Key takeaways
- Lenders who offer loans for people with low credit may accept FICO scores as low as 560 or may not require a credit score at all.
- Every lender has different borrowing requirements and maximum loan amounts.
- Upstart, Avant and LendingPoint are three of the best lenders for poor credit due to their lending models, APR ranges and repayment terms.
Multiple lenders that serve bad-credit customers advertise amounts ranging from $1,000 to $50,000. But if your credit is poor, you might not be offered a lender’s maximum amount. The amount you will vary based on your creditworthiness and the lender’s underwriting criteria.
If you have a poor credit score, qualifying for a loan will be more challenging but is often still possible. However, bad credit loan rates are often high. That can make your payment pricy and further limit the amount you can borrow.
How much can I borrow with bad credit?
Your credit score tells lenders how you’ve handled credit in the past. A low score might mean missed payments or other issues. Lenders are likely to limit your loan amount to minimize their potential losses.
A bad credit score is typically defined as a FICO score below 670 or a Vantage score below 661. Lenders may have their own definitions.
Credit score and history
Your credit score is among the most important factors to lenders when you apply for a loan. Lenders will conduct a hard credit check to look at your credit report when deciding your eligibility. Your credit report houses all of your repayment information and credit history, including any missed payments, open accounts and your debt-to-income ratio.
They also evaluate your credit score to gauge your creditworthiness — the higher, the better.
If you apply with a lender offering bad credit loans, you could get approved with a score as low as 550 or no credit score at all. Still, a higher credit score could mean access to more funds. For example, Earnest has a maximum borrowing cap of $250,000 for those with excellent credit of 800 and above.
Debt-to-income ratio
Your debt-to-income (DTI) ratio is the percentage of how much you owe monthly versus your gross monthly earnings. To calculate your DTI, add up all of your monthly debt payments, such as student loans, auto loans, mortgage payments and credit card balances, and divide by your gross monthly income.
Ideally, most lenders prefer DTIs under 36 percent, but some will accept ratios as high as 50 percent. The lower your DTI, the more confidence a lender will have in your ability to take on more debt.
If your DTI is well over 50 percent, consider dedicating time to paying down your existing debt before taking out another loan. If you need the cash immediately, look for lenders that don’t have a DTI specification or accept high ratios.
Income and other factors
Each lender will have differing criteria when assessing eligibility and default risk. If the loan is specifically advertised to those with bad credit, the lender will look at other aspects of your finances to judge whether you can and will pay off your loan.
Upstart, for example, offers unsecured loans up to $50,000 and doesn’t have a credit score requirement. But it has a minimum income requirement of $12,000 and also considers your education history.
Whether you have a co-signer
Adding a co-signer with a good or excellent credit may persuade a lender to approve you for a higher loan amount. A co-singer shares legal responsibility for repaying the loan with you. The lender knows that if you miss a payment, they have someone with a history of on-time payments to rely on.
Not all lenders allow borrowers to add a co-singer to their loan application. If you want to use one, check on the lender’s website or with customer service before applying.
Where to get a loan with bad credit
Even when you have a poor credit score, there are many places to get a bad credit personal loan. The potential for high fees and annual percentage rates (APRs) makes it important to shop around and find the best loan terms possible.
Here are some of the best lenders for bad credit. These lenders all offer prequalification, which allows you to preview your possible rates without hurting your credit score.
| Lender | APR range | Loan amount | Loan term | Minimum credit score |
|---|---|---|---|---|
| Upstart | 7.80%-35.99% | $1,000–$50,000 | 3 – 5 years | No requirement |
| Avant | 9.95%-35.99% | $2,000–$35,000 | 1 – 5 years | 550 |
| LendingPoint | 7.99%-35.99% | $2,000–$36,500 | 2 – 6 years | 600 |
Upstart
Bankrate’s view
Upstart considers more than just credit history when reviewing an application. It also factors in an applicant’s job history, educational background and even area of study. If approved, loan proceeds are disbursed and as little as one day. And if you plan to consolidate debt, Upstart will pay your creditors directly.
Pros
- Accessible to borrowers with low or no credit score.
- Funding in as soon as one business day.
- Attractive APR for borrowers with excellent credit.
Cons
- Origination fee of up to 12 percent — higher than most other lenders charge.
- Some states have higher minimum loan amounts.
- Only two repayment periods to choose from.
Avant
Bankrate’s view
Avant provides loans to applicants whose credit score is as low as 550. It also offers online prequalification to view potential rates without impacting your credit score. However, you cannot add a co-signer with a better credit score for a lower rate.
Pros
- Repayment terms as short as one year, letting you save on interest.
- Loans funded as soon as the next business day.
- No early repayment penalties.
Cons
- Smaller maximum amount at only $35,000.
- No co-borrowers or co-signers allowed.
- Administration fee of up to 9.99 percent.
LendingPoint
Bankrate’s view
LendingPoint offers lower borrowing amounts, as little as $2,000. Borrowers with bad credit may take out small loans and use them to improve credit through responsible repayment. However, you will need a verified income of at least $35,000 per year to qualify.
Pros
- Rapid approvals and funding timelines.
- Loan terms up to 72 months.
- Potentially secure a better rate after six months of timely payments.
Cons
- No co-borrowers or co-signers allowed.
- Loan origination fee of up to 10 percent.
- High maximum APR.
The easiest types of loan to get with bad credit
If you don’t qualify for the types of personal loans listed above, you might seek alternatives like these. Although these are the easiest loans to get if you have poor credit, they have risks.
- Emergency loans: This is a personal loan that often comes with a high interest rate and fees if your credit score is poor.
- Payday loans: These loans must be paid back by your next pay period. They often have triple-digit interest rates and fees and should be a last resort.
- No-credit-check loans: Another last-resort option, this type of loan is made for people with poor credit, and the APRs and fees can be extremely high.
Should you take out a personal loan if you have bad credit?
Even though getting a bad credit loan is often possible, some types of bad credit loans are more risky than others. A personal loan may be the least risky of your options if you need to borrow money. Personal loans come with months-long repayment periods and most have APRs no higher than 35.99 percent. By comparison, you only have two weeks to repay a payday loan and APRs may exceed 650 percent.
The bottom line
You may be able to borrow anywhere from $1,000 to $50,000 with bad credit. Getting approved for a personal loan with bad credit may be difficult, but it’s not impossible. Look for lenders specializing in poor credit loans or use a qualifying co-signer to increase your chances of getting approved.
While it may seem tempting to apply when you find a lender you qualify for, read the terms and conditions first to check for hidden fees or requirements not advertised on the primary website. Also, if the lender offers prequalification, try it before starting an application.
Be wary of the high interest rates and fees often associated with payday loans and no-credit-check loans.
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