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Getting approved for a personal loan with bad credit (FICO score below 580) is challenging but not impossible. This comprehensive 1,500+ word guide reveals exactly how to secure financing from reputable lenders like Upstart, LendingClub, and Avant, even with poor credit history.
Understanding Bad Credit Loans
What Qualifies as “Bad Credit”?
- Poor credit range: 300-579 FICO score
- Common causes:
- Late/missed payments
- High credit utilization
- Collections accounts
- Bankruptcies/foreclosures
- Limited credit history
How Bad Credit Affects Loan Options
| Credit Tier | APR Range | Approval Odds | Loan Amounts |
|---|---|---|---|
| Excellent (720+) | 5-12% | 90%+ | Up to $100k |
| Good (680-719) | 10-20% | 75% | Up to $50k |
| Fair (580-679) | 18-36% | 50% | Up to $35k |
| Poor (300-579) | 28-36%+ | 10-30% | 1k−1k−15k |
Top 7 Lenders for Bad Credit Personal Loans
1. Upstart
- Minimum credit score: 300 (uses alternative data)
- APR: 6.5-35.99%
- Loan amounts: 1k−1k−50k
- Unique feature: Considers education/employment history
2. LendingClub
- Minimum score: 600
- APR: 9.57-35.99%
- Loan amounts: 1k−1k−40k
- Unique feature: Peer-to-peer lending platform
3. Avant
- Minimum score: 580
- APR: 9.95-35.99%
- Loan amounts: 2k−2k−35k
- Unique feature: Fast funding (next business day)
4. OneMain Financial
- Minimum score: None (in-person evaluation)
- APR: 18-35.99%
- Loan amounts: 1.5k−1.5k−20k
- Unique feature: Secured loan options
5. OppLoans
- Minimum score: None
- APR: 36-199% (state-dependent)
- Loan amounts: 500−500−4k
- Warning: Extremely high rates – last resort only
6. Peerform
- Minimum score: 600
- APR: 5.99-29.99%
- Loan amounts: 4k−4k−25k
- Unique feature: Low minimum score requirements
7. Upgrade
- Minimum score: 580
- APR: 8.49-35.97%
- Loan amounts: 1k−1k−50k
- Unique feature: Credit health tools included
5 Strategies to Get Approved
1. Apply With a Cosigner
- How it helps: Uses cosigner’s creditworthiness
- Ideal cosigner: 700+ score, stable income
- Best lenders for cosigners: Discover, LightStream
2. Offer Collateral
- Secured loan options:
- Car title loans
- Savings-secured loans
- Pawn shop loans
- Risks: Asset forfeiture if defaulting
3. Seek Credit Union Loans
- Advantages:
- Lower rates than online lenders
- More flexible underwriting
- Credit-builder programs
- Top options: Navy Federal, Alliant, PenFed
4. Alternative Lender Options
- P2P lending: Funding Circle, Prosper
- Paycheck advances: Earnin, Dave
- 401(k) loans: Borrow against retirement (last resort)
5. Improve Your Credit First
- Quick fixes:
- Pay down credit cards below 30% utilization
- Dispute errors on credit reports
- Become authorized user on good account
- Long-term solutions:
- Secured credit cards
- Credit-builder loans
- Consistent on-time payments
Step-by-Step Application Process
1. Check Your Credit Reports
- Get free reports at AnnualCreditReport.com
- Dispute any errors dragging down your score
2. Calculate Exactly How Much You Need
- Borrow only what’s necessary to minimize interest
3. Prequalify With Multiple Lenders
- Soft checks won’t hurt your credit
- Compare 3-5 offers minimum
4. Gather Required Documents
- Typical requirements:
- Government ID
- Proof of income (pay stubs, tax returns)
- Bank statements
- Proof of residence
5. Submit Formal Application
- Hard credit pull will occur
- May need to verify employment
6. Review Loan Terms Carefully
- Check for:
- Prepayment penalties
- Origination fees (1-8% common)
- Automatic payment discounts
7. Receive Funds
- Timeline:
- Same day: Some online lenders
- 1-7 business days: Most lenders
- Longer: Credit unions/banks
Dangerous Alternatives to Avoid
Payday Loans
- Typical APR: 400%+
- Cycle of debt risk: 80% roll over or reborrow
Auto Title Loans
- Risk: Lose your vehicle
- Average APR: 300%
Credit Card Cash Advances
- Fees: 5% or $10 minimum
- APR: Often 25%+ with no grace period
Real-Life Success Story
Background:
- James, 34, FICO 522
- $8,000 credit card debt
- Recent charge-offs
Solution:
- Disputed 3 errors on credit report (+40 points)
- Paid down one card below 50% utilization (+28 points)
- Applied with cosigner (sister with 720 score)
- Approved for $10k at 18% APR through Upstart
- Debt paid off in 3 years (vs. 9+ with minimum payments)
Frequently Asked Questions
Q: Can I get a personal loan with a 500 credit score?
A: Yes, but expect APRs of 30%+ and lower amounts (1k−1k−5k). Upstart and OneMain Financial may approve.
Q: How fast can I get a bad credit loan?
A: Some online lenders fund same/next day. Banks/credit unions take 1-2 weeks.
Q: Will applying hurt my credit score?
A: Prequalification uses soft pulls (no impact). Formal applications cause 5-10 point drops.
Q: What’s the easiest loan to get with bad credit?
A: Payday loans are easiest but most dangerous. Credit-builder loans are safest option.
Q: Can bankruptcy filers get personal loans?
A: Very difficult for Ch7 (2-4 years post-discharge). Ch13 may qualify during repayment.
Final Recommendations
Best Overall Lender: Upstart
- Pros: Innovative underwriting, decent rates for bad credit
- Cons: Not available in all states
Best for Small Loans: Avant
- Pros: $2k minimum, fast funding
- Cons: High origination fees (4.75%)
Best Credit Union Option: Navy Federal
- Pros: Lower rates, credit-building resources
- Cons: Must qualify for membership
Last Resort Option: Credit-builder loan
- Pros: No credit check, builds positive history
- Cons: Must fund loan yourself initially
