Even with poor credit, you might still need a personal loan for one reason or the other. An emergency doesn’t consider whether you have a good credit score or not. When you are strapped for cash you consider any solution to tackle the issue at hand. This is why lenders have come up with unsecured loan options for customers with bad credit scores.
These loans are charged higher interest. You receive a smaller amount compared to those with a good score. The repayment period might also be significantly reduced for this type of loan. Consider all these factors before you apply for one. Many lenders require you to have another person with a better score to co-sign the loan for you. This person agrees to take up the burden of paying back the loan in case you don’t finish paying.
The one you pick to co-sign the loan with you should have a secure source of income that is probably higher than yours. The one that co-signs the loan is liable until you finish paying it off. If you default then the lender comes after them.
What is Credit Score?
When you come across the term credit score as you’re applying for an unsecured loan, you must understand what it means and get your rating. It is what determines your creditworthiness. This depends on your finances and all the debts that you have. A good credit score is rated high which means you are financially stable and can be granted a loan by any lender. With a high score, you’re even in a better position to discuss lower interest rates.
For those who have a lower score, getting a loan approved can be a tough process. The credit score was introduced by FICO (Fair Isaac Corporation) which is the company that runs it up to date. It quickly became how lenders can get information on an individual’s financial history at the click of a button.
A poor score doesn’t necessarily mean you can never raise it. All that is required is for you to pay back what you owe and take on little debt. Strive to improve your credit score because having a low score has a bad effect on your finances. Not all lenders have options for those with low credit scores and this limits you when shopping for the best unsecured loan. You can opt to consolidate all your debt and get one unsecured loan even with a higher interest rate to clear it all. After that, you keep your credit cards free of unnecessary expenditures and pay off the borrowed loan.
Most credit scores for individuals lie between 380 and 850 with 850 being the best score that can grant you to some of the best unsecured loans in the market. With a score of 380 and below, not many lenders can even consider giving you a loan. Remember to never close a credit card account when working to raise your credit score because this can work against you. Opt to not use it and keep it away.
Personal Loans for Poor Credit Score
| Lender | Max. Loan Limit | Interest Rate % | Longest Terms Acceptable | Lowest Credit Score |
| One Main Financial | $20000 | 18% to 35.99% | 2 to 5 years | N/A |
| Lending Point | $25000 | 9.99% to 35.99% | 2 to 5 years | 585 |
| Lending Club | $40000 | 6.95% to 35.89% | 3 to 5 years | N/A |
| Avant | $35000 | 9.95% to 35.99% | 2 to 5 years | 580 |
| Peerform | $25000 | 5.99% to 29.99% | 3 to 5 years | N/A |
| Upgrade | $50000 | 6.98% to 35.89% | 3 to 5 years | N/A |
1. One Main Financial
With this lender, you can manage to get an unsecured loan even with a poor credit score. One Main Financial is one of the most sought-after lenders by many people intending to borrow even though their credit rating is significantly low. With this loan, you aren’t required to meet a certain set minimum credit score. Meaning you can apply even with the poorest score. This service is available to borrowers who have bad credit but still need a quick cash infusion for example to handle an emergency.
The lender protects their interest because of the poor credit rating and this being an unsecured loan. This is accomplished by charging you a high interest rate of up to 35.99%. This loan also incurs an origination fee of up to 10% depending on where you’re located in the country.
The minimum amount you can borrow is $1000 and the maximum is set at $20000. The loan duration is between 2 to 5 years and you are charged a late fee of up to 15% if you make a delayed payment. The good thing is the loan takes only one business day to process, therefore, efficient for an emergency.
Pros
- One business day loan processing
- No credit score limit set by the lender
- Good repayment period of 2 to 5 years
Cons
- High-interest rate charged of up to 35.99%
- Origination and late fees apply on this unsecured loan
2. Lending Point
You can secure a loan that has more flexible terms from Lending Point when it comes to how to pay it back. This works to your advantage because you can opt to pay it all quickly or select the longest time to pay it back. The good thing about this lender is that you can opt for different payment options. You can choose to make installments every two weeks or every month. This flexibility makes it easier to figure out how best to pay it depending on your income.
There is a limit to the credit score accepted by this lender, unlike others who don’t have a specified one. The credit score limit is set at 585 and anything lower can’t get you a loan. The loan you get ranges from as little as $2000 to a maximum amount of $25000 only. It works if you borrow within this range. For anything higher, you need a better credit score.
The interest rate is set from 9.99% to 35.99% depending on the amount you borrow. This high rate is to safeguard the lender due to the lower credit score required. You can pay back the loan within 2 to 4 years.
Pros
- Can opt to pay biweekly or monthly
- Loan is processed fast
- No late payment fee is charged for any delay
- Low credit score of 585
Cons
- Low loan limit of $25000 only
- Harder for those with even lower credit score to get
3. Lending Club
Yet another great option for those seeking unsecured loans with low credit score. This lender operates online and manages to dispense many loans to its customers. There is no minimum credit score required as per the website. This means that if you have a poor credit score you can get a loan. The only catch is the interest rate charged on such a loan will be significantly higher than that of one with a higher credit score.
The interest rate starts from as low as 6.95% up to 35.89% depending on the amount you seek to borrow from the lender. There is an origination fee charged on the loan from 1 to 6% and the repayment period is set at 3 to 5 years. The least amount you can borrow is $1000 and the maximum is set at $40000 which is higher than what most lenders offer. You are charged a 5% late fee in case of any delayed payment.
Pros
- Larger maximum loan limit set at $40000
- Longer repayment period of up to 5 years
- Can be processed in one day
- No specified credit score limit
Cons
- High-interest rate of up to 35.89%
- Origination and late fees are applicable
4. Avant
One of the top lenders when it comes to unsecured loans is Avant through which you can get a loan even with a low credit score. The only catch here is you end up paying a high-interest rate on it. Even though the credit score is low there is still a limit to keep in mind which is 580. With this credit score, you can secure a loan from a minimum amount of $2000 to a maximum of $35000. The interest rate charged starts from as low as 9.95% to a maximum of 35.99% which is high considering the maximum loan amount received.
The lender requires you to pay back the loan within 2 to 5 years and you can receive the loan as soon as the next business day if approved. There is an origination fee applicable of 4.75% and a late fee charged at $25 if you delay paying the loan with 10 days or more.
Pros
- Easy processing that takes only one day to complete
- Longer repayment period of up to 5 years
Cons
- High-interest rate charged from 9.95% to 35.99%
- Low loan limit of up to $35000 only
5. Peerform
Peerform is the best option when seeking to consolidate your loans to tackle bad credit card debt. This is not the only purpose as you can use it for any other emergency that requires a fast infusion of cash. There is no set credit score rating required when applying for this loan. However, you must ensure that you have made your payment religiously for at least one year to qualify.
The repayment period extended to borrowers by this lender is between 3 to 5 years. The minimum amount you can borrow is $4000 while the maximum is set at $25000. There is some origination fees charged on this loan. The lender deducts it from the loan once it’s processed. The interest rate charged is fixed and ranges from 5.99% to 29.99% which is lower as compared to what other lenders are offering in the industry.
Pros
- Longer repayment period of up to 5 years
- Lower interest rate as compared to other lenders
- Not specified credit score limit
Cons
- Low maximum loan limit of $25000
- Origination fees deducted from the loan once processed
6. Upgrade
Upgrade gets you one of the highest maximum loan limits as compared to what other lenders offer. This is important because the lender doesn’t specify any minimum acceptable credit score to qualify. Still, the interest rate charged on this type of loan is quite high ranging from 6.98% to 35.89%. It has the best maximum loan limit and might be the better option when you need more money than what others offer even at a higher interest.
The maximum loan limit is set at $50000 and you should repay it within 3 to 5 years from the time of approval. The lender doesn’t charge any prepayment penalties for this loan and the monthly installments are quite affordable, to say the least. This is why many borrowers who need a larger amount opt for this loan from Upgrade. It takes only one business day to process the loan after handing over your application.
Pros
- Higher loan limit of $50000
- Longer repayment period of up to 5 years
- Better interest rate charged as compared to other lenders
- No specified credit score
Cons
- Late and origination fees apply
Conclusion
Getting an unsecured loan with a poor credit score is possible even though the loans available charge a high-interest rate. Shop around for the best option depending on how much you need and the repayment period you are seeking. Most of these companies charge some origination fees to process the loan that are either deducted from the gross or added to the total amount owed.
Late fees apply in case you delay any payment. Most loans have a repayment period of up to 5 years giving you enough time to pay it back. You might need someone to co-sign the loan and be held liable in case you don’t pay it all back.