We always want to have good credit, but for some unavoidable reasons, many of us end up having bad credit. Credit history is a track record about how responsible one is with her or his finance. For people with bad credit scores, it is difficult and extra challenging to get a new loan. They have limited options, greater restrictions, and usually pay higher interest rates than borrowers with a good credit score. Although they face many problems still bad credit holders can get a personal loan. Here you will know about the lenders that offer loans for borrowers with poor credit at reasonable rates and favorable terms & conditions.
What is bad credit?
In the US, there are three national credit bureaus – Equinox, Experian and TransUnion. Credit bureaus generate credit score using credit scoring models. FICO (Fair Isaac Corporation) is the main credit scoring system, creates a variety of FICO credit scores for lenders. Lenders use a FICO credit score while evaluating a loan application. The credit score ranges from 300 to 850 as follows:
Poor: 300 - 579
Fair: 580 - 669
Good: 670 - 739
Very good: 740 - 799
Excellent: 800 - 850
Even to qualify for a bad credit loan, you typically need to have fair credit. However, it depends on a lender how big risk it is willing to take.Â
What are bad credit personal loans?
Personal loan schemes which are specifically designed to individuals with less-than-average credit are known as bad credit score personal loans. This type of loan has greater restrictions, higher interest, and offered for typically shorter terms. Rates, fees and tenures may vary from lender to lender. Multiple credit unions, banks and online lenders offer this type of loan. As criteria and offers vary from lender to lender, it is vital to compare rates and terms from multiple lenders before you sign a loan agreement.Â
What rate can you expect?
Rates vary from lender to lender and are based on the range of your credit score, repayment capacity and loan amount. Here are average rates for different credit ranges.Â
Credit ScoreEstimated APR670 to 73913.5% – 15.5%580 to 66917.8% – 19.9 %300 to 57928.5% – 32%
Which lender is right for a bad credit loan in 2020?
Here is a list of some of the most popular lenders for bad credit loans in 2020 based on eligibility, fees, repayment methods, repayment tenure, credit score, and other additional features.
Best lender with a minimum loan amount
UpstartÂ
Upstart is a peer-to-peer lender and offers loans to younger buyers with a less developed credit history. No hard credit check is required for an Upstart personal loan.
Key details of Upstart bad credit personal loan
Minimum FICO score: 600
Loan amount: $1,000 to $50,000
Loan term: 3 to 5 years
Origination fee: 0% to 8%
Co-applicant option: No
Best bad credit loan with a co-signer
FreedomPlusÂ
FreedomPlus personal loan is exclusively designed for debt consolidation personal loan with fast approval and fund disbursal. It offers both joint and co-signed loans. Add a co-signer to improve your eligibility for a personal loan.
Key features of FreedomPlus bad credit personal loan
Minimum credit score: 620
E.S.T. APR: 7.99 - 29.99%
Loan amount: $7,500 - $40,000
Loan term: 2 - 5 years
Origination fee: 0% - 5%
Best lender for bad credit loan with restrictions
LendingPoint
LendingPoint is an online lender, offers a personal loan for individuals with fair and bad credit score with little debt. Notable features of Lending Point personal loan include flexible repayments, fast funding and refinance options. You can use the personal loan amount for any legal purpose. Â
Key features of LendingPoint bad credit personal loan
Minimum credit score: 585
E.S.T. APR: 9.99% - 35.99%
Loan amount: $2,00 - $25,000
Loan term: 2 - 4 years
Origination fee: 0% - 6%
Co-applicant option: No
Best lender for bad credit loans with fast access to funds
Avant
Avant offers an instant personal for borrowers with a low credit score looking for funds to consolidate debt or need money for essential expenses. With Avant, you can get a prequalified personal loan within one business day.
Key features of Avant bad credit personal loan
Minimum credit score: 580, varies case by case
E.S.T. APR: 9.95 – 35.99%
Loan amount: $2,00 - $35,000
Loan term: 2 - 5 years
Origination fee: Up to 4.75%
Co-applicant option: No
These are some of the best bad credit personal loans in 2020. You can compare rates and other terms to choose the best lender.
Note: APR, fee, loan amount, term, etc. may vary based on an analysis of information provided by you to lenders. These features are subject to periodic change, and lenders enjoy the sole discretion to do so. Lenders determine APR, fee, and terms depending on a borrower’s credit score, income and other factors.Â
Bottom line
While looking for a personal loan, you must understand the pros and cons of an unsecured personal loan. It is a very challenging task and involves lot of hassle for getting a loan with bad credit score. But there are some notable lenders who are willing to offer loans even for individuals with a bad credit. Getting a loan with a bad credit score will help you improve your credit score if you make payments on time without skipping any installments. Thus, you can get a bigger loan at lower interest rates in the future.