budget and if you have a plan to make the payments on time.

Cash advance app

A cash advance app gives you an advance up to a few hundred dollars and withdraws repayment — plus any tips and fees — on your next payday. These apps can help bridge a temporary income gap, but be sure you can cover regular expenses when the advance is taken from your next paycheck to avoid falling into a debt cycle.

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Frequently asked questions

• What lender offers the best loans for bad credit?

  Our picks for the best loans for bad credit are from these personal loan companies:

  • Upgrade: Best overall bad credit loan.

  • Upstart: Best for thin credit.

  • Universal Credit: Best for credit-building tools.

  • Avant: Best for fast funding.

  • Best Egg: Best for secured loans.

  • Prosper: Best for joint loans.

• What is the fastest way to get a loan with bad credit?

  The fastest way to get a loan with bad credit may be with an online lender. These lenders offer a fast pre-qualification and application process, and many can send loan funds the same or next day after approval.

• How can I borrow money quickly with bad credit?

  A bad credit score may not prevent you from getting a loan. Lenders like those listed here provide personal loans for borrowers with bad credit, however, you may not qualify if your score is below 500. In that case, consider alternatives such as family loans, payment plans with medical and utility providers, local financial assistance programs, cash advance apps and buy now, pay later plans.

• Can I get a loan with no credit check?

  Yes, but it may be risky. A no-credit-check lender provides a loan without reviewing your credit history. Instead, these lenders consider information like your bank account transactions, income and employment status. Because these lenders don’t conduct a credit check, making loans is riskier for them and they make up for that risk by charging sky-high interest rates.

  All of the lenders listed on this page check credit.

• How much can I borrow with bad credit?

  Bad-credit loans are generally from $1,000 to $50,000. Your loan amount depends on your credit, income, outstanding debts, the lender you choose and the type of loan you get.