Best Bad Credit Loans Online for People With Poor Credit of 2024

Managing finances is often challenging and unpleasant. Whether you are saving for a new car, entering a venture, or meeting financial obligations, it is common to exceed your budget. In such instances, turning to lending institutions becomes a viable option. Unfortunately, not everyone enjoys a favorable credit standing.

Both bad credit loans online and in brick-and-mortar institutions impose high fees for individuals with suboptimal credit. For instance, from February to May 2023 alone, U.S. commercial banks charged an interest rate of 11.48% for 24-month personal loans (Statista, 2023). Luckily, there are flexible options that may offer friendlier rates and terms.

To help you with this, our team of experts provides a thorough guide on credit scores and loans, offering tips on how to compare various personal loans online and presenting insights on how to qualify and secure them. We also include a curated list of the best personal loans for bad credit online to assist individuals with less-than-perfect credit in overcoming this financial hurdle.

List of Best Bad Credit Loans Online

Our team rounds up a short list of the best bad credit loans online to assist you in your search for affordable and flexible money lending options. We looked into the loan details, cost, accessibility, application requirements, and other key metrics to curate this list.

1. Upgrade

Upgrade offers personal loans amounting from $1,000 to $50,000 and payable for 24 to 84 months. Approvals are granted within one business day or as soon as your credentials and application are verified. Checking your rate takes minutes and does not affect your credit score or cost. Borrowers also have the option to choose between unsecured or secured loans and can modify their monthly payment date.

2. Avant

Avant offers another way for individuals with bad credit scores to request loans. You can borrow from $2,000 to $35,000, with APRs ranging from 9.95 to 35.99%. You can also set up payments between 12 to 60 months, depending on your needs. Most of its clients have a credit score between 600 to 700, but those with lower scores may still avail of its financial assistance upon verification.

3. Upstart

From a variety of long-term personal loans to debt consolidation or short-term reliefs, Upstart introduces versatile options for you to borrow money. Its loan amounts vary from $1,000 to $50,000, which can be payable within three to five years. Upstart’s services are accessible to individuals with a credit score of 300 and above. Moreover, its fixed rates of 6.4% to 35.99% APRs offer transparency for borrowers throughout their loans.

4. LendingPoint

LendingPoint presents loan amounts from $2,000 to $36,500. Borrowers can expect to pay rates anywhere from 7.99% to 35.99% APRs. In addition, you can select loan terms from 24 to 72 months. Except for those living in Nevada and West Virginia, it allows residents in all states and the District of Columbia to apply for a loan. You must have a minimal yearly income of at least $35,000 to become eligible for its loan services.

5. Universal Credit

Among the platforms online where you can ask for a loan with bad credit standing is Universal Credit. You can borrow $1,000 to $50,000, with 11.69%-35.99% APRs. Borrowers can complete repayment from 36 to 60 months. In addition, its loans have an origination fee of 5.25% to 9.99% which is deductible from the loan proceeds. You can also opt to pay your loan early with no additional fees or penalties.

Best Practices When Comparing Bad Credit Loans Online

One major pitfall of having a not-so-ideal credit score is that you may not consistently receive the most favorable loan offers or the lowest interest rates. Therefore, as you browse through our list of the best loans for poor credit, it is also important to keep the following best practices in mind. These tips will help you pinpoint loan options that suit your credit profile and financial requirements.

• Prequalify with various lenders. Most providers allow you to get an overview of potential offers by prequalifying for a loan. Because most prequalifying steps often involve soft credit checks, such as initial credit report inquiries, these do not affect your credit score.
• Weigh rates and fees. After prequalifying with a few providers, compare the ranges of APR, interest rates, or any other fees. This allows you to make a comprehensive assessment of the total cost of the loan and understand the financial implications associated with each option.
• Consider loan repayment periods. Borrowers must also take note of the flexibility in loan duration. Choose a repayment period that offers either shorter terms for quicker repayment or longer terms for more manageable monthly payments.
• Read customer reviews. Researching reviews and testimonials enables you to gauge the experiences of others with similar credit profiles and loan needs. Doing so also helps you determine what snags they encountered, what they liked about the services, or what obstacles they faced when dealing with customer support.
• Skim through the FAQs. Going through the provider’s FAQs page lets you gain valuable insights into the finer details of their loan offerings and the borrowing process. It clarifies uncertainties and gives you a better understanding of the terms and conditions associated with each provider.

Bad Credit Scores Vs. Bad Credit Loans

Whether you choose to apply for bad credit loans online or from traditional providers, understanding the dynamics between bad credit scores and bad credit loans is pivotal for making informed financial decisions. We will break down these terms to shed light on their implications for borrowers.

What is a bad credit score?

A credit score is a number that determines your creditworthiness or ability to borrow money. It also provides lenders with an assessment of the risks associated with lending you money. While many factors affect your credit score, several financial institutions follow the Fair Isaac Corporation (FICO) Scores. Most people have credit scores that span between 300 and 850.

A high credit score means you are not a risk to lenders and that you are likely to be perceived as a responsible borrower. Conversely, a low or bad credit score falls below the threshold, indicating a history of financial challenges or defaults on credit obligations and making you a risk to lenders. According to MyFICO (n.d., retrieved November 30, 2023), a score classified as good is near or slightly above the average credit score, and this falls between the numbers 670 and 739.

Source: MyFico, n.d., retrieved November 30, 2023

What is a bad credit loan?

A bad credit loan is specifically designed for individuals with poor credit scores. Lenders offering bad credit loans online acknowledge the higher risks that come with borrowers in this range. To secure repayment, financial institutions impose higher rates or fees. This practice is a way for financial institutions to compensate for the increased likelihood that these individuals may default on their loans. Additional fees are usually applied in the following areas:

• Interest rate. This is the percentage charged by a lender to a borrower for the use of money over a specified period. Individuals with lower credit scores may be offered loans with higher interest rates to offset the potential risk of non-payment.
• Origination fee. This is an upfront charge to borrowers that enables lenders to process and execute new loan applications. Usually, it is 1% of the loan amount, but other providers may charge more depending on the type of loan you avail.
• Late fee. When you fail to pay your repayment due date on time, you are charged a late fee, which usually ranges from $25 to $50.
• Non-sufficient funds fee. This is imposed when a borrower attempts to make a payment, but there is not enough money in their account to cover the transaction.
• Prepayment penalty. Though less common, some lenders charge a fee if a borrower pays their loan earlier than the due date. This is to compensate the lender for the interest income they would have earned.

Average Personal Loan Interest Rates by Credit Score

Knowing how credit scores impact personal loan interest rates is essential for borrowers seeking the most favorable terms. Based on Credible’s calculations (2023), the following is a breakdown of the average interest rates based on credit scores:

Source: Credible (As of November 27, 2023)

Types of Bad Credit Loans and Their Uses

When comparing the offers of providers, you might encounter different types of loans that cater to a variety of needs. Knowing what these kinds of loans are and what they are for can help you select the loan that addresses your money issues. In this section, our team identifies the types of bad credit loans online as well as loans that you can get through traditional providers:

1. Secured and Unsecured Personal Loans

Secured personal loans require collateral, such as a savings account, a house, or a valuable asset, to ensure repayment and reduce the risk for lenders. Conversely, unsecured personal loans do not demand borrowers to submit collateral. In secured loans, you may be charged lower interest rates, but you can lose your pledged asset when you fail to repay. Meanwhile, because providers rely solely on your creditworthiness in unsecured loans, they can impose higher interest rates or demand stricter qualifications.

2. Joint Personal Loans

These loans involve two individuals applying together. The co-borrower is usually a family member or a close friend who is willing to support your loan. By combining their creditworthiness, they can present stronger credit scores and qualify for better loans. The caveat is that since there are two parties, both share the responsibility for the repayment. Moreover, the lender is authorized to collect payments not only from you but also from your co-borrower.

3. Payday Loans

Payday loans are designed to provide short-term, quick cash access to the borrower. This loan, usually not exceeding $500, will be deducted on your next payday, enabling you to repay within two to four weeks. Unfortunately, this type of loan comes with excessively high interest rates and fees. Furthermore, since borrowers can swiftly obtain a loan through this option, it frequently results in an undesirable cycle of debt.

4. Home Equity Loans and Home Equity Line of Credits (HELOCs)

Your lender considers your house’s market value and mortgage balance to grant you these types of bad credit loans online. Home equity loans involve a fixed interest rate and enable you to have access to the money in a lump sum. HELOCs operate as revolving lines of credit, enabling you to keep borrowing with varying rates and the flexibility to withdraw as little or as much money as necessary. Similar to a secured loan, you are at risk of losing your home when you fail to repay.

5. Auto Loans

Individuals who wish to purchase a vehicle may avail of auto loans. This loan exposes you to costly interest rates, high downpayment rates, or additional charges. On top of that, you might lose your vehicle if you do not meet the repayment requirements. In addition, this type of loan is rare, and it typically demands borrowers to attain a higher credit score.

6. Student Loans

If you plan to pursue higher education, you can choose to apply for a student loan for bad credit. Doing so can cover your tuition and fees. However, obtaining a private student loan may be difficult since it also requires high rates. A more lenient option is applying for a federal student loan, which has flexible repayment terms or forgiveness.

Where can you get a loan with bad credit?

Credit scores are calculated based on your payment history (35%), amounts owed (30%), length of credit history (14%), credit mix (10%), and new credit (10%) (Investopedia, 2023). If you have a history of late payments, defaults on credit cards, previous loans, or other financial obligations, bad credit loans online are among the primary choices for securing funds. These have versatile repayment options and wide ranges of loan amounts, which are ideal for borrowers with poor credit standing.

There are also alternative ways to get a loan, and each one comes with its eligibility criteria, terms, interest rates, and risks. However, this should not discourage you as exploring other avenues can help you find the perfect fit for your financial needs. These options include:

• Banks. Traditional banks, in general, are more cautious about lending to individuals with bad credit. However, some small or local banks may offer personalized assessments and be open to working with borrowers facing credit challenges.
• Credit unions. Being member-focused, credit unions often have more flexible lending criteria compared to larger banks. Some of these unions specifically cater to individuals with lower credit scores.
• Nonprofits. Certain nonprofits and community-based organizations offer financial assistance programs or low-interest loans to individuals with bad credit. The downside is that there may be limited availability.

How do you get a loan with bad credit?

Securing a loan with bad credit may pose challenges, but strategic steps can be taken to enhance creditworthiness over time. Consider the following tips to improve your credit profile and increase your likelihood of loan approval whether through bad credit loans online or in person.

• Understand your credit score. Researching what your credit standing is can provide you with an overview of how much providers can potentially lend you. Doing so can also help you set goals to increase your score before you take a loan.
• Prepare your budget. Create a realistic budget that allocates funds for essential expenses and repayment. Sticking with this budget helps improve financial stability and avoid unnecessary spending.
• Consider credit counseling. Seek personalized guidance from reputable credit counseling agencies. They can assist you in setting up goals and budgets, managing debts or expenses, and improving credit.
• Prequalify with various providers. This allows you to check the rates, terms, and offers of different lenders and evaluate which one provides the best services that answer your needs.
• Seek a co-signer. Consider having a co-signer with a stronger credit history when applying for loans. A cosigner’s creditworthiness may enhance your chances of approval and result in more favorable terms.
• Repay on time. Set a reminder before your due date to give you ample time to settle your accounts. This way, you can pay early and sufficiently, which helps you improve your credit score for future applications.

Can you qualify for a loan with bad credit?

You can still qualify for loans even with bad credit, but you must not expect to have low interest rates or relaxed terms. Online lending organizations that offer personal loans for bad credit instant approval typically prequalify you after sending them a few personal information, such as your occupation, annual wages, address, and Social Security number. Once approved, your loan is readily available in your account within one to five business days.

At the same time, you can initiate steps to improve your credit reputation by:

• Addressing debts and bills. Prioritize paying off existing debts, especially high-interest credit cards or accounts in collections. Another tip is to pay off your bill payments on time as this could boost your payment history.
• Double-checking your reports. Audit your credit reports and other statements to identify errors or duplicates in charges. Disputing these errors can ease your credit score.
• Exploring credit-builder loans. These are specifically made to boost your credit score. It still works like a personal loan, but instead of receiving the loan amount upfront, the funds are typically placed in a savings account, which you can use at the end of the term.
• Opting for secured loans. Using collateral when applying for loans can help you get approved more quickly for offers with low interest rates. Depending on the provider, it can also allow you to have access to more flexible repayment terms.
• Postponing your loan application. Take a step back and ask yourself if you need this loan urgently. Consider taking time to build credit credibility first before taking a loan so that you can choose among better offers.

Protecting Yourself from Loan Scams

Although looking into bad credit loans online and pre-applying for them may be a good idea, you must also be aware of the dangers of falling for loan scams. According to the Federal Trade Commission, from 2021 to 2023, the majority of reported fraud losses were channeled through social media platforms, resulting in a total loss of $2.7 billion (Fletcher, 2023). To assist you in steering clear of loan scams and dubious offers, we compiled a list of red flags to watch out for:

• Asking for your login credentials, bank account information, or other sensitive details
• Requiring you to pay upfront fees before providing details about the loan
• Insisting that you need to wire money or transfer gift cards to an account to be qualified
• Offering services or terms that are too good or easy to be true
• Using pressure tactics or saying that the offer will expire if you do not take it as soon as possible
• Lacking address, contact information, or legitimate credentials when verified
• Displaying consistent errors in spelling, sentence structure, or tone on digital trails
• Claiming that they do not do credit reports or score checks

Alternative Loans for Bad Credit

Relying on bad credit loans online may sometimes fall short, especially for individuals with poor credit scores. Apart from credit unions, nonprofits, banks, and secured loans, you can choose from the following loan options to obtain some cash for your needs:

• Government assistance programs. Depending on your situation, government assistance programs may provide financial support or loans through local or federal initiatives.
• Salary advance requests. Some employers offer in-house salary advance programs, emergency funds, or financial assistance to help employees manage unexpected expenses.
• Relatives or friends. Never underestimate the support and assistance of your family and close friends. Although borrowing money from them may seem awkward, they are more likely to understand your situation and needs.
• Peer-to-peer lending. P2P lending platforms connect borrowers directly with individual investors. Some P2P lenders are more lenient in assessing creditworthiness and offer competitive rates.
• Cash advance for credit cards. While not ideal due to high interest rates, a cash advance or withdrawal from a credit card may provide quick access to funds.

Enhance Your Financial Security with Greater Insight into Bad Credit Loans Online

In this guide, our team provided thorough explanations and clear examples of how to get bad credit loans online to assist those with less-than-perfect credit. We also offered insights into effective strategies for comparing, qualifying, and securing bad credit loans and suggested a list of credit loan providers online to help you start your prequalifying process.

Borrowing money—or maintaining a good credit reputation for that matter—is no easy process. However, by equipping yourself with knowledge about bad credit loans, their qualifications, processes, and alternatives, you are better prepared to make informed financial decisions. Moreover, in doing so, you can reflect on your financial preparedness and regain control of how you manage your money toward a more secure and stable future.

By Louie Andre

B2B & SaaS market analyst and senior writer for FinancesOnline. He is most interested in project management solutions, believing all businesses are a work in progress. From pitch deck to exit strategy, he is no stranger to project business hiccups and essentials. He has been involved in a few internet startups including a digital route planner for a triple A affiliate. His advice to vendors and users alike? "Think of benefits, not features."