Personal Loans - Bad Credit Score
Yes – you can get a loan with a bad credit score, thanks to the existence of personal loans for bad credit score.
These loan products, though don’t come with the best terms or interest rates, can bail you out during a financial mess. At least get you back to your feet. We will discuss everything you need to know to get you started.
Let’s start with some of the best bad credit score personal lenders;
- Rep APR
- Amount
- Credit Score
LendingClub
- 10.68%-35.89%
- $1,000 - $40,000
- 580+
OneMain Financial
- 18.00%-35.99%
- $1,500 - $20,000
- 580+
Avant
- 9.95%-35.99%
- $2,000 - $35,000
- 600+
- APR range
- Fees
- Terms
- Amounth
- Unemployment protection
Bank 1
- 6.95%–35.89%
- Up to 5% transfer fee
- 3–5 years
- $1,000–$40,000
- No
Bank 2
- 6.95%–35.89%
- Up to 5% transfer fee
- 3–5 years
- $1,000–$40,000
- No
Bank 3
- 6.95%–35.89%
- Up to 5% transfer fee
- 3–5 years
- $1,000–$40,000
- No
Table of Contents
What does it mean to have a Bad Credit Score?
FICO has a scoring system – the FICO credit scoring system – that ranges credit scores from 300 to 850.
Basically, a credit score below 580 is considered a bad credit score.
Individuals falling in this category have damaged their credit profiles by making late loan repayments, late bill payments, and messed up credit card balances.
These borrowers don’t easily qualify for loans with most lenders. They might also experience problems renting an apartment or purchasing a home.
For the few lenders who may offer them loans, they’ll ask for higher interests. Such loans will also attract higher loan charges and shorter repayment terms.
580 or least is considered a Bad Credit Score
Can I get a Personal Loan with a Bad Credit Score?
Yes. The above lenders offer personal loans for bad credit scores.
All of them only consider borrowers with credit scores above 580. Their loans are mostly short-term.
They also tend to charge higher interest rates and other loan charges due to the increased lender risk.
Shop around for, and approach lenders with lower interest rates and better loan terms. Maintaining a good standing with a lender will give you an upper hand.
Alternatively, you can choose to use your car, boat, house, or any other valuable property as security for your loan. Collateral reduces the lender risk, hence compelling them to offer you loans at better terms.
Requirements to Qualify
Different lenders have different requirements to offer you a bad credit score personal loan.
You’ll first need to prove you’re aged 18 years and above. You’ll also need to prove you’re a legal resident of the United States.
You may also need to show proof of income. For those employed, such things as the employer contact information, W2 forms, and payslips will come in handy.
Those who are self-employed can use their two-years’ tax returns.
The idea here is to prove to the lender that you’re able to repay the loan if offered. You also want to demonstrate your level of need to compel the lender to offer you a loan.
To have a good standing with most lenders, strive to pay your existing loans.
What do you need to know about personal loans?
If you’re looking to take bad credit score personal loans, here are some of the things you should keep in mind;
- Loan usage – Bad credit loans are flexible. You can use them to pay such bills as rent, buy households, pay for your education, or sponsor a vacation. How to use the loan lies entirely in the hands of the borrower
- Interests – Personal loans for bad credit scores generally attract higher interest compared to other loan products. Lenders view them as risky. There’s no assurance that the borrower will repay the loan.
- Loan terms – Most bad credit score loans are short-term. You’ll, therefore, have a shorter period to repay your loan. That also implies that the monthly repayment amounts are fairly high
- Collateral – the lenders above also offer secured personal bad credit loans. offering security for your loan makes you a less risky borrower to the lender. Therefore, you’ll likely get better loan terms, lower interests, and higher loan limits.
- Guarantor – most lenders will allow having someone guarantee your loan. They accept to take responsibility should you fail to repay your loan. Alternatively, you can also choose to get a co-signer with a stellar credit profile. Such open chances for higher loan limits and better loan terms.
Types of personal loans you can get with bad credit
With bad credit, the first loan products that come to mind are personal secured and unsecured loans. If you don’t qualify for these, here other bad credit loan alternatives;
Payday loans
These are short-term loans. You can borrow from $500 to $1000, and more depending on your income stability.
Lenders here don’t check your credit score. They’ll mostly use your bank account information to reach a decision. Therefore, it’s easy to get approved for these loans.
Consider that payday loan lenders charge high-interest rates of up to 400% and even higher loan charges.
That makes them dangerous as they could lead you into a deep debt cycle.
Shop around for loans with better terms. Do thorough research on the lender you intend to borrow from.
Bank agreements
Banks can make arrangements to offer their customers short-term loans and overdrafts.
Such depends on the relationship a customer has with the bank. Those with a good standing and an impressive history of timely loan repayments with active accounts can enjoy such products.
However, since they are not official policies, bank agreements aren’t reliable when it comes to borrowing money.
If interested, approach your bank for information regarding the same.
Home equity loans
With equity personal loans, you’ll receive your loan amount upfront in a lump sum. You’ll then be making monthly repayments, just like in normal personal loans.
However, for these, you’ll use your home as collateral. That makes it risky for the borrower. Should you breach your agreement with the lender, they’ll have a right to possess your home.
Home equity loans are closely related to secured loans. They attract some of the lowest interest rates.
Since lenders consider them as low-risk, you can easily qualify for them.
These loans are most suited for such large cash requirements as home improvement projects and debt consolidation.
Consider that payday loan lenders charge high-interest rates of up to 400% and even higher loan charges.
How much can you Borrow?
You can borrow from $1,000 to $40,000 with our chosen lenders.
Some states dictate the minimums and maximums lenders can offer.
That said, how much you can borrow depends on the lender’s evaluation of what type of a borrower you are, basically if you can be trusted with repayment of the loan.
Larger loan amounts are reserved for lenders with excellent credit scores. They pay their loans on time and have a good standing with lenders.
Another way to crack higher limits if you have a bad credit score is by getting a co-signer with a stellar credit score.
You can also get larger loans if you attach collateral.
You’ll save yourself some points by applying for prequalification to see beforehand how much you qualify for with different lenders.
However, qualifying for a certain loan amount doesn’t mean you have to take it. Only borrow what you can afford to repay.
Also, only go for loans when you’ve exhausted other means of raising like family and friends.
Tips for choosing a bad credit score lender
Check out for the following when vetting a bad credit score personal loan lender;
- Loan requirements – these are crucial since they are what the lender uses to determine whether or not you qualify for a loan. Look out for such requirements as credit scores, income-to-debt ratio, and income levels. This information is often available on the lender website. Ensure you’re comfortable with all the eligibility requirements.
- Interest rates and other loan charges – this is crucial in determining whether or not you’ll afford a loan product. This will mostly be reflected on the loan APR. Lenders calculate interest rates differently. Shop around for lenders charging lower rates.
- Repayment terms – lenders set repayment terms depending on such factors like the loan product and your standing with the lender. A short repayment period means lower interest rates while a longer repayment period means higher interests. Look for lenders with friendly repayment terms for maximum convenience.
- The type of lender – Banks, credit unions, and online lenders all offer personal loans for bad credit scores. Credit unions are generally lenient and have favorable terms. Online lenders boast convenience and low-interest rates.
How to boost your bad credit score
- Make timely repayment of your loans – repaying your loans will have lenders regularly updating your credit profile which positively affects your credit score
- Avoid opening too many credit cards at once – it costs you some points off your credit score every time a lender does a hard credit check on you before issuing you a credit card loan
- Fix errors on your credit reports – regularly ask different agencies for your credit reports and ascertain them. Notify the respective agency immediately you identify any errors on your report
- Make timely payments for your bills – this will paint you as a reliable and responsible borrower to different lenders
Frequently Asked Questions (FAQ)
They are loans meant for borrowers with credit scores less than 600.
Yes, personal loans for bad credit scores are meant for borrowers with a credit score generally less than 600.
Our selected top lenders have loan products from $1000 to $40,000.
Repay your bills and existing loans on time, correct errors on your credit reports, and avoid opening too many credit cards.
Disbursement period differs from one lender to another. However, most take 24 hours.
How CD rates are calculated?
An invested sum in CDs compounds over time. This means that when a CD earns interest rates, it is calculated based on the initial principal and all accumulated interest, or another term for it is interest-on-interest. Compared to bonds, an intrinsically related investment vehicle, CDs may offer you superior returns over time, mostly since a bond’s interest or coupon rate is derived only from the principal.
This is the formula for you to calculate CD rates:
Final Amount = Principal (1+Rate) Term
Using the formula above, your $5,000 investment with a 5% rate would turn into $6,381 after five years. But if you invest the same amount in a bond with an equal rate, it would be $131 short.
CD: $6,381 = $5,000 (1 + 0.05)5
Bond: $6,250 = $5000 + ($5,000 x 0.05 x 5)
