Tag: Bad Credit

Advertiser Disclosure

Pay Down My Debt, Personal Loans

Personal Loans for People with Bad Credit

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Personal Loans for People with Bad Credit

Updated July 20, 2016

When your credit is less than satisfactory, it can be difficult to find a lender willing to give you a personal loan. That doesn’t mean it’s impossible to find one – there are more options available now than ever before to get a personal loan with bad credit. What’s better is you can easily apply online to see the rates for which you qualify – without hurting your credit score.

In recent years, lenders like Springleaf, Avant, and LendingClub have been making loans to people with less than perfect credit. They each have lower credit thresholds and none rely solely on your FICO score when deciding to lend to you, making it easier to qualify.

Even though you might have a poor credit score, your actual credit history may not be that bad. Your credit file could be thin because you didn’t start building any credit until recently, or maybe you’ve only ever had one open line of credit. Whatever the reason, just because your score is low doesn’t mean you’re not creditworthy, and these lenders know that.

Therefore, it’s worth making sure you’re still getting a decent deal on personal loan terms. It can be easy to think that because your score is low, you’ll be approved for a less than ideal interest rate, but you shouldn’t accept the first offer that comes your way.

Start Shopping for a Loan Here – LendingTree

With LendingTree, you can apply to dozens of lenders with a single application form. LendingTree will perform a soft credit pull – which means your credit score will not be harmed. Lenders will compete for your business and will let you know how much you can borrow. You will also be told the interest rate. Because LendingTree works with so many lenders, this is a good place to start if your credit isn’t perfect. Rather than taking time to apply (one at a time) to multiple lenders – a single application form can save you a lot of time.

Avant Personal Loan

You could borrow anywhere from $1,000 to $35,000 with a personal loan through Avant. Specific rates and terms vary depending on your state of residence, but in general APRs range from 9.95% to 35.99%.

Checking your rates through Avant doesn’t affect your credit score – it’s initially just a soft pull. On its FAQ, it states most customers have a credit score ranging from 600 to 700, though you can still qualify with a lower credit score.

Its customer service team is on staff seven days of the week to assist you in case you have any questions. It’s also possible to receive your funds as soon as the next business day.

There is no prepayment fee. Loans are available in all states except Colorado, Iowa and West Virginia.


Apply Now


LendingClub Personal Loan

LendingClub* is different than Springleaf and Avant because it’s a peer-to-peer lender. Individual investors can choose to put their money toward your loan – the money isn’t coming from a bank.

You can borrow anywhere from $1,000 to $40,000 with LendingClub. You can borrow for up to 5 years. Its APR ranges from 5.99% to 35.89%.

For example, if you borrow $20,000 on a 5 year term at an APR of 8.91%, your monthly payment will be around $185.24. That’s including an origination fee of 3% (or $600), so the total amount you receive would be $19,400.

There’s no prepayment penalty, but you need to watch out for the origination fees. These range from 1% to 6%, depending on your loan grade. Remember to factor this in when receiving offers, because being charged an origination fee lessens the amount of money you actually receive.

To be eligible for a loan with LendingClub, you must be 18 years or older and have a verifiable bank account. You must be a U.S. citizen, permanent resident, or have a valid long term visa. Your credit score should be at least 600 to qualify.

LendingClub does not offer loans in Iowa and West Virginia.

When determining creditworthiness, it takes the following into consideration:

  • Debt-to-income ratio
  • Credit score
  • Length of credit history
  • Number of open accounts
  • Usage and payment history
  • Other credit inquiries over the past 6 months

It has an A+ rating with the BBB and has been accredited since 2007.


Apply Now

*referral link

Springleaf Personal Loan

Springleaf offers personal loans ranging from $1,500 to $10,000. You can apply for a secured or unsecured loan. You can also apply online and have a decision within a day.

Springleaf has been around for over 90 years, has an A+ rating with the BBB. It is a brick-and-mortar bank with over 800 branches across 27 states. Unfortunately, that means it’s limited to those with branches nearby, as you need to physically sign for the loan.

Its website has minimal information on APRs, terms, and fees for loans, but from the calculator provided, we know the APR range is 15.99% to 39.99%, and 2 to 5 year terms are offered.

Springleaf also has a track record for working with borrowers who have low credit. You need a minimum credit score of 550 to qualify.

What would an example loan look like? If you borrow $4,000 on a 3 year term, at an interest rate of 30%, your monthly payment will be around $169.81.

You can check to see if Springleaf has a pre-qualified offer for you, as it doesn’t affect your credit score. If you do accept its offer, then a hard credit inquiry occurs.


Apply Now

*referral link

Which Lender is the Best Choice?

It’s largely going to depend on the rates you receive. Luckily, with Avant and LendingClub, you’re able to apply without a hard inquiry on your credit, which allows you to shop around without worry. It’s smart to start with these two lenders and see which of the two offers you better terms.

Here’s a side-by-side comparison of the rates and terms offered by all 3 lenders:

Criteria Springleaf Avant LendingClub
Amount Borrowed Up to $10,000 Up to $35,000 Up to $40,000
APR Range 15.99% – 39.99% 9.95%-35.99% 5.99% -35.89%
Length of Loan Up to 5 years Up to 5 years Up to 5 years
Min. Credit Score 550 580 600

Your best option is to shop around. You can apply to LendingClub, Prosper and Avant without hurting your score. We recommend you start there first.

If you need the money today and live near a Springleaf branch, that is your best option. But if you can wait a day, Avant is able to get the funds to you in one business day.

Customize your personal loan offers with comparison tool

We’ll receive a referral fee if you click on the “Apply Now” buttons in this post. This does not impact our rankings or recommendations You can learn more about how our site is financed here.

Erin Millard
Erin Millard |

Erin Millard is a writer at MagnifyMoney. You can email Erin at erinm@magnifymoney.com

TAGS: , , , ,

Get A Pre-Approved Personal Loan


Won’t impact your credit score

Advertiser Disclosure

Building Credit, Pay Down My Debt

Looking For A Credit Card With Bad Credit?

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.


If you have a bad credit score, it can be very difficult to get approved for a credit card or a loan. And even if you are approved, you will end up paying significantly higher interest rates. If you’re looking for a credit card with bad credit, this guide will help you understand:

  1. Is your credit really that bad?
  2. What is the best option to get approved now?
  3. Which companies should you avoid?
  4. How can you build your credit score so that you qualify for the best deals in the future?

The rest of this guide will help you understand other options to build your credit or get access to credit now.

1. Is Your Credit Really That Bad?

In order to be approved for a good credit card or loan offer, you typically need to have:

  • A 650 FICO score or higher: If you obtain your credit score from free sites like CreditKarma, you are receiving your VantageScore. The ranges on the VantageScore are similar to your FICO score and also give a good indication of your chance of being approved.
  • A debt-to-income ratio of less than 40% to 50%: That means all of your credit bureau debt (mortgage payment, auto payment, credit card payments and any other debt on your credit report) can not be more than 40% of your monthly paycheck (that’s *before* taxes get taken out).
  • A job: Most creditors want to see that you are employed, and that you have a minimum income. Freelance or contractor work will likely make it harder to be approved for a loan or debt refinancing.
  • No currently delinquent balances: It is possible to have a score above 650, but to be delinquent on a credit card (for example). Most lenders will not approve someone who is not up-to-date on all of their payments.

In general, if you meet those guidelines, you should qualify for the best offers (and don’t need to ready any further). You should be applying for the best cash back credit cards, the longest 0% balance transfers, and the cheapest personal loans.

If you do not have a job, your debt burden is already above 50%, or you are delinquent on loans today, you will likely find it very difficult to be approved by any reputable lenders regardless of your credit score. Payday lenders and title loan companies would make a deal with you, but you should avoid them at all cost. Payday and title loans are traps, and you will be lucky to pay less than 300% interest rates. If you can’t find other ways to increase your income, you really need to consider restructuring your debt, rather than borrowing more. We can walk you through that process in our free Debt Guide, and you can even set up a free 30 minute consultation to discuss your options with us.

If you have a good debt burden and a job, but your score is still below 650, you do have options. We will explain those options in the next section.

2. Cheapest Options For Obtaining Credit Now

Typically, the best option for people with scores below 650 is a personal loan. However, some credit unions offer credit cards that would also provide a good deal.

If Your Score is Between 620 – 650

PenFed Promise (Credit Card): PenFed is a credit union that anyone can join. For just a $15 donation to support the troops, you can become a member. MagnifyMoney has awarded PenFed Promise an A+ transparency score because it has no late fees, no risk-based re-pricing, no penalty fees and no foreign exchange fees. In addition, you can transfer debt from existing high rate credit cards to PenFed Promise, and you would only pay 4.99% for the first 12 months. PenFed will approve people with lower credit scores, but they still have very strict rules on debt burden. In addition, you are much more likely to be approved if your score is low because of limited activity, rather than delinquency. If you have a lot of defaults and missed payments, PenFed will likely reject you.


Apply Now

Other traditional credit card issuers: Lenders like Citibank are gradually reducing its score cutoffs towards the 620+ range. And Capital One has a long history of approving customers in this space. You can actually see if you are qualified for these credit cards without hurting your score via a Pre-qualification Tool.

LendingClub* (Personal Loan): LendingClub is an online lender that is offering very competitive interest rates to people with lower credit scores. Interest rates range from 5.99% – 35.89%, and if you apply online, you can find out your interest rate without hurting your credit score. Your score should be at least 600. LendingClub is not available in Iowa or West Virginia.


Apply Now*referral link

Prosper (Personal Loan): Prosper is also an online lender, very similar to LendingClub. It also allows you to apply and see if you would qualify without hurting your score. Its interest rates go up to 35.97%, and it will often approve people that LendingClub would reject.


Apply Now

Below 620, or You Were Rejected By Everyone We Just Mentioned Above

If your score is below 620, your options are even more limited. However, there are companies you can consider. There are a few personal loan companies that specialize in this area. And, in the credit card space, we strongly recommend applying for a store credit card.

  1. Personal Loan

You might want to consider three companies that will lend to people with credit scores below 620. One of them (Avant) is an internet-only lending platform. The other two (OneMain* and Springleaf*) have branches.

Avant*: Avant offers access to loans from $1,000 to $35,000 and rates from 9.95% to 35.99%. The loans are amortizing loan and will be paid off during a fixed term. You can check your rates online to see if you qualify without hurting your credit score, and Avant looks beyond just your credit score, unlike other traditional lenders. Avant is available in all states except Colorado, Iowa and West Virginia.

35.99% is a high interest rate. If you are financing an emergency, this is better than a payday loan. However, we strongly recommend that you download our Debt Guide and set up a free consultation so that we can help you build a plan to get debt free forever.

Otherwise, consider applying to OneMain Financial. You can see if you are pre-qualified online (this is a hard inquiry on your credit report and will cause a dip in your score). However, you need to visit a branch to close the loan and receive the funds. You can receive the money in the same day (sometimes less than 30 minutes), but you need to be prepared to verify your income and visit a branch. Because you need to have a branch in your neighborhood, you should look for a local branch before applying. These lenders can go all the way down to a 500 credit score. With these lenders, you really need to make sure you know the following:

  • You should probably avoid the insurance that they offer at the time of the loan closing. Most of these policies are incredibly expensive. If you need life insurance, you should buy a good term life policy that covers everything you need, not just this loan.
  • Be careful about renewing the loan with these lenders. After 6 months, they will try to encourage you to take more cash. Because these lenders charge origination fees and, in the case of Springleaf, have pre-computed interest, paying off early means your actual interest rate will be much higher than the advertised rate.
  1. Store Credit Card

Store credit cards (like Walmart, for example) often approve people with credit scores as low as 520. In addition, they usually have no annual fee. And although the interest rates are not low, they are much lower than other subprime credit cards.

There is a reason store card approve people with such low scores. Banks fight hard to win a co-brand deal with a retailer. For example, Citi just made a huge bid to steal the Costco co-brand away from American Express. When banks bid for these deals, the retailer is very focused on the credit card approval rate. The retailers want to sell as much product as possible, and credit cards help them do that. And, when they make banks compete for the co-brand credit card deals, they force banks to agree to approval rates that are much more liberal than the bank’s usual criteria. Banks are willing to do this, because they either get all of the business (if they win the co-brand deal), or they get none of it. That is why you will see store card cutoffs in the 500s, when the same bank may only approve you with a 650 on a normal bankcard.

Here are some store cards with no annual fee that you can apply for online

3. Which Companies Should You Avoid?

There are a number of credit card companies out there targeting people with scores below 650. They have a very simple model:

  • Charge an application fee
  • Offer a very low credit limit
  • Charge a high annual fee (that uses up a big portion of the line)
  • Charge very high interest rates
  • Collect aggressively
  • Charge very high late fees

This is the standard playbook. You are much better off applying for a store credit card or a personal loan than turning to one of these lenders. One of the worst is First Premier, and we gave it an F (on our transparency score) in this article. It has a $95 application fee, a $75 annual fee and usually only offer $300 credit limits. And the interest rate is 36%. When First Premier increases the credit limit, it charges you 25% of the increase as a fee. This card is a tool to generate fees for the credit card company, rather than to provide affordable access to credit for the borrower. A store card would be a much better option.

Payday Lenders and Title Lenders of all types should be avoided. Payday lenders have a simple product construct. They will lend you money with very few questions asked. For every $100 you borrow, they will typically charge $15 – $20. In two weeks, you will be given a choice. You can pay the $15 – $20 fee to extend the loan, or you can pay back the full balance and the fee. So, you are given the choice of an interest-only payment or a balloon payment. Because it is not an amortizing loan, you end up in a debt trap, where you balance grows rapidly over time. Once you get into a payday loan, it is very difficult to get out.

[Stuck in a Payday Loan Trap? Read this article.]

Title loans are fee and interest machines. They try to get as much cash out of you as possible, and then frequently repossess the automobile.

4. How To Build Your Credit For The Future

Ultimately, your goal should be to get a credit score above 700. At that level, you can qualify for the best deals and refinance any high interest rate credit card debt to much lower rates.

Here are the most important things to remember for getting a good credit score:

  • You need to constantly feed your credit report with positive information. That means you need to use credit (you don’t need to pay interest!) and you need to make payments on time. If you don’t have any credit at all, you should start building by finding a secured credit card. We compare the best here.

[Read Build Credit with $10 a Month on a Secured Card]

  • You must bring all of your accounts up-to-date. And you must pay on time every month. Even just a single missed payment (more than 30 days late) could be enough to keep you below 700.

[Read 6 Simple Steps to Improve Your Credit Score]

  • You should watch your credit card balance carefully, and make sure that you never charge more than 20% of your total available credit. If you have $30,000 of available credit across three cards, make sure your total statement balance stays below $6,000. Using a personal loan to pay down your credit card debt will reduce your utilization and help boost your score. (Just make sure you don’t fall into the credit card debt trap again).

[Read Decoding How FICO Determines Your Credit Score]

  • If you have collection items, do not enter an arrangement where you only pay small amount each month forever. That will likely be a much more expensive way to settle the debt. In addition, by paying the debt you may restart the statute of limitations (in some states). Also, some collection agencies will be liberal with their reporting and will try to use the recent payments to keep the collection item alive on your credit report. If that happens, you should complain to the CFPB. The better strategy is to save up money each month (rather than making a monthly payment) and try to settle with your collection agency in full and get a “pay for delete” while you are at it – so that they remove the item from your credit report after you pay in full. And if the item is close to 7 years old, it might be wise to ignore it. Once it is 7 years old, it no longer impacts your credit score.

[Read 7 Things You Need to Know If You Have Debt in Collections]

You can read all about how to build your credit score in our free Debt Guide, starting on Page 30. Please email us (info@magnifymoney.com) with any questions, and one of our experts will do their best to help you.


*We’ll receive a referral fee if you click on offers with this symbol. This does not impact our rankings or recommendations. You can learn more about how our site is financed here.

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

TAGS: , , ,

Get A Pre-Approved Personal Loan


Won’t impact your credit score

Advertiser Disclosure

Building Credit

Do I Really Have Bad Credit?

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

credit score

“Do I have bad credit?” The answer to this question can determine whether or not you will be approved for mortgages, auto loans or credit cards. It will also determine how much you will have to pay for those products if you are approved.

Different Types of Credit Scores

The traditional measure of your credit worthiness is a credit score. And the original credit score was FICO. This score is still used in nearly 90% of all lending decisions, and is particularly important in the mortgage market. It is fairly easy to get your FICO score for free. We tell you where you can find a free FICO score here.

FICO measures how successfully you have managed consumer debt in the past. The most important factor in the score is on-time payment history. The score also looks at how much debt you have (the less debt and the lower utilization the better) and how long you’ve had credit. In addition to missed payments, negative items like collections, judgements and foreclosures can have a big impact on your score. Based upon your behavior, you will receive a score between 300 – 850.

The three credit bureaus, tired of FICO’s monopoly, created VantageScore. It looks at many of the same attributes, and it uses the same scale. That is why it is often referred to as the FAKO. Most of the free credit score websites provide you with a VantageScore.

The scale on FICO and VantageScore is similar. You can see what those scores mean here:

  • Above 750: Excellent Credit
  • 680 – 749: Good Credit
  • 620 – 679: “Near Prime” or Acceptable Credit
  • 550 – 619: Sub-prime
  • Below 550: Bad Credit

With Excellent or Good credit, you will likely be approved for almost any credit product. Near-prime customers are seeing more options every day, as banks and finance companies expand their product offerings. Sub-prime borrowers will have fewer options available, and they will all be very expensive.

People with Bad Credit have a score below 550. If your score is this low, it will be very difficult to obtain any financial product. Your focus should be on improving your score, which we explain in our Debt Guide.

There is no difference between having no score and having a bad score. If you have no credit history, you should start building it with a secured credit card.

Screen Shot 2015-03-23 at 5.17.29 PM

Is My Credit Score Enough?

Your credit score is a good indication of whether or not you will be approved, but it is not enough.

Credit card decisions are largely automated and score-driven. However, in addition to your credit score your debt burden is extremely important. Your credit score does not know how much money you make. $20,000 of debt can be a lot (if you make $40,000 a year), or not much at all (if you make $500,000 a year). Your debt burden looks at your monthly expenditure and compares it to your monthly income. Usually, only expenditures reported are the credit bureau are included. That means things like your mortgage, car payment, credit card payments and any other form of unsecured debt. If your debt burden is above 50%, you are typically considered a bad credit risk and would be declined by most lenders. Excellent Credit means a debt burden below 30%. And there are debates about everything in between.

In addition, most banks will look at how rapidly you have been building up debt. If you have been accumulating a lot of debt recently, the bank will likely consider you a high risk, and you will have fewer opportunities to borrow at a good interest rate.

For products like mortgages and auto loans, your down payment and income are also extremely important when the bank considers your level of risk. The lower the down payment, the higher the risk.

Especially for mortgages, you will probably have your income and employment verified. Banks like people with steady jobs and a long history of employment. If you have highly volatile income, you are considered riskier and may be rejected. Or, the bank may not consider all of your income, given its volatility.

So, What Is Bad Credit, Really?

When people talk about their “credit,” they are really talking about their likelihood of being accepted. To have bad credit means that you have a low chance of being approved. And here are the main reasons you find it impossible to get any form of credit approved:

  • Your score is below 550
  • Your debt burden is above 50%
  • You have no credit score
  • You have been building up a lot of debt recently
  • You are unemployed

The only way to improve your debt burden is to pay down your debt or increase your earnings. If you are starting from no credit score, you can build a good one very quickly. Improving a damaged score takes more time, but it can be done. In a worst case scenario, every negative item will disappear from your credit score in seven years. But most people, with focus, can have a dramatically better score in 12 to 18 months.

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

TAGS: , ,

Get A Pre-Approved Personal Loan


Won’t impact your credit score