How To Get A Loan With Bad Credit

Best lenders who provide long-term loans for bad credit borrowers in 2022

Having bad credit when you are trying to navigate your day-to-day finances and plan for the future can be a hard situation for anybody. Being a bad credit borrower typically means that you may need to pay a premium to have access to the money you need to live a normal life in the United States. Paying a premium means that in order to obtain the financing you need to have a home, raise a family, and enjoy your day-to-day life, you may have to pay much higher interest rates and fees than someone who may be considered a borrower with good or excellent credit. On top of higher interest rates and fees, depending on how bad your credit is, you may not even be able to qualify for some of the financing you need to accomplish your goals.
When it comes to personal loans, you may not have access to higher loan amounts or loans with the longest terms because lenders may see you as a higher-risk borrower that they are not willing to take a chance on. You may be able to qualify for smaller loans with shorter terms, but even those may come with incredibly high-interest rates. You may find that you do not qualify for the amount you need or if you do, the monthly payment may not fit your budget.
If you need to borrow money, you may need to consider finding a cosigner. Applying with a cosigner can increase your chance of approval. It can also help you qualify for higher loan amounts, longer repayment terms, and lower interest rates. Ideally, the cosigner should have good credit, otherwise a cosigner may not be much help. Asking a friend or family member to cosign a loan can put them in an awkward position. If they say yes, you should understand that you are both equally responsible for the loan. Even if you have the best intentions of making all your payments on time, if something should happen and you are unable to pay, then it may impact you and your co-signer's credit. It can put strain on relationships which is why you should only use a cosigner if the terms are understood and you have no other choice.
An alternative to using a cosigner could be applying for a secured loan. Secured loans are secured by collateral. Some lenders may even offer a secured personal loan option. However, most lenders offer unsecured personal loans. The downside to a secured loan is that if you default, you risk damaging your credit score as well as losing possession of the collateral or asset you secured the loan with.
If you need to borrow money with bad credit you will want to explore your options. You should also think about any consequences that may be involved. Some individuals may be so stressed by the fact they need money and they need it now that they put themself in a worse financial situation by borrowing. Regardless of your motives or situation, always stop to think things through before making financial decisions.
Being realistic about your financial situation and borrowing only what you can afford is necessary so that if you do need to enlist the help of a co-signer or use an asset as collateral to obtain a loan, you can avoid the most severe consequences by making all of your payments on time. If you are able to make all your payments on time, then the next time you need to borrow money, you may be able to enjoy the benefits of having a well-established payment history and a better credit score. The next loan you apply for may not need the help of a co-signer or collateral.
If you want to avoid needing a co-signer or collateral altogether, then you may want to devote some time to improving your credit score to ensure you can qualify for a long-term loan on your own. Later we can discuss steps that you can take to give your credit score the boost it needs to get you into a better credit category. Considering all this, depending on how bad your credit score actually is, there are still some lenders who may be willing to work with you to help you obtain a long-term personal loan. Below is a list of the best lenders who may consider extending your loan long-term personal loan to a bad credit borrower in 2022.

Upgrade – 560 min score

Top pick for: bad credit personal loans
Qualifications Needed: Upgrade only requires a minimum credit score of 560 for personal loans that range from $1,000 to $50,000. Loan terms can span anywhere from 3 to 7-years. If you have bad credit, you still may be able to qualify for a 7-year loan for a larger amount, however, your APR may make the loan quite expensive. APRs can range anywhere from 6.94% to 35.97% and personal loans may come with an origination fee between 2.9% and 8%.
Pros:
Quick approval and funding
Lower credit score requirements
Accepts co-signers and co-borrowers
Secured loans are available for bad credit borrowers

Cons:

Higher APRs

Origination fees

Why choose: Upgrade has one of the lowest minimum credit score requirements on the market. If you have bad credit, start here. Additionally, Upgrade does have long-term loans of up to 7-year available for those who qualify. To improve your chances of qualifying, Upgrade does allow the use of a co-signer or co-borrower and they even have some secured loan options available.

OneMain Financial – 600 min score

Top pick for: Borrowers with less than perfect credit that need fast funding
Qualifications Needed: OneMain Financial requires a minimum credit score of 600 for personal loans that range from $1,500 to $20,000. Loan terms span anywhere from 3 to 5-years. If you have a bad credit score, then you may want to consider OneMain Financial as an option for long-term loans of up to 5-years with average APRs that range from 8.98% to 36%.
Pros:
Lower credit score and income requirements
Fast funding
Loans of up to 5-years are available.

Cons:

Higher APRs

A high origination fee of up to 10% or $500 flat fee depending on where you live

Why choose: If you are a bad credit borrower looking for a 5-year personal loan for a larger amount, then you may want to consider a personal loan through OneMain Financial.

Best Egg – 600 min score

Top pick for: fair credit personal loans
Qualifications Needed: BestEgg requires a minimum credit score of 600 for 3 and 5-year loans for amounts between $2,000 to $50,000. Average APRs range from 5.99% to 29.99% and personal loans may come with an origination fee between 0.99% and 6.99%
Pros:
Fast approval and funding
Good customer experience
5-year loans are available

Cons:

Charges an origination fee of up to 6.99%

Why choose: BestEgg is a good lender for people who think customer service is very important and that they deserve to have a good customer experience. If you are a bad credit borrower trying to obtain a 5-year loan for a larger amount of money, then you may want to contact someone at BestEgg who may be able to help you through the process.

Prosper – 600 min score

Top pick for: peer-to-peer personal loans $40,000 and less
Qualifications Needed: Prosper offers 3 and 5-year loans for amounts between $2,000 and $40,000, for borrowers with a credit score of 600 or above. APRs can average from 8.99% to 35.99% and there may be an additional origination fee of 2.41% to 5%.
Pros:
Loan amounts of up to $40,000 available
Good reputation
5-year loans are available

Cons:

Longer approval and funding times than other lenders

Why choose: Prosper may be a good site to check out for borrowers who want to support the peer-to-peer lending market. Additionally, Prosper investors may be more willing to work with a bad credit borrower looking for a 5-year personal loan for a larger amount.

LendingPoint – 600 min score

Top pick for: low income borrowers that need fast funding
Qualifications Needed: LendingPoint requires a minimum credit score of 600 and a minimum income of $30,000/year to qualify for 2 to 4-year loans for amounts between $2,000 and $25,000. APRs average between 15.49% and 35.49% and personal loans may come with an origination fee of up to 6%.
Pros:
Lower credit score requirements
Fast approval and funding
4-year personal loans are available

Cons:

Charges an origination fee of up to 6%

Why choose: Bad credit borrowers who are looking for a lender that may be able to help them obtain a 4-year loan for a loan amount of up to $25,000 may want to consider using LendingPoint as their lender of choice.

LightStream – 660 min score

Top pick for: personal loans with no fees
Qualifications Needed: LightStream may not be available to most bad credit borrowers, however, they do allow people to apply for loans with a co-borrower. LightStream offers some of the longest loans available with repayment terms of up to 12-years, so if you are a bad credit borrower who has a co-borrower with excellent credit, you then may want to consider a personal loan through LightStream, APRs average between 4.99% and 17.49% with no additional fees. Either the primary borrower or the co-borrow should have a minimum credit score of 660 and a minimum income of $50,000/per year, however, there may be higher minimum requirements to qualify for personal loans up to $100,000 and for loan repayment periods of up to 12-years.
Pros:
Allows the use of a co-borrower to qualify
Zero fees
Lower APRs
Larger loan amounts and some of the longest loan terms available

Cons:

Hard to qualify for the larger loan amounts even with a co-borrower

Why choose: LightStream may have some of the most strict qualification requirements, however, if you can qualify, they offer loans of up to $100,000 with loan repayment periods of up to 12-years with zero fees and some of the lowest APRs available on the lending market.

What is bad credit?

If someone has bad credit it typically means that they may have had some history of failing to pay bills on time or that they have a major negative credit event on their credit report. Late payments, missed payments, home foreclosures, loan defaults, delinquent accounts, and bankruptcies all can have a major negative impact on an individual's credit score. Having a bad credit score tells a lender that there is the likelihood that the borrower may fail to make timely payments in the future or that they may even default on the loan. This is why bad credit borrowers have harder times qualifying for larger loan amounts and lower interest rates.
When it comes to what FICO credit scores are considered to be bad credit, typically it is generally accepted that any score below a 579 may be considered bad. However, some lenders may even view fair credit scores that range from 580 to 669 as bad credit as well. This is because any credit score below 670 is generally considered to be a subprime credit score. Subprime borrowers are more likely to become seriously delinquent on their loans in the future, and for borrowers who have a credit score less than 579, approximately 62% may become delinquent on a loan.
Credit scores are calculated based on five determining factors:
Payment history
Total debt amount
Length of credit history
Credit mix
Amount of new credit.
Understanding how these factors affect your credit score is the key to improving your credit score by making attempts to change some of your credit behavior.

How does bad credit affect getting a loan?

Bad credit can make qualifying for a loan, especially one with favorable terms, challenging. Bad credit may cause you to pay high interest charges and other fees. Lenders will need a healthy return on investment to encourage them to take the risk of loaning money to someone with bad credit. While the higher monthly payments that result from high interest rates may not help you repay the loan, lenders have to justify the risk. Lenders are in the business of loaning money for profit so they must make good business decisions.
In most cases, a bad credit score is avoidable. In the event you are unable to make payments, you should contact the lender. They may be willing to work out a repayment plan that is more manageable. Afterall, they want their money back. Finding a way to help you repay is in their best interest.

What do you need in order to get a loan with bad credit?

Before applying for a loan, regardless of credit score, you should determine how much you need to borrow. You should also refer to your paystubs and or deposits to confirm exactly how much your income is. As you complete the application, you should note whether the lender wants gross income or net income. Having a few paystubs handy may help you be prepared in the event a lender wants to see proof of income.
Next, you should check your credit score. When you check your credit history you can do several things. First, you can see if there are any mistakes on your credit report that need to be removed immediately. Second, you can see what your credit score is so you know where you stand when you begin to review the minimum credit score requirements of various lenders. Last, you can see if there is anything you can do in the short term to help boost your credit score a bit before applying for a loan. You may be able to take care of a delinquent account or pay down some credit card debt right away to hopefully see some sort of increase in your credit score. Doing so may help more than you realize to obtain a loan with a lower credit score or to help you qualify for a loan in the first place.
Now that you know what you need and where you stand, you can set out in search of a lender that can help. You may want to check with your local bank or credit union, but you may find more options through online lenders.

Where can you get a loan with bad credit?

If you are looking for a loan and you have bad credit, there are still some options available to you for acquiring a loan. Some of those options include an online lender, a payday or title loan center, pawnshop, your friends or family, a cash advance on your credit card, or an advance on your salary from your employer. Additionally, if you have any equity built up into your home, you may be able to take out a home equity loan or a home equity line of credit, even with bad credit. This is especially true if you have a significant amount of equity in your home and you have a good mortgage payment history. Because you are using your home as collateral, some lenders may be able to look the other way when it comes to a bad credit score. However, be careful here that you only borrow what you can afford and that the monthly payments are within your budget. If you should happen to fall behind on your payments and/or default, the lender may sell your home to cover the balance of the loan plus any additional fees.

What interest rates should I expect for a personal loan with bad credit?

Interest rates can be determined by the lender, market fluctuations, and your credit score. Depending on how bad your credit score is, you could be subject to interest rates as high as 36%. If you are unwilling to pay interest rates in the upper-20s or low-to-mid-30s, then you may want to consider improving your credit score before applying for a personal loan with bad credit.

What sort of monthly payment will I have on a personal loan with bad credit?

If you have a bad credit score, you may be required to take on a personal loan with a shorter term and higher interest rates. Because of this, you could see some higher monthly payments. If you want to calculate what kind of monthly payments a personal loan may bring, then the most accurate way to find out is to prequalify. A less accurate way that can still give you a pretty good estimate for expected monthly payments is using an online personal loan calculator.

Is 600 a bad credit score?

Although technically a credit score of 600 is not in the bad credit score category, it may be the minimum credit score for several lenders. If you have a 600 credit score, you should boost your score before applying for a loan. Even just 20 or 30 points could make a big difference. With a 600 credit score, you may be subject to higher interest rates and less favorable terms, but you still may be able to qualify for a personal loan.

What is the easiest loan to get?

If you have bad credit, getting a loan may never be easy. However, small personal loans or a secured credit card may be easier than other options. Payday or title loans may also be easy, but also expensive and risky.

Should you borrow money when you have bad credit?

The most obvious answer to this question is no. If you have bad credit, you should not borrow money. However, that may not be an option for somebody who has a car in the shop that needs to be fixed so they can return to work or who has a furnace that went out in the middle of winter. If you do not need the loan for an emergency expense, then you may want to consider holding off on applying for a loan until you can repair your credit.

What should you do if you're denied a loan for bad credit?

If you are denied a loan for having bad credit you can either reapply for a smaller loan, ask a co-signer to help you qualify, or use an asset as collateral to secure the loan. In some cases, none of these options may be available. If that is the case you should ask the lender what you need to do to qualify. The answer may be as simple as boosting your credit score by a few points.

Can you get a personal loan with a credit score of 550?

Qualifying for a personal loan with a credit score of 550 may be nearly impossible. In most cases, lenders will want a loan secured by collateral if a borrower has a 550 credit score. If you need to borrow money now and have a 550 credit score you should consider a payday loan, title loan, or secured loan.

How long will it take to get a better credit score?

The length of time it will take to get a better credit score depends on how bad your credit score is and if you have anything like bankruptcy or home foreclosure on your credit history. The worse your credit report, the longer it may take to see significant results. However, even if you have a bad credit history, you may be able to see incremental improvements within a few months of taking the necessary steps to repair your credit.

What credit score do I need for an $8,000 loan?

Minimum credit score requirements are set by the lender, however, if you are looking for an $8,000 personal loan, then you should know that many lenders start their minimum credit score requirements at around 600. Other lenders may require a higher credit score of may 660, 680, or 700, and some lenders may be willing to work with a borrower with a credit score as low as 560. It all depends on the lender. The best way to see if you may qualify for an $8,000 personal loan is to prequalify.

How to raise your bad credit score:

The best way to raise your credit score is to take a look at your credit report and first resolve any issues with delinquent accounts. Next, pay down as much credit card debt as you can. After you do those two things, make sure you make every payment to every credit account on time going forward. If you can manage these three main components and avoid taking on any new debt or charging more on your credit cards, you may start to see your credit score increase within a few months.