How to Get a Personal Loan with Poor Credit
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How to Apply for a Personal Loan Even if You Have Credit Scores that aren’t great Credit
Credit-worthy borrowers with bad credit may need to go through additional steps to qualify for a personal loan or to secure a better rate.
Last updated on Oct . 11 2022
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Table of Contents
Table of Contents
A low credit score does not have to stand in your way of getting a personal loan to cover an emergency or to consolidate debts.
Credit-worthy borrowers with poor credit (a 629 or lower score) may need to do some additional work to qualify, but doing so can aid in getting approved and could get you a lower interest rate.
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Five steps to secure a personal loan even with poor credit
Check your credit . The majority of lenders have a minimum credit score minimum, and you might be denied if you do not satisfy it. Many financial companies, including NerdWallet, provide , and provides a no-cost, in-depth review of your credit history throughout the years. You might find mistakes on your credit report, and correcting them can improve your credit.
Compare lenders. There are no two lenders that offer the same borrower requirements or rates, so it is important to evaluate multiple choices. You should choose a lender that offers a price you can afford and other tools to build credit, fast funding or an app for managing loan payment.
Pre-qualify. shows you what rates, loan amount and repayment timeframe to anticipate, and it doesn’t affect your score on credit. It’s particularly useful when you’re trying to figure out if you’re eligible for an loan and you want to compare rates. A majority of banks and online lenders offer this feature.
Include it in your application. Co-signed and secured loans could help you get a loan or get a lower rate on the personal loan. When you apply for a co-signed loan, another’s income and credit information is included in the loan application and that person is required to repay the loan if the borrower can’t. Let you offer collateral, typically such as a savings or car — that a lender can take if the loan isn’t fully repaid.
Apply. It’s helpful to gather the documents you need to before you apply, to make the process easier. These can include W-2s, pay bills, financial statements and you Social Security number. Some lenders will give you an answer within the same or the next day following your application.
Find out if you’re pre-qualified for an individual loan without impacting your credit score
Just answer a few questions to receive an estimate of your personal rate from a variety of lenders.
The loan amount
on NerdWallet
How bad credit affects a personal loan application
When looking over an application for loan application, lenders determine not just if they will accept the application, they also decide on the rate of interest they will be charging and how much to loan to you.
The lender might inform you that you have had difficulty making payments towards credit cards or other debt in the past, so the lender could be taking more risk when they loan you money. This would cause the lender to deny your application or approve a small loan at a high . If you do not need the loan urgently, make sure you take the time to think about it before applying.
Here are the average APRs of the borrowers of each credit band.
What’s your credit score?
Score range
Estimated APR
Excellent
720-850.
11.3%.
Good
690-719.
15.6%
Fair
630-689.
22.3%.
Bad
300-629.
25.2%.
Source The average rates are based on aggregate information from offer data that is anonymized from users who pre-qualified in NerdWallet’s lending marketplace between July 1, 2022, until October. 31, 2022. Rates are estimates only and not specific to any lender. The credit scores with the lowest scoregenerally less than a credit score of 500 — are unlikely to be considered. Information in this table applies only to lenders that have APRs lower than 36 percent.
Every lender evaluates credit scores in a different way. Your , employment history and even whether you lease or own your own home may also be considered on an application.
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Browse our Best-Of Awards to review the best personal loans and select the most suitable one for your particular needs.
Where to take a loan with poor credit
Credit unions. You must be an enrolled members of the credit union in order to borrow from it, but they’re among the most suitable options if you have bad credit.
Take into account a loan applicant’s history as a member before making a decision, which means a good rapport with the credit union may help with the approval process.
You can also receive lower rates at a Federally chartered credit union since APRs are capped at 18%. Rates from other lenders can be as high as 36%.
Online lenders . Some online lenders, including and also, provide loans to customers. These lenders can offer consumer-friendly features, like fast financing and expert advice to help build your credit.
It’s best to check online loans with offers from different lenders to find the lowest cost.
Nerdy Tip
Some lenders who have bad credit add an origination charge that’s typically 1to 10 percent of the loan amount. The majority of lenders subtract the cost of the loan before depositing the funds in your account. This means you could end up with less money than you had hoped for. If the fee is included ensure that the remainder of the loan amount is sufficient to cover the cost.
Do not take no-credit-check loans
It could be tempting to take out a loan from a lender who won’t even check the score of your credit, however these lenders often provide excessively high-interest installment loans or payday loans.
A lender that doesn’t review details like that of credit scores isn’t thoroughly assessing your ability to repay. Some lenders the borrower a vicious cycle of debt, offering high interest rates, which make payments inaccessible, leading them to borrow again at the time the payment is due.
If you aren’t sure you’ll be eligible for a lender who checks your credit score take a look .
Calculate the bad-credit loan payments
Know the monthly loan payment and the total cost of interest before you borrow. Making payments on time can assist in building credit. However, not making payments can damage your credit even more. Also, knowing the amount you’ll pay in total interest can help you decide if this loan is worth it.
A lot of lenders allow you to preview loan payment during pre-qualification but you can also utilize an individual loan calculator to obtain an estimate.
About the author: Annie Millerbernd is a personal loans writer. Her writing has been featured in The Associated Press and USA Today.
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