Best Personal Bad Credit  Loans Of 2022

Best Personal Bad Credit  Loans Of 2022

Best Personal Bad Credit  Loans Of 2022

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.

Personal loan interest rates vary depending on your score and the qualification requirements you meet, so you shouldn’t expect to get the lowest rates or the most favorable terms with damaged credit.

What Are the Current Personal Loan Rates?

Personal loan interest rates fell this week, trending lower for three- and five-year loan terms. Here are average personal loan rates, as of Nov. 14, offered to well-qualified applicants with credit scores of 720 or greater:

• Three-year personal loan term: 15.13%, down from 15.89% a week ago.
• Five-year personal loan term: 16.6%, down from 16.96% a week ago.

But if you have bad credit, you likely shouldn’t be looking for the best rates; the provider that offers a loan your score qualifies for is typically the best one for you. And if there are multiple options open to you, then compare loan limits and interest rates to find the one that best fulfills your needs.

We reviewed 18 popular lenders based on 14 data points in the categories of loan details, loan costs, eligibility and accessibility, customer experience and the application process. We chose lenders that have a minimum credit score requirement of 600 or lower and ranked them based on the weighting assigned to each category:

• Loan details: 20%
• Loan cost: 25%
• Eligibility and accessibility: 30%
• Customer experience: 15%
• Application process: 10%

Within each category, we also considered several characteristics, including loan amounts, repayment terms, APR ranges and applicable fees. We also looked at whether each lender accepts co-signers or joint applications and the geographic availability of the lender. Finally, we evaluated each provider’s customer support tools, borrower perks and features that simplify the borrowing process—like prequalification and mobile apps.

Where appropriate, we awarded partial points depending on how well a lender met each criterion.

Tips for Comparing Personal Loans for Bad Credit

Consider these tips when comparing personal loans for bad credit:

• Compare the top-end range of interest rates. Because interest rates largely depend on your qualifying credit score, you’re likely to land a rate at the top end of the range with bad credit. So, when comparing personal loans for people with bad credit, be sure to compare the maximum rate.
• If possible, prequalify with a provider. Several providers offer the opportunity to prequalify you for a personal loan. This means you can submit details like your income information, desired loan use and housing situation to learn about potential loan limits, rates and repayment options. Prequalifying also only requires a soft credit check, which doesn’t hurt your credit score, so you can safely find the best rates.
• Check for additional fees. Some personal loan providers charge no origination fees, late payment fees or prepayment penalties. However, there are some that may charge all or some of these fees. When comparing bad credit personal loans, be sure to look at the fee structure beyond the potential interest rate you can receive.
• Evaluate the lender’s customer support options. If you’ve found a lender, there’s one more thing to consider before signing the loan agreement. While customer support may not seem like a big deal, it can make a huge difference if you encounter issues with payments or face a financial hardship during your repayment period. Review the lender’s customer service resources and read reviews to make sure it’s a good fit.

What Is a Bad Credit Score?

Based on the FICO credit score range of 300 to 850, a score below 580 is considered to be a bad credit score. Lenders refer to borrowers who fall in this range as subprime borrowers, and those borrowers tend to be riskier. A bad credit score can make it more difficult to qualify for things like a car, a mortgage or a loan for a business, so it should be in your best interest to improve your score before submitting an application.

What Is a Bad Credit Loan?

Some lenders offer bad credit loans for applicants who have had little to no time to build a credit history or who may have experienced some pitfalls. While it can be difficult to get a loan with a credit score below 580, some lenders, including those on this list, are willing to extend funds to applicants with scores between 580 and 600. Minimum credit score requirements tend to vary between lenders, so be sure to check if your score qualifies through your preferred lender.

Bad credit applicants will typically receive high interest rates and lower loan limits due to their credit scores. The lowest rates and most favorable terms are reserved for high-qualified applicants.

Types of Loans for Bad Credit

When it comes to personal loans, there are two types you can apply for: secured and unsecured loans. However, if you’re having trouble qualifying for a personal loan, consider other loans for bad credit.

Secured & Unsecured Bad Credit Personal Loans

Traditional personal loans can either be secured or unsecured. Secured loans require you to provide something of value (also known as collateral), such as your car, savings account or home, to back (or secure) the loan. The lender can repossess the collateral if you fall behind on payments or default. This makes them less risky to a lender, which also means they tend to come with more favorable terms, like lower interest rates, and fewer qualification requirements.

Unsecured loans, on the other hand, are the more common of the two and don’t require any collateral. Because these loans don’t require collateral and therefore pose more risk to lenders, they typically come with more qualification requirements and higher interest rates. The loans on this list are all unsecured personal loans.

Student Loans for Bad Credit

If you’re trying to cover higher education expenses, a student loan for bad credit is likely the direction you want to look. Although private student loans typically require good credit, borrowers with bad credit can take out federal student loans, which don’t require a credit check. Federal loans also come with the most flexible repayment terms, including forgiveness if you work in public service or choose certain repayment plans.