Pros: Personal loans with Upgrade range from $1,000 to $50,000, with repayment terms between three to five years. You can apply for a joint loan if you want to better your chances of getting approved for a low rate.
Cons: If you have “fair” credit, you may end up with an APR as high as % and an origination fee as high as 8%. People who live in Hawaii and Washington, D.C., aren’t eligible for Upgrade personal loans.
Overview: Upstart is an online lender that uses AI technology to evaluate and approve borrowers with non-traditional financial backgrounds, which includes those who may not have strong credit scores but are considered creditworthy in other respects (e.g., having a steady income and employment history).
Pros: Upstart’s AI technology factors employment and education history into your application, so if you have a limited credit history or are self-employed, your odds of getting a personal loan may be higher with Upstart than other lenders. The minimum credit score is 580 (considered “fair”), and you may receive funds as soon as the day after approval.
Cons: Even if you get approved for a personal loan with a “fair” credit score, you may be paying a very high APR. And if you live in Iowa or West Virginia, you won’t be eligible installment loans Illinois for an Upstart personal loan.
If you’re in need of a specialized debt payoff plan, we recommend looking at nonprofit credit counseling agencies . A credit counselor can help you create a budget and improve your credit score so that you won’t need to take out a personal loan designed for bad-credit borrowers.
What Are Bad-Credit Loans?
Bad-credit loans are for borrowers with low credit scores or a limited credit history. Oftentimes, people end up with low credit scores because of missed payments, bankruptcies, or heavy debt loads – or because they haven’t had enough time yet to establish a credit history. Personal loans are more difficult to get when you have bad credit. But many lenders do offer them – and some even specialize in bad-credit borrowing.
What is a bad credit score?
Each credit scoring agency defines a bad credit score differently. But for our purposes, we’ll refer to FICO credit scores here. FICO scores are between 300 and 850; the better your credit, the higher your score.
- Fair credit: 580 to 669
- Poor credit: 300 to 579
What makes a bad credit score?
- Payment history (35%)
- Amounts owed (30%)
- Length of credit history (15%)
- New credit (10%)
- Credit mix (10%)
If your credit score is low, it’s likely because you haven’t consistently made payments or because you have substantial debt from multiple loans. Your credit score can also get dinged if you have a short credit history, if you have only had access to one type of loan or credit, and if you have recently gotten a new credit card or loan.
How to Get a Bad-Credit Loan
The process of getting a personal loan with bad credit may be more difficult than if you had excellent credit – but you can find one that’s flexible or affordable. You’ll just have to do a little more digging and consider how a loan payment may fit into your budget.
First, consider why you need a personal loan. Are you looking to consolidate credit card debt? Fund a wedding or vacation? Taking out a loan is a big responsibility and can damage your financial health if you’re not careful. We recommend taking out a loan only if it’s going to improve your financial health. Otherwise, you could be sinking yourself into unnecessary debt with unfavorable terms.