Best Bad Credit Loans of 2021

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Borrowing money when you have bad credit can be stressful and limit your loan options. But a bad credit rating isn’t a dead end. Even if you can’t qualify for the best loan terms, there are loans for bad credit.

The consequence of bad credit is that you could need to make trade-offs and compromises. For example, personal loans for bad credit can offer access to funds, but that access might come with a high interest rate and other restrictions that don’t apply to borrowers with a good credit score.

This guide will help you understand how bad credit loans work, how to apply for and get a loan, and how to choose the best bad credit lender.

What Are the Best Bad Credit Loan Companies of 2021?

SoFi

5.24% to 19.88% APR
$100,000 Max. Loan Amount
Not disclosed Min. Credit Score

Earnest

As low as 2.49% APR
$250,000 Max. Loan Amount
Not disclosed Min. Credit Score

TD Bank

6.99% to 21.99% APR
$50,000 Max. Loan Amount
Not disclosed Min. Credit Score

Rocket Loans

5.97% to 29.99% APR
$45,000 Max. Loan Amount
Not disclosed Min. Credit Score

PNC Bank

5.99% to 28.74% APR
$35,000 Max. Loan Amount
Not disclosed Min. Credit Score

LendingClub

7.04% to 35.89% APR
$40,000 Max. Loan Amount
Not disclosed Min. Credit Score

Oportun

28.62% to 35.99% APR
$10,000 Max. Loan Amount
Not disclosed Min. Credit Score

BHG

7.99% to 25.21% APR
250,000 Max. Loan Amount
Not disclosed Min. Credit Score

Best for loans of up to $100,000 with no fees

SoFi, short for Social Finance, offers personal loans of up to $100,000. The lender operates nationwide and is known for offering loans with no fees. In addition to personal loans, SoFi offers student loans, student loan refinancing, home loans and small business financing.

Before You Apply

  • Minimum FICO credit score: undisclosed
  • Loan amounts: $5,000 to $100,000
  • Repayment terms: up to 84 months
  • Better Business Bureau rating: A+

Best Features

  • The lender does not charge origination, prepayment or late fees.

  • Loans of up to $100,000 are available.

  • Co-borrowers are accepted.

  • Borrowers become members and get special benefits.

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Best for large loan amounts

Earnest partners with personal loans marketplace Fiona to match borrowers with loans that have terms up to 144 months. There’s no fee to use Fiona to search for loans, but some of the lenders that users will see on Fiona might.

Before You Apply:

Minimum FICO credit score: Not disclosed
Loan amounts: $1,000 to $250,0000
Repayment terms: up to 144 months
BBB rating: A

Best Features

  • Prospective borrowers can match with loan options within 60 seconds.

  • Loans available up to $250,000.

  • Searching loan options on Fiona doesn’t impact your credit score.

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Best for fast funding

TD Bank is an American subsidiary of Canada’s Toronto-Dominion Bank and is one of the 10 largest banks in the United States. The full-service bank has more than 1,100 retail store locations across the Northeast, Mid-Atlantic, Washington, D.C., metro area, the Carolinas and Florida. TD Bank offers unsecured personal loans to cover large and small expenses with amounts ranging from $2,000 to $50,000.

Lender Highlights:

  • Minimum FICO credit score: undisclosed
  • Loan amounts: $2,000 to $50,000
  • Repayment terms: up to 60 months
  • Better Business Bureau rating: B+

Best Features

  • Personal loans are issued by one of the 10 largest banks in the United States.

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Best for digital customer care

Rocket Loans offers personal loans to qualified borrowers in 47 states. These loans may be useful for people who need to borrow up to $45,000 for debt consolidation, home improvements, medical expenses or other expenses.

Before You Apply

  • Minimum FICO credit score: Not disclosed
  • Loan amounts: $2,000 to $45,000
  • Repayment terms: up to 60 months
  • Better Business Bureau rating: A+

Best Features

  • Same-day loan funding may be available.

  • No prepayment penalties apply.

  • An online application process is available.

See full profile

Best for low fees and discounts

PNC Bank can trace its history back to 1852 and the Pittsburgh Trust and Savings Co. Today, PNC Bank is the seventh-largest bank in the U.S., and it features a wide range of consumer and business banking services. Among its suite of products, PNC offers personal, unsecured installment loans up to $35,000. Applicants are considered based on satisfactory credit history, ability to repay and income.

Before You Apply

  • Minimum FICO credit score: undisclosed
  • Loan amounts: $1,000 to $35,000
  • Repayment terms: up to 36 months
  • Better Business Bureau rating: A+

Best Features

  • A range of loan amounts and repayment terms.

  • No prepayment penalty and no origination or application fee.

  • Get a 0.25-percentage-point discount if you set up autopay using a PNC checking account.

  • Applicants can secure a loan with a co-signer.

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Best for fair credit

LendingClub is an online marketplace bank that connects borrowers and investors through its network of lending partners. LendingClub initially launched on Facebook and has since evolved from an extensive peer-to-peer lender to a bank holding company.

Before You Apply

  • Minimum FICO credit score: Not disclosed
  • Loan amounts: $1,000 to $40,000
  • Repayment terms: up to 60 months
  • Better Business Bureau rating: not rated

Best Features

  • Loans of $1,000 or more are available.

  • Joint applications are accepted.

  • Borrowers can qualify with fair to excellent credit.

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Best for flexible credit requirements

Oportun offers personal loans of up to $10,000 to borrowers in 23 states. The lender has no credit history requirement, making the loans an option for consumers with bad credit. The lender also allows co-signers in some instances and doesn’t charge application or prepayment fees.

Before You Apply:

Minimum FICO credit score: undisclosed
Loan amounts: $300 to $10000
Repayment terms: up to 48 months
Better Business Bureau rating: A+

Best Features

  • No credit history requirement.

  • There is a possibility of being approved even if you’ve faced bankruptcy.

  • Online, phone and in-person application options.

See full profile

Best for health care professionals

Bankers Healthcare Group started in 2001 and in 20 years has exceeded $8 billion in funded loans The Davie, Florida, business provides direct loans to licensed health care professionals of all kinds, including dentists, physicians, veterinarians, physician assistants and nurse practitioners.

Before You Apply:

Minimum FICO credit score: undisclosed
Loan amounts: $20,000 to $25,0000
Repayment terms: up to 144 months
Better Business Bureau rating: A+

Best Features

  • BHG offers loans of up to $200,000 for qualified borrowers.

  • Repayment terms of up to 12 years are available.

  • BHG has an array of financial solutions to meet the needs of different borrowers.

  • The lender reviews each funding request rather than rely on a computer model for loan approval.

See full profile

What Is the Best Interest Rate on a Personal Loan?

Even if you have bad credit, you could save by shopping around for the best interest rate on a personal loan. Compare bad credit personal loan offers with national average trends for personal loans to know whether you’ve found a good deal.

The average personal loan rate is 9.33%. Last week’s average rate was 9.33%.*

*Rate as of October. 7, 2021

Personal Loan Finder

Select your desired loan amount and loan purpose, your credit score range, and your state to see estimated annual percentage rates and loan terms.

What Is a Bad Credit Loan?

Loans may be available for people with bad credit scores or no credit. Different lenders have different credit criteria, but it may be possible to get a personal loan with a FICO credit score in or below the fair range (580-669). Riskier types of loans, such as payday loans and alternative installment loans, are also available to borrowers with low credit scores or no credit.

The weaker your credit score, the greater the risk to the lender, which is why bad credit loans can be costly. Generally, you’ll pay higher interest rates and receive shorter repayment terms than people with good credit scores.

Here is one example for comparison. If you took out a $10,000 loan at an APR of 25% and repaid it over three years, you would pay about $398 monthly and about $4,300 in total interest. With better credit, you could qualify for a lower APR – say 11% on the same three-year $10,000 personal loan. You would pay about $327 monthly and less than $1,800 in total interest. Having a higher credit score would save you more than $2,500 in this instance, making it less expensive to take out a loan for debt consolidation, home improvements, car repairs, unexpected expenses or something else.

What Types of Loans Can You Get With Bad Credit?

Even with bad credit, you can choose from many types of loans. Some present more risk to borrowers than others. Here are some of your options:

Personal loans for bad credit

Personal loans have fixed rates as high as about 36%, and they are generally safer than options such as payday loans, auto title loans or alternative installment loans. You can typically repay loans in set amounts over a few years. Lenders may offer small and large personal loans, so check the lender’s minimum loan amount to make sure it meets your needs.

Generally, this type of loan is unsecured, which means you don’t have to put down collateral. Collateral is a valuable asset, such as your car or savings account, that the lender can claim if you default on a loan.

With a poor or fair FICO credit score, it can be difficult to qualify for a standard personal loan. If you have bad credit, you may want to consider taking out a secured personal loan that uses a valuable asset as collateral. Although secured loans put your assets on the line, you are more likely to get approved and could receive a better APR. Some lenders also allow co-signers on personal loans, which can help riskier borrowers get approved.

A payday loan is a small, short-term loan intended to cover expenses until your next payday, when you can pay it back. Payday loans have a reputation as predatory, with lenders targeting consumers with poor credit scores and few options who need quick access to cash.

Loan limits, often $500, are typically much lower than personal loan limits, and payday loans usually have to be paid back in weeks, not years. Fees can be very high, often equivalent to triple-digit APRs.

If you can’t repay the loan in full by the end of the term, you may be able to extend your loan by paying more fees. Some payday loans ultimately cost more in interest and fees than the original loan amount.

Alternative installment loans

Alternative installment loans may look a lot like standard personal loans: The lender sends you funds and you follow a repayment schedule to pay the loan back. But they can also resemble payday loans because they are easier to obtain for consumers with bad credit and tend to charge high interest rates, often well above 100%.

Generally, alternative installment loans have fixed monthly payments and can have repayment terms as short as several months or as long as a few years. But you should expect steep interest rates when you turn to alternative installment loans.

If you’re considering a loan because you can’t afford your educational expenses, you should make sure to consider student loans. You’ll generally get the most value out of federal student loans, but even private loans can provide better terms for students than other loan options for consumers with below-average credit.

Student loans tend to offer a wider range of repayment terms, ranging from five to 20 years for private loans. You can qualify for a federal student loan for yourself without a credit check, and you may be able to add a co-signer to help you qualify for a private student loan.

Credit card cash advances

Like payday loans, credit card cash advances can get you quick access to cash, but they come with a high price. When you get a cash advance, you are taking out a loan from your credit card. You’ll often be on the hook for a cash advance fee of at least $10, and the loan will come with an interest rate higher than what you’re charged for purchases.

A credit card cash advance can be helpful if you pay it off quickly, but advances can also harm your credit score by bringing up your card’s balance.

U.S. News Survey

U.S. News Survey: Many Consumers Don’t Know How Loans Work

U.S. News surveyed consumers in August 2020 about financial literacy, or their ability to manage money: in this case, loans. Even with good credit, qualifying for a loan can be tricky, thanks to the economic crisis caused by the pandemic.

The survey revealed that, whether people have bad credit or good credit, they may not know how to shop around for loans or avoid hiccups such as missing payments.

Additional Survey Insights

Top purposes for personal loans are making major purchases or paying down debt.

Most consumers said they don’t need to borrow money because of COVID-19 hardship. Those who do need to borrow said 0% APR credit cards, personal loans and home equity loans are the best options.

Many consumers said they aren’t clear on how deferred interest loans work.

Most consumers don’t realize the potential damage of missing a loan payment.

About 1 in 5 consumers said they’ve taken out a loan to pay off debt.

Most consumers said they don’t think payday loans are a good idea.

Survey Results

How Can You Get a Loan With Bad Credit?

You can qualify for a loan with bad credit, but you’ll get the best deal if you do some homework. Start by checking your credit report, budgeting for your loan payment and shopping around for the best terms.

  1. Check your credit report. You can get a free credit report from each of the three major credit bureaus at AnnualCreditReport.com. Use your report to identify ways to improve your credit, such as by paying off a debt in collection or paying down a high credit card balance. Also check for errors that could be lowering your score. Rod Griffin, senior director of public education and advocacy for Experian, one of the three major credit bureaus, recommends checking your credit report and score at least three months before applying for a loan.
  2. Budget your loan repayment. Figure out how much you need to borrow, and come up with a plan for your payments that fits into your budget. Your loan amount, repayment period, APR and any fees the lender charges will help determine your monthly payment. The longer you have to repay the loan, the more you will pay in interest but the lower your monthly payment will be.
  3. Shop around for the best interest rate. Lenders often use a soft credit inquiry to grant preapproval or prequalification for loans. Soft inquiries don’t affect your credit score, and applying for preapproval is a good way to compare interest rates and terms before you apply. Applying for a loan may trigger a hard credit inquiry, which can affect your credit.
  4. Beware of scams. Spotting a bad credit loan scam can be difficult, but look out for some key signs. Scammers often require upfront fees, ignore your credit record, pressure you to take out a loan, ask you to pay with a prepaid card or aren’t licensed to make loans in your state.
  5. Repay the loan. After your lender disburses the loan funds, you will become responsible for making payments. It’s important to make on-time payments to avoid paying late fees and harming your credit score. You’ll also owe more interest if you delay payments. “If you miss a payment or due date, credit profiles will suffer,” says Joseph Toms, president and chief investment officer of Freedom Financial Network, a debt management business. “That can reduce the consumer’s ability to get credit in the future. Before applying, be sure you can make the payment every month.”

What Should You Consider When Choosing a Bad Credit Loan Company?

The best loan for bad credit depends on many factors. When choosing a lender for a bad credit loan, consider these key criteria:

  • Eligibility requirements, including credit history and employment. The credit score you need to get a loan will depend on the lender and the type of loan you want, with higher scores increasing your options. Lenders may also consider parts of your background besides credit, including income and debt-to-income ratio. “Traditional credit data does not necessarily account for your complete financial profile and ability to pay debts,” Toms says. If you can’t qualify for a loan with your own credit or income, some lenders allow you to add a co-signer.
  • Interest rates and types. Make sure you’re comparing interest rates when considering which loan is the best. The higher your credit score, the lower your interest rate will most likely be. Personal loans typically come with fixed interest rates, which means your rate remains the same for the duration of your loan. Private student lenders often offer fixed and variable interest rate options. Variable-rate loans have interest rates that can fluctuate in tandem with an index rate.
  • Loan terms. Before accepting a loan, make sure to review its terms, including APR, loan period and loan restrictions. You should be comfortable with the terms and confident you can make on-time payments.
  • Fees and penalties. Origination, late, returned payment and other fees may apply, depending on your lender and in some cases your state. Some lenders don’t charge origination fees to make a loan, while others may charge a percentage of the loan amount. LendingClub, for instance, charges an origination fee of between 3% and 6% for personal loans. If your lender charges for late payments, you may have a grace period of up to 15 days before the lender charges a fee.
  • Repayment options. Lenders usually offer multiple payment options, including online, check and automatic payments. Automatic payments might come with a discount. Some lenders also provide flexibility with your payment date, so you can change it to a date that works best for you.
  • Customer service ratings and reviews. Getting a loan is a big commitment, so make some time to read lender reviews before you sign on the dotted line. It’s also a good idea to search the Consumer Financial Protection Bureau’s Consumer Complaint Database to learn about common gripes consumers have about lenders.

Advertising Disclosure: Some of the loan offers on this site are from companies
who are advertising clients of U.S. News. Advertising considerations may impact
where offers appear on the site but do not affect any editorial decisions,
such as which loan products we write about and how we evaluate them. This site
does not include all loan companies or all loan offers available in the marketplace.


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