Bad credit. Anyone who has it knows how tough it can be on their financial situation. Whether you’re looking for an affordable apartment, applying for a credit card, or trying to secure a personal loan of any amount big or small, it’s that ever present albatross around your neck painting a sad portrait of your financial history. If your credit score is poor then you’re probably used to hearing the words “no” or “not approved” or “you’re kidding, right?” on a somewhat routine basis and you’re probably getting pretty sick of it by now.
Chances are you may even think you’ve exhausted all of your options in finding a lender who will understand that your credit score doesn’t tell the whole story. Well think again, as we’re going to talk about the surprisingly lengthy list of alternatives that exist for individuals who are struggling with different FICO ranges. For these consumers, there are a number of lending choices that cater to people who are working to get their credit scores back up or have too little established in order to obtain a reasonable loan from a reputable source.
Credit Scores
As you know, the score can be your best friend or worst enemy in situations in which a lender is making a decision to take a monetary risk on you with a new loan. A score of 630 or below is an indicator of bad credit. Even lenders who are more forgiving with their approval requirements for credit are going to want it as high as possible, so if you’re rolling with a number in the 600’s you have more options than if it were in the 500’s, which is the absolute rock bottom where lenders are concerned.
Anything under 580 is going to get you rejected by lending houses that are already making concessions that no bank or other mainstream financial institution would even think of affording you. Therefore, even though you’re walking into this transaction acknowledging your poor credit, you still have to maintain at least a respectable score.
Of course, the quickest way to avoid getting denied a loan at a better rate than you’re going to get from many of these permissive lenders is to hold off on applying for a personal loan until you can clean up your credit report. Bumping your number up to the high 600’s or low 700’s will do wonders for your worthiness with lending companies and even the banks might consider approving your loan application.
A Word of Warning
Before you read on, stop and ask yourself one simple question: Why is your credit score so low? Is it the result of hardships that came from unexpected medical expenses, a divorce that impacted your finances, or getting caught in the housing crisis? Did you take a hit from some other dramatic unforeseen life change and you’re trying to dig yourself out of the hole? If so, then these loans are something you might seriously consider.
However, if you are in an economic bind through irresponsible fiscal management, a lack of reliable employment, and poor budgeting practices, then you might want to refrain from applying for a personal loan at this point in time. Securing one of these loans is going to require you to make routine payments on time at higher rates than other applicants with better credit might normally receive.
Getting a loan can prove even more detrimental to your current situation and continue the vicious cycle of debt in which you are presently entrenched. But individuals who are well-prepared to accept the responsibility of taking out a personal loan and paying it back on time will find that this can be a very important step towards raising a less than exemplary credit score.
So now, without further ado, let’s check out your options and get you back on the road to good credit!
Poor Credit Score Lenders
You could scour the Internet and find a dearth of lenders who are willing to work with your lousy credit score. But the difference between them lies with whether or not they’re circling your credit situation as a hungry predator just looking to yank large sums of money out of your pocket for just lending you a few hundred bucks. There are plenty of predatory loan companies that are happy to offer you a capped dollar amount with a rate that could be two to three times the amount you’re borrowing. You’d have better luck with the local loan shark on a street corner.
So we’ve done the research for you and identified trustworthy companies that are willing to help you with a personal loan without cleaning out your bank account to the tune of hundreds, even thousands more than you needed to borrow in the first place.
Avant
This Chicago-based company is the best of the bunch when it comes to getting an unsecured personal loan with the most flexibility for low credit scores. Avant targets borrowers with a wide array of scores, from as low as 580 to as high as 700. That low end score is the lowest you’re going to find with any lender of this sort – they won’t work with you if it falls short of that number.
There are other great benefits of choosing Avant such as no origination fees, a higher borrowing limit of $35,000, flexible repayment schedules that can extend to as long as five year terms and no minimum requirements for annual income or debt to income ratio. They also offer flexibility with respect to late payments, in that they will charge you a late fee of $25 if you miss the due date. But make three consecutive payments on time after that and they will reimburse you that $25 fee. It’s little things like this which make Avant a strong choice.
Their APR’s, however, are commensurate with a lender taking a chance on high-risk borrowers, with rates for well-qualified applicants starting at 9.95% (which is already much higher than other lenders) and ballooning up to 36% for less-qualified borrowers with much lower scores. What’s most reassuring about Avant is their A+ rating with the Better Business Bureau.
Minimum credit score: 580
APR: 9.95% to 36% fixed
Loan Amount Range: $1,000 to $35,000
Terms: 2 to 5 years
When You Can Expect Your Money: Next business day to one week later
Fees: $0 origination fees on unsecured loans. $25 late fee. $15 unsuccessful payment fee.
OneMain Financial
You could say this lender is the closest thing you’ll get to the banking experience because of the near 1,100 locations that you can walk into and apply for a personal loan. Much like a big banking chain, you can also apply for your loan online. However, you prefer to do it, you’ll be expected to meet their requirements for approval which begins with a hard credit check. This may not be ideal for all consumers as it delves a bit deeper than a soft credit check and may therefore adversely affect your score.
The company understands this can be a problem for prospective applicants and they are looking to change this to a pre-qualification situation which would mean only a soft check. You’re not up against a minimum credit score unlike most other lenders but you will need to contend with other stipulations such as demonstrating a minimum annual income of $20,400 and a debt to income ratio that proves you’ll be able to pay back the loan on time.
Their APR’s are higher than you’ll find at Avant even if you’re well-qualified to borrow at the lowest rate and you can take up to five years to pay the loan back in full. OneMain does offer an interesting feature in their Rewards Program which awards points to borrowers who pay on time, go paperless, and check their scores on a regular basis. Those points can be cashed in to receive gift cards and movie tickets
Minimum credit score: No Minimum Score (but you must meet minimum income requirement)
APR: 12.99% to 35.99% fixed
Loan Amount Range: $1,500 to $25,000
Terms: 3 to 5 years
When You Can Expect Your Money: Same day to three business days later
Fees: Vary by state with respect to origination and late fees.
Lending Point
The newest company on the poor credit lender block, Lending Point has a small footprint in just 13 states throughout the United States. They offer loans to qualified borrowers who meet minimum requirements of a 600 credit score and $20,000 minimum annual income.
But if you think that’s the extent of it, then hold on because the underwriters at Lending Point take a veritable laundry list of factors into consideration when they’re deciding to say yes or no to your loan application. In addition to your score and income, they take your credit history, credit delinquencies, credit card debt, employment status, and they’re looking for a debt to income ratio of less than 45%.
They report to all the credit bureaus, so if your loan is approved you can use it to reclaim a positive credit score through paying the loan back on time. One major caveat with this lender is the fact that their starting APR is 17.46% which is pretty astronomical for those borrowers who are qualified to receive that rate. There is an origination fee which can be paid up front or factored into the monthly payments that may be submitted once or twice a month at the discretion of the borrower.
Another plus with Lending Point is the customer service “Point Person” who is there to walk new borrowers through every step of the process and continues to provide assistance throughout the full term of the loan.
Minimum credit score: 600
APR: 17.46% to 35.99% fixed
Loan Amount Range: $3,500 to $20,000
Terms: 2 to 3 years
When You Can Expect Your Money: Next business day
Fees: 5% origination fee based on loan amount. $30 late fee.
Peerform
Offering one of the best low APR’s among any on our list, Peerform is a peer to peer lender that works as a sort of matchmaking service that connects prospective borrowers with investors looking to lend money out. The company analyzes every applicant with a similar vetting process as the other lenders by setting minimum credit standards that every potential borrower must meet and then receive a soft credit check before being subjected to a more invasive version down the line.
Every applicant is given a letter grade based on their particular statistics and those letter grades are used by loan investors to decide whether or not to fund their loan request. They are posted on the Peerform website for investors to view at anytime.
You may be wondering what requirements and statistics are factored into the letter grade. For starters, the minimum credit score they will even consider is 600. Each applicant must have at least one full year of credit history and a debt to income ratio at 40% or lower. But there is no minimum income requirement and, best of all, well-qualified borrowers can enjoy a low 7.12% fixed APR on that loan which lasts for a term of three years and you won’t have any prepayment penalties to deal with either if you pay it off early.
Late payments come with a 15-day grace period before you get whacked for the extra fee which comes in handy in case you’re facing such a problem. There is no flexibility with due dates here, so the 15-day grace period can be a big help but don’t be late too often as it won’t help improve your credit score.
Minimum credit score: 600
APR: 7.12% to 29.99% fixed
Loan Amount Range: $1,000 to $25,000
Terms: 3 years
When You Can Expect Your Money: Five business days to two weeks later
Fees: 1% – 5% origination fee based on loan amount. 5% or $15 late fee. $15 unsuccessful payment fee
Upstart
This lender takes more into consideration than just your credit score when deciding on acceptance or denial of your loan application. But it may not be what you expect. Sure, they check into your credit history and do the standard diligence as the rest of the lenders on our list, however, if you are a recent college graduate who had a high GPA and did well on your SAT’s then they will consider that part of your background as well. They do have a minimum credit score requirement of 640 without a minimum income or credit history requirement. Upstart doesn’t lend to their customers directly but instead puts borrowers in touch with investors for an origination fee. One of the big positives to going with Upstart is the low 4.66% APR for qualified applicants.
Minimum credit score: 640
APR: 4.66% to 29.99% fixed
Loan Amount Range: $1,000 to $50,000
Terms: 3 to 5 years
When You Can Expect Your Money: Next business day with a 3-day waiting period on some loans
Fees: 1 – 6% origination fee based on loan amount. $15 or 5% late fee.
Pave
This New York based lending company takes a different approach to their lending practices by giving out personal loans to younger borrowers with little to no credit. They still analyze every potential applicant through the standard credit history vetting processes, but they also factor in the reason why you’re borrowing the money from them.
It’s not meant to place limitations or dictate how the money should be spent once it’s handed over, but for those borrowers who use the money to further their education, enroll in courses, pay down credit card debt, move for a new job, or pretty much anything that is intended to improve their life and their future earnings potential, that also comes into play when the company is weighing their options for approval. If you’re using it for education, they will assess the courses you’re planning to take and that could greatly reduce your interest rate and your monthly payment as well.
Minimum credit score: 660
APR: 6% to 26.26% fixed
Loan Amount Range: $3,000 to $25,000
Terms: 2 to 3 years
When You Can Expect Your Money: A few business days
Fees: 1 – 6% origination fee based on loan amount. $15 or 5% of past due late fee.
Vouch
Taking a loan out from a bank or getting a financing company to extend you a car loan can be very tough without good credit. The first thing many people ask these institutions is if they will accept a co-signer, someone who can guarantee the loan in order to be approved. Ninety percent of the time the answer is no, even if the co-signer has good or even excellent credit.
Vouch is a member of the other 10%, a lending company that specializes in underwriting loans for people who have a co-signer willing to help them secure the money they need. However, unlike asking your Dad or a rich uncle to back you, Vouch puts potential borrowers in touch with potential backers, people who are willing to step in and sponsor you should you default on the payments.
The intention isn’t to have you backed by just one sponsor, either. You can amass a number of them, each coming in to co-sign for amounts starting as low as $100, and the more you get to vouch or sponsor you, the higher your loan amount could be or the lower your interest rate might get.
Minimum credit score: 600
APR: 10.68% to 29.99% fixed
Loan Amount Range: $3,500 to $20,000
Terms: 1 to 3 years
When You Can Expect Your Money: One to two business days
Fees: 1 – 5% origination fee based on loan amount. $15 or 5% of past due late fee.
Backed Personal Loans
With Backed you can bring a co-signer to the table in the more traditional method of having a member of your family or a friend back you up when you’re trying to get a loan. Like Vouch, Backed Personal Loans accepts a co-signer but unlike the other lender you’re not searching out potential investors to vouch for your credit worthiness.
This way the process is much more straightforward as you come to the company with your co-signer in tow and the two of you together are put through the typical application protocol. But don’t worry, they’re willing to work with you even if you don’t have a co-signer on board. If you’re applying on your own, the minimum requirements mandate a credit score of 660, a gross income of $18,000, and a minimum of six months of verifiable credit history.
If you have someone along to co-sign, those minimums go away but your co-signer must have a credit score of 720 and they will be directly contacted in case a payment is missed.
Minimum credit score: 660 w/co-signer, 720 for co-signer
APR: 2.90% to 16% fixed
Loan Amount Range: $3,000 to $25,000
Terms: 1 to 3 years
When You Can Expect Your Money: Next business day
Fees: .8 – 2% origination fee based on loan amount. $20 late fee.
Our Final Thoughts
Poor credit doesn’t need to mean you should be denied a personal loan. Your score doesn’t necessarily denote your credit worthiness because there could be a whole list of reasons why it’s fallen so low. But with these lenders in the marketplace, consumers can find the money they need and without the incredibly high rates that come with payday loan companies or other quick cash lenders.
It’s true you may be subject to far greater interest rates and fees than you might find at a bank, but getting up to $25,000 with a credit score in the 600’s is no small feat. These companies are ready to step in and get you back on track with a personal loan you can afford to manage responsibly at terms that won’t have you making payments for the next decade.
