To get a loan with bad credit, consider the following options and strategies:
Types of Loans Available for Bad Credit
- Personal Loans: Some lenders offer unsecured personal loans to borrowers with bad credit, but expect higher interest rates and possible difficulty getting approved
- Secured Loans: These require collateral, such as a home or vehicle, which reduces lender risk and may improve approval chances, but failure to repay can lead to loss of the asset
- Guarantor Loans: A friend or relative agrees to repay if you default, which can help secure a loan but shifts financial risk to the guarantor
Recommended Lenders for Bad Credit Loans
- Upstart: Accepts credit scores as low as 300, uses AI to consider factors beyond credit history (like education and employment), offers loans from $1,000 to $50,000 with terms of 36 or 60 months, and can fund loans quickly
- OneMain Financial: Offers loans starting at credit scores around 500, with same-day funding possible, loans from $1,500 to $20,000, and allows using a car as collateral
Tips to Improve Loan Approval Odds
- Apply with a Co-borrower: A co-borrower with better credit can improve your chances and potentially lower interest rates
- Consider Secured Loans: Offering collateral can increase approval chances despite bad credit
- Avoid Payday Loans: Though they don’t require credit checks, payday loans have extremely high interest rates and fees and can trap you in a debt cycle
- Check Multiple Lenders: Use platforms like LendingTree to compare offers without affecting your credit score
What You Need to Qualify
- Be at least 18 years old with a steady income (Upstart requires at least $12,000 annually)
- Provide identification, proof of residence, and income documentation
- Have no recent bankruptcies or delinquencies, depending on lender criteria
Summary
While bad credit makes loan approval harder and usually results in higher interest rates, you can still get a loan by:
- Choosing lenders specializing in bad credit loans like Upstart or OneMain Financial.
- Considering secured or guarantor loans to improve approval chances.
- Applying with a co-borrower if possible.
- Avoiding predatory payday loans.
- Comparing multiple offers to find the best terms.
These approaches can help you access funds even with poor credit and potentially improve your credit score by making timely repayments
