The best lenders for bad credit of December 2021
Getting a loan when you have bad credit might seem daunting. But, with some research, you might be able to find one that fits your needs.
In assembling this list of the best loans for people with low credit scores, we only considered lenders willing to make loans to people with credit scores below 600, or credit that’s considered “very poor,” or on the low end of “fair,” according to FICO. Since many lenders require higher credit scores than that to borrow, that narrowed the list considerably.
Note that since lenders like to work with people who have good or excellent credit, they tend to offer higher interest rates and limited availability to applicants with lower scores. Getting a loan when you have bad credit can be difficult and the terms can be less than ideal, but sometimes it’s the best — or only — option available.
Here are the companies offering the best loans to people with bad credit right now.
Avant: Best personal loan
Other personal loan companies we considered:
- LendingClub: This popular online peer-to-peer lender has APRs similar to Avant, but has no clearly defined credit score minimum and potentially a higher origination fee ranging from 2% to 6%.
- OneMain Financial: Interest rates start at 18% through this lender, making it an expensive option.
- Upgrade: This online lender’s origination fees can be as high as 8%.
- LendingPoint: Interest rates starting at 9.99% combined with fees up to 6% make Avant’s slightly lower interest rate and lower origination fees a better option.
Capital One: Best auto loan, best auto refinancing
Other auto refinance loan companies we considered:
- LendingClub: This popular online peer-to-peer lender doesn’t offer any better interest rates than more reputable Capital One, but has more stringent requirements. LendingClub requires that refinance applicants have at least 24 payments left on their loan. Additionally, refinance loans are only available in 35 US states.
- RoadLoans: This lender is a part of Santander Bank, and makes loans to people with all credit types. However, it doesn’t provide much information on its website about the range of interest rates, making it hard to tell how much you could actually save by refinancing.
- OpenRoads: This lender requires a minimum credit score of 500, and requires a $1,500-a-month minimum income. However, it has some stringent requirements on the cars and drivers it accepts: It won’t make refinancing loans to self-employed people, and requires that the car model still is in production. With recent model-shake ups in 2020 and 2021, manufacturers have stopped making some sedans — models like the Volkswagen Beetle, Chevrolet Cruze and Impala, and the Fiat 500, for example, won’t be eligible for refinancing through OpenRoads.
Ascent: Best private student loan
Other private student loan companies we considered that didn’t make the cut:
We couldn’t find other lenders with credit score requirements at 600 or lower, so we considered popular lenders that require a slightly higher score:
- CommonBond: This online private student loan lender requires a cosigner for undergraduate loans, and has a higher credit score requirement than our winner, requiring a minimum of 660.
- Earnest: Another online student loan originator, Earnest requires a high minimum credit score of 650.
Frequently asked questions
Why trust our recommendations?
Personal Finance Insider’s goal is to help people make smart, informed decisions with their money. Our recommendations come from hours spent comparing and contrasting the fine print, interest rates, and requirements to find the best loans for you. While we know that the term “best” is subjective, we outline the facts from the highlights and lowlights of each of these financial products.
How did we choose the best loans for bad credit?
Insider considered many different factors in choosing the best personal loans. We considered information from the lenders themselves, and information from outside sources such as NerdWallet, ValuePenguin, Credit Karma, and LendingTree. Data considered included:
- Interest rate range: We considered the cost of borrowing, calculated as the interest rate. The higher the interest rate, the more it will cost to borrow over the life of the loan.
- Minimum credit score requirements: Each company has outlined a minimum credit score requirement, and won’t lend to anyone with a score lower than that. In this case, we only considered lenders with a minimum credit score requirement below 600.
- Fees: Some lenders charge origination fees, administrative fees, application fees, or other fees, especially lenders specializing in low-credit score loans. We tried to find the lenders with the smallest or no fees.
- Nationwide availability: Lenders considered had loans available in most US states, if not all 50.
What is a low credit score?
Your credit score is a three-digit number ranging from 300 to 850 that helps lenders evaluate your trustworthiness and the risk it is taking in lending to you. Banks use credit scores to decide how much it will cost you to borrow money from them — your interest rate.
To get your credit report from one of the three major credit bureaus, use annualcreditreport.com. You can get your report for free once per week through April 20, 2022. While you won’t receive your credit score on this report, you’ll get information about your credit and payment history. While reviewing your credit report, you can spot errors and figure out where you can improve.
You can obtain your score at no cost on your credit card statement or online account. You can also purchase it from a credit reporting agency.
In general, the lower your credit score, the more it will cost to borrow money. Here’s the breakdown on how scores are considered, according to FICO:
- Very poor: below 579
- Fair: between 580 and 669
- Good: between 670 and 739
- Very good: between 740 and 799
- Excellent: above 800
While your credit score will influence your interest rate, interest rates can also move on their own based on federal regulations. If you’re unable to find an interest rate you’re comfortable with, it might be worth working to raise your credit score before borrowing, or build more credit history.
Where else can borrowers with low credit scores find loans?
A great place to start looking for loans is at a local credit union, if you’re a member. Oftentimes, these smaller, member-owned institutions have low credit score requirements and lower costs of borrowing, too.
often offer car loans, mortgages, and personal loans, and may be more affordable than through a big bank. If you’re not already a member, many credit unions have fairly lax membership requirements, and you can join simply for living in a specific community or area.
If your credit score is very low, it might help to have a cosigner on your loan. However, it poses a risk to the person who cosigned for you — if you stop repaying, the cosigner becomes responsible for repayment, and their credit can be hurt, too.