Bad Credit Personal Loans

Getting a personal loan with bad credit

A credit score of less than 630 will not always prevent you from obtaining a personal loan. Some online lenders specialize on serving those with poor credit. When deciding whether or not to lend you money, these companies consider your credit history and scores, but their standards are more flexible than those of banks.

While personal loans from reputable internet lenders may be a suitable option for many borrowers, we recommend that you visit your local credit union first when looking for loans. The majority of credit unions provide more accommodating loan terms and lower interest rates than online lenders, particularly for those with poor credit. The maximum APR permitted by a federal credit union is 18%.

If you are unable to obtain a loan through your local credit union, we advise you to evaluate offers from multiple lenders prior to entering into a loan agreement. Rates for consumers with terrible credit can vary based on the lender’s underwriting standards. Pre-qualification is the simplest method for comparing actual rates.

What rate should I expect?

Rates vary from lender to lender, but here is what interest rates for personal loans look like, on average:

How’s your credit?Score rangeEstimated APRExcellent720 – 85013.9%Good690 – 71918.0%Average630 – 68921.8%Bad300 – 62927.2%; lowest scores unlikely to qualify

Source: lender survey

Additional steps toward financial health

If you’re borrowing money to pay off debt, a personal loan will work best if you have a plan how to deal with your financial obligations. Developing a budget and a savings routine are two basic actions that could help you establish a more secure financial future.

If you do not have an immediate need for cash, you should focus on establishing credit. In the future, a higher credit score will qualify you for more lending options, lower interest rates, and better loan terms.

Not aware of your credit score? Numerous websites devoted to personal finance provide a free credit score. Find a website that provides instructional resources, such as a credit score simulator and access to your credit report.