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Understanding Debt Relief Programs

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Nobody seeks out illness, job loss, divorce or any other financial catastrophe, but sometimes things happen. Many people will accumulate overwhelming debt loads as a result of such hardship. If the burden of your debt is too much for you to afford, what can you do? The worst thing to do is jump into a debt relief program without educating yourself.

In this guide, we’ll explain the risks and benefits of the most common types of debt relief programs.

Bankruptcy

Chapter 7 bankruptcy, also known as liquidation bankruptcy, offers comprehensive debt relief. In liquidation bankruptcy, a court-appointed bankruptcy trustee sells certain assets (called unprotected assets), and the proceeds are used by the trustee to repay your creditors. Following the distribution of funds, the court discharges the remaining eligible debts. That means you no longer owe the debt and collectors cannot contact you about the debt. Debts that the court won’t discharge include: income tax debt that’s less than three years old, child support or alimony payments, student loans and fees and penalties owed to the government.

Although Chapter 7 bankruptcy requires selling off your valuables, filing may not leave you penniless. Filers can keep protected assets, such as personal items and money in retirement accounts. Most states allow filers to keep a small amount of cash and some amount of equity in vehicles or homes.

Who is a good candidate for Chapter 7 bankruptcy?

Chapter 7 bankruptcy is available to anyone earning less than the median monthly income for a family of your size in your state. If you earn more than the median income, you may qualify for Chapter 7 bankruptcy through “means testing.” The means test shows whether you have enough income to cover a debt repayment plan that Chapter 13 bankruptcy requires.

Being eligible for Chapter 7 bankruptcy doesn’t mean it’s a good idea for you. Some people have too many unprotected assets to make Chapter 7 bankruptcy a reasonable option. Chapter 7 bankruptcy may force people into selling paid off cars, tools for operating their business or other important assets. In those cases, Chapter 13 bankruptcy or other types of debt relief may be a better option.

— Read our article on when to consider bankruptcy

How much will you pay for Chapter 7 bankruptcy?

The amount you’ll pay for Chapter 7 bankruptcy depends on a variety of factors, including where you live and the complexity of your case.

You can expect to pay $1,100-$1,200* in attorney’s fees when you file Chapter 7 bankruptcy, according to Lois R. Lupica’s Consumer Bankruptcy Fee Study. Filers must also pay filing and court fees, which adds several hundred dollars to the cost of bankruptcy. In general, all fees have to be paid before your attorney will file your case.

*Numbers adjusted for inflation.

How does bankruptcy affect your credit score?

Following bankruptcy, your credit score will drop, but it’s not necessarily a death sentence. Bankruptcy stays on your credit report for 10 years after filing, but your credit score can recover. You can take steps to grow your credit score immediately following Chapter 7 bankruptcy.

In some cases, bankruptcy filers choose to reaffirm debts as part of the bankruptcy agreement. That means they agree to continue paying certain loans (such as a car loan or mortgage) as agreed. Making those payments can increase your credit score over time. Making timely payments on a secured credit card can also help you rebuild your score.

Filing for bankruptcy becomes less significant as time passes and you continue to display positive financial management on your credit report.

Risks of bankruptcy

  • Lower credit score: Following bankruptcy, you can expect to see your credit score drop. The lower score may make borrowing inaccessible for several years.
  • Can’t take out a mortgage: Bankruptcy makes you ineligible to take out most mortgages. Following bankruptcy, you’ll have to wait two years to take out an FHA mortgage and four years for a conventional mortgage. — Read how to get a mortgage after bankruptcy here.
  • Loss of property: Chapter 7 bankruptcy means you may have to sell off assets, which could put you in a precarious financial situation. “In Florida, you only get a $1,000 vehicle allowance. The fact that you need a vehicle to get to and from work isn’t factored into the equation,” Shawn Yesner, a bankruptcy and debt relief attorney practicing in the Tampa Bay area, told MagnifyMoney.
  • Problems with professional licensing: Leslie Tayne, a debt management attorney practicing in the New York City and Long Island area, helps clients avoid bankruptcy through debt settlement. Many of her clients are financial professionals who could face trouble renewing their license if they filed bankruptcy. “In cases like that,” Tayne told MagnifyMoney, “the last thing you want is to file bankruptcy. Something happened that caused this person to get in over their head, but they shouldn’t lose their livelihood because of it.”

Benefits of bankruptcy

  • Automatic stay: The courts grant all bankruptcy filers an automatic stay against collections activities. This means that all collections activity against you has to stop right away.
  • Discharge most debts: People with very few assets (or only protected assets), can expect to have eligible debts discharged without paying anything except attorney’s fees and filing fees.
  • Quick resolution: On average, Chapter 7 bankruptcy resolves within 115 days. Within a few months of filing bankruptcy, you can expect to move on with your life.

Other types of bankruptcy

Aside from Chapter 7 bankruptcy, many consumers file Chapter 13 bankruptcy. Chapter 13 bankruptcy allows you to keep all of your assets, but it comes with a downside. Chapter 13 bankruptcy involves a debt payment plan that lasts three to five years. On top of that, the fees for Chapter 13 bankruptcy can be much higher than the fees for Chapter 7 bankruptcy.

6 things to do before filing for bankruptcy

  1. Talk to a lawyer for free: Before deciding to file bankruptcy, talk with a few bankruptcy attorneys. Many bankruptcy attorneys offer a free consultation to determine your eligibility and give you estimates of the fees.
  2. Explore alternatives: Bankruptcy is one option, but it’s not always the best choice. Before committing to bankruptcy, you may want to talk with a certified credit counselor about other options.
  3. Understand the costs: You’ll need to come up with $1,000 or more to pay for your bankruptcy fees.
  4. Find low-cost help: In some counties, you may be able to find free or low-cost legal help through Legal Aid.
  5. You can’t declare bankruptcy again for eight years: Bankruptcy is a form of last resort for debt relief. If you opt to declare Chapter 7 bankruptcy, you won’t be able to declare bankruptcy again for another eight years.
  6. Discharged debt is taxable: Bankruptcy may relieve you of your debts, but you will have to pay income tax on the amount of debt that is discharged. You may owe the IRS more than usual when you file taxes at the end of the year.

— Read our guide on when to file bankruptcy

Debt management plans

A debt management plan is a new payment schedule for paying off existing debts. These plans are created and administered by nonprofit credit counseling companies. Under the plan, credit counselors will consolidate your credit card debts, unsecured personal loans and bills in collections into a single, monthly payment. You’ll pay the credit counseling agency instead of paying creditors directly.

The credit counseling agency doesn’t just consolidate debt, it works to reduce your monthly payment. The agency may be able to reduce interest charges, get old fees waived and even extend the length of time you have to pay a loan. “Most of the time, people see smaller monthly payments when they go on a debt management plan,” said Robby Dunn, vice president of counseling at the nonprofit company, Consumer Credit Counseling Service of Buffalo.

What happens to credit cards?

In general, when you agree to a debt management plan, your creditors close down your lines of credit. This means that you cannot use your credit cards during the repayment plan. Dunn told MagnifyMoney that some people keep one credit card with a low balance off the debt management plan. This allows people to keep a source of credit available for emergencies.

Will a debt management plan help my credit score?

When you start a debt management plan, you’ll have to close every credit card account you have, even accounts that are in good standing. This reduces your length of credit history and results in an immediate drop in your credit score; however, most people can regain the lost points in six to twelve months.

What happens if I miss a payment?

It’s imperative that you stick to your repayment plan and don’t miss any payments. Your credit counseling agency won’t be able to pay your creditors if you don’t pay them, which doesn’t leave you with many good options. “It’s important to understand that your creditors aren’t likely to be empathetic toward you. They expect to get paid,” said Dunn.

Creditors that don’t get paid may drop out of the debt management plan and report that you’re no longer paying as agreed. The creditors may also attempt to collect your debts through other means.

Risks of debt management plans

  • Debts not reduced: Unlike other forms of debt relief, debt management plans don’t reduce the amount you owe. Instead, these plans reduce your interest charges and fees.
  • Difficulty getting new credit: Closing your current credit accounts may lead to a short-term drop in your credit score. On top of that, lenders may see that you’re repaying your debts through a credit counseling agency, which may affect their willingness to extend various types of credit.
  • Lower credit score: The goal of a debt management plan is to help you clear debt without declaring bankruptcy. Unfortunately, the plan may yield a lower credit score when you close down so many accounts.

Benefits of debt management plans

  • Lower fees: Compared with bankruptcy or debt settlement, debt management plans are a low-fee option. Traditionally, nonprofit companies charge a small setup fee (less than $100 in general) and a monthly service charge ranging from $25-$50. The CFPB recommends asking credit counseling companies about setup or monthly fees before you work with the company.
  • Avoid bankruptcy: By sticking with your debt management plan and making the agreed-upon monthly payments, you can avoid bankruptcy and pay off the full balance of your debt.
  • Reduce monthly payments: The debt management plan generally comes with lower monthly payments.

Things to know before accepting a debt management plan

  • How long the plan takes: Clearing all your debts through a debt management plan could take as long as five years. A credit counselor can walk you through the specific length of your debt payoff plan.
  • No debt forgiveness: Credit counselors don’t negotiate for loan balance reductions. Even on a debt management plan, you’ll still owe the balance of your debt and interest charges.
  • Work with a nonprofit: For-profit debt management companies generally charge higher fees than nonprofit companies. You can find certified nonprofit financial counselors from the Financial Counseling Association of America (FCAA) or the National Foundation for Credit Counseling (NFCC).
  • Credit counselors help you consider other options: Debt management plans are important tools offered by credit counselors, but they shouldn’t be the only option. “Our main goal is to educate clients on what their options are. We try to help them see the advantages and disadvantages of each option,” explained Dunn.

Debt settlement

Many people confuse nonprofit credit counseling companies with for-profit debt settlement companies. Debt settlement companies do not offer credit counseling services, and instead, work to help you pay off debts that are already in collections.

How does debt settlement work?

When you settle a debt, you agree to pay a creditor a portion of the debt you owe. In exchange, the creditor won’t sue you for the remaining balance. Most of the time debt settlement companies can only help you settle the debt that’s in collections.

Debt settlement companies will negotiate with creditors on your behalf. Although these companies work for you, the amount you ultimately pay depends on the creditor, your income, how long you’ve owed the debt and the type of debt you owe.

For example, credit card lenders may be more willing to settle your debts than business lenders. Additionally, debt settlement attorneys may be able to reduce the amount you owe on private student loans, but that’s not possible with federal student loans. Yesner estimates that most credit card companies settle for an average of 30%-35% of the debt amount owed, but he’s quick to point out that the range varies widely case to case.

It’s a good idea to have a solid understanding of the debt settlement process before you start working with a debt settlement company or attorney. If you don’t have upfront cash savings — a requirement for some companies — they may want you to set up a dedicated savings account to pay fees and funds. Legally you will own the funds in this account and have complete control over the account at all times.

Other companies may be willing to work with you to negotiate new payment plans. Tayne explained that she negotiates installment plans on behalf of her clients. Through her negotiations, she aims to reduce the interest rates to 0% and reduce the principal balance to a manageable amount; however, that’s not always possible to achieve.

Debt settlement companies may also ask you to change how you’re handling your creditors. If you’re paying debts as agreed, a debt settlement company may advise you to stop paying your debts.

How are debt settlement companies paid?

The fee structure of a debt settlement attorney or company will heavily affect your overall costs. “You only want an attorney that works on contingency. They should be compensated based on how much money they save you,” Tayne said. Contingency fees (fees based on a percentage of savings) incentivize your attorney to negotiate the amount you owe as low as they can. If the fee isn’t based on a negotiated savings rate, it will be based on a percentage of your overall debt load prior to negotiations.

Debt settlement companies cannot legally charge you any money unless they have successfully negotiated at least one debt for you. You must pay your creditor before the debt settlement company can collect its fee.

How does debt settlement affect my credit score?

There’s no doubt that settling your debts will affect your credit score; however, exactly how much it affects your score is difficult to estimate. Once an account is in collections, settling the debt will not cause any further damage to your credit score. However, defaulting on an account that’s on a debt settlement plan could cause substantial harm to your credit score.

“In most cases, [your credit score] will go down, but it won’t go down permanently. In some cases, settling debts could actually raise your credit score. If you have a score in the low 600s with all your accounts in default, you might see it go up right away,” said Tayne.

Risks of debt settlement

  • Legal risks: Your creditors may sue you if you default on your debts.
  • Debt load could grow: When you default on your debts, your creditors may charge you late fees or higher interest rates. Even when working toward settling a debt, your total debt balance could still grow.
  • No guarantees: Most of the time, debt settlement companies don’t have prearranged agreements with your creditors. That means that the company cannot tell you how much you’ll ultimately owe, nor can they tell you how long the settlement process will last.
  • Amount forgiven is taxable: When you settle a debt for less than you owe, the IRS considers the forgiven amount income. That means you’ll pay state and federal income tax on the forgiven amount (in most cases).

Benefits of debt settlement

  • Reduce the amount you owe: When you settle a debt in collections, you’ll only pay a percentage of what you originally owed.
  • Avoid bankruptcy: Settling debts can keep you out of bankruptcy courts. Negative information will remain on your credit report for seven years, but your credit score may recover more quickly from debt settlement than bankruptcy.
  • No fees without successful negotiation: It is illegal for debt settlement companies to charge you a fee if they fail to change the terms of your debt. You’ll only pay if the company negotiates your debt.

What are the risks to not paying creditors?

Strategically defaulting on debt may sound reasonable, but it can expose you up to a variety of risks. When you stop paying your bills, your creditor may charge you higher fees and interest. If you can’t successfully settle the debt, you’ll owe more than you did before.

Defaulting on debt will lead to negative marks on your credit report. Negative information will stay on your credit report for seven years. Settling already-defaulted debt won’t harm your credit any further; however, defaulting on a current debt account could cause your credit score to take a big hit.

Finally, your creditors may sue you if you default on a debt. Due to legal risks, Tayne recommends working with a debt settlement attorney rather than a debt settlement company. “You need someone who understands how to handle the legal risks appropriately,” she said. “It’s not enough for a company to say ‘We have an attorney on staff.’ It’s better to know that an attorney will handle legal matters.”

Things to know before settling debt

  • How are fees determined: Debt settlement companies can collect fees using two methods; they can charge you a percentage of your total debt load, or they can charge based on a percentage of savings.
  • You won’t get any guarantees: Debt settlement companies cannot promise you how long the negotiations will take, nor can they guarantee the settlement amount. Representatives offering promises are engaging in illegal activity and you should not work with them.
  • Creditors could sue you: If you fail to make payments as agreed, a creditor could sue you. After a creditor wins a suit against you, they can collect a judgment against you, which could include garnishing your wages or putting a lien on your property.
  • Creditors may offer standard settlements: Some creditors have adopted standard policies about settling debts in collections. You may be able to settle your debts on your own.

Can I settle debt on my own?

Creditors may be more willing to work with individuals than debt settlement companies, but settling debts on your own presents its own risks.

The CFPB sets out a three-step process for negotiating settlements with your creditors. The process recommends understanding your debts, proposing a solution and negotiating a realistic agreement. During the final step, the CFPB recommends enlisting the help of an attorney or credit counselor to help you with the negotiations. “Settling a debt sounds simple; you simply call up a creditor and work out a settlement. In reality, it can be a lot of work. It can take three or four hours just to start talking with the right person,” explained Tayne.

“You’re probably smart enough to do this on your own. The real value that I bring is that I do this day in and day out. Sometimes it’s just more efficient to pay someone else,” added Yesner.

That said, if money is tight, settling debts on your own could be the right option for you. Below we explain how to work through your own debt relief program.

DIY debt relief

Making your own debt relief plan may seem overwhelming, but it is possible to find debt relief without paying for outside help. Use the following tips to be successful with your own debt relief plan.

Put a stop to creditor harassment

A DIY debt relief plan requires executing a well-thought-out plan. This isn’t easy if you’re constantly hounded by calls from debt collectors. Put a stop to creditor harassment instead of sending your money to the most threatening collector.

The CFPB provides sample letters that can help you deal with debt collectors. These letters can stipulate when and how a debt collector can contact you. While collectors can still sue you, they cannot legally contact you.

Know what you owe

Once you have the creditors at bay, the first step in resolving your debt is knowing what you owe. Specifically, you will need to know how much money you owe, who owns the debt, the interest rate on the debt, the minimum monthly payment on the debt and whether the debt is in good standing. You can find most of this information from your credit report (which you can get for free from AnnualCreditReport.com).

You can find the exact amount you owe and the interest rate on current debts from the most recent billing statements from your lenders.

Make a plan for “good standing” debt

Debts in collections may seem like the most pressing matter, but most of the time you’ll want to deal with current accounts first. Once a debt is in collections, it has already damaged your credit score. Only time (and adding good credit information to your report) will fix the damage.

Unless a creditor sues you, you’ll want to put your money toward debt that’s still in good standing before dealing with debts in collections. This guide offers step-by-step guidance on how to eliminate credit card debt as fast as possible.

It’s important to note that dealing with current debts isn’t always a matter of making minimum payments on all your loans. If you have student loans, you may want to consider opting into an income-driven repayment plan. These plans will reduce your monthly payments, so you can put more money toward high-interest credit card debts.

For credit card debts, unpaid medical bills and other related debts, you may want to consider a debt consolidation loan. Debt consolidation loans are unsecured personal loans with fixed interest rates and fixed repayment schedules. They allow you to roll all your payments into a single payment, reduce your interest rate and (in some cases) increase your credit score.

Debt consolidation loans are an effective option for people who have enough income to support the monthly loan payments.

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A Personal Loan can offer funds relatively quickly once you qualify you could have your funds within a few days to a week. A loan can be fixed for a term and rate or variable with fluctuating amount due and rate assessed, be sure to speak with your loan officer about the actual term and rate you may qualify for based on your credit history and ability to repay the loan. A personal loan can assist in paying off high-interest rate balances with one fixed term payment, so it is important that you try to obtain a fixed term and rate if your goal is to reduce your debt. Some lenders may require that you have an account with them already and for a prescribed period of time in order to qualify for better rates on their personal loan products. Lenders may charge an origination fee generally around 1% of the amount sought. Be sure to ask about all fees, costs and terms associated with each loan product. Loan amounts of $1,000 up to $50,000 are available through participating lenders; however, your state, credit history, credit score, personal financial situation, and lender underwriting criteria can impact the amount, fees, terms and rates offered. Ask your loan officer for details.

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Settle debts in collections

Once you’ve paid off your debts that are in good standing (or you’re easily able to make your monthly payments), you may want to work toward paying off bills in collections. Paying off bills in collections won’t improve your credit score, but it can help you avoid lawsuits.

Before you reach out to your creditors, you’ll want to create a budget that shows you how much you can put toward debt that’s in collections each month. A certified credit counselor could help you create a budget if you need help. A credit counselor or a consumer advocacy attorney may also be able to advise you if the statute of limitations on your debt has expired. When the statute of limitations on debt expires, debt collectors can no longer sue you to collect.

If you determine that you still want to pay off your debt in collections, you can propose your payoff plan to your creditor. Do not put any money toward debts in collections unless you get a payoff agreement in writing.

Enlist help as needed

Although a DIY debt relief plan is a low-cost way to get rid of debt, you may need help. If a creditor or debt collector sues you, you’ll want to contact a consumer advocacy attorney. Don’t ignore lawsuits, or your creditor may win a judgment against you.

Additionally, credit counselors that work for nonprofit companies may be able to help you understand your best options, such as through the FCAA or NFCC.

Watch out for debt relief scams

If you choose to work through overwhelming debts on your own, you could run into some scams. The following are red flags that someone or some company might be trying to scam you:

  • Charging advance fees for debt settlement: Debt settlement companies cannot charge you any fees unless they successfully help you settle a debt. Do not work with a debt settlement company that charges upfront fees.
  • For-profit credit counseling: The vast majority of credit counseling companies are not for-profit companies. The nonprofit status allows credit counselors to consider a range of payoff options instead of pushing clients toward solutions that help the company maintain the highest profits. Generally, it’s more beneficial to work with nonprofit credit counseling companies than for-profit credit counseling companies.
  • Companies making guarantees: Do not work with any company that makes guarantees or promises about debt relief. Whether you’re trying to settle debts, declare bankruptcy or reduce your monthly payments, a company cannot promise that your creditors will work with them. The best a company can do is determine whether you’re a good candidate for their services.
  • Pushy companies: No single debt relief plan is perfect for everyone. Don’t work with companies that push one option without helping you understand why that option is best for you, while also providing you with alternatives.

What to avoid when facing overwhelming debt

  • Sending money to the loudest collection agency: A good debt payoff plan deals with current debts before dealing with debts in collections. Do not send money to the debt collectors because they harass you. Instead, use a written request that tells the collector when and how they can contact you.
  • Ignoring lawsuits: Contact a lawyer who can help you understand the best options for your situation if you receive notice of a debt collection lawsuit. Ignoring the lawsuit won’t make it go away, and could make your financial situation worse.
  • Making partial payments: If you don’t have the money to pay all your monthly bills, don’t make matters worse by sending partial payments to all your creditors. Partial payments are considered just as bad as not sending a payment at all. Instead, send full payments to as many creditors as possible to keep more debts out of collections and help you rebuild your credit score.

The bottom line: When should you consider debt relief?

If you’re struggling to make your monthly debt payments, or you’re overwhelmed by calls from collection agents, you’re a good candidate for some sort of debt relief. Seeking advice from a bankruptcy attorney or a certified credit counselor is a good place to start. When you know more about your debt relief options, you can make a plan to get back on track financially.

Even if you’re making on-time payments on most of your debts, you may still benefit from a debt relief plan. Those with debts in good standing may find relief from debt management plans, consolidating your debts or by taking advantage of promotional balance transfers.

Whether you’re struggling to make payments, or you’ve already defaulted on your debts, debt relief could be right for you. The sooner you start your research, the sooner you’ll get yourself back on the right financial foot.

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Hannah Rounds is a writer at MagnifyMoney. You can email Hannah here

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How To Know If Your Student Loans Are Private or Federal

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How To Tell If Your Student Loans Are Private or Federal

When you borrowed money to pay for college, you may not have paid much attention to the difference between federal and private student loans. You might not know who your student loan servicer is, or if you do, you may wonder for example whether that loan listed under Nelnet is federal or private.

In fact, it’s completely reasonable to ask why the difference between private and federal student loans matters in the first place.

There are a few ways to see if your student loans are private or federal — here’s how, along with what makes each different, and why knowing which type of loan you have is important.

What makes federal and private student loans different?

Federal student loans are offered through the Department of Education. Typically, these loans are easy to qualify for. For many federal student loans, your credit isn’t even checked.

There are four different federal student loan programs currently available:

  • Direct subsidized loans: These loans are awarded based on your financial need. When you apply for federal financial aid, your eligibility for subsidized loans is also considered. “Subsidized” here means that interest isn’t charged until after you graduate or drop below half time.
  • Directed unsubsidized loans: Anyone can receive an unsubsidized loan — they aren’t based on need. However, unsubsidized loans will put you on the hook for interest charges that accrue while you’re in school.
  • Direct PLUS loans: These loans are specifically for graduate students or for parents of undergraduate students taking out loans on behalf of their child. These loans aren’t based on financial need, and a credit check is required.
  • Direct consolidation loans: This type of loan allows you to combine all your federal student loans into one, giving you one manageable payment each month rather than many. Your new interest rate is the weighted average of all your loans, rounded up to the nearest one-eighth of a percent.

Private student loans, on the other hand, are offered by private lenders and have different repayment requirements compared with federal student loans. For example, private student loans can offer fixed or variable interest rates, while federal student loans only offer fixed rates.

Because the features of private loans vary from lender to lender, eligibility will depend on the bank, credit union or online financial institution that you borrow from.

Most borrowers usually favor federal student loans, given the flexible repayment options and debt-forgiveness programs they come with. But since federal loans also have borrowing limits, students may need to turn to private loans to help fund any remaining costs, and in a few cases, a private loan might have a better interest rate than their federal equivalent.

How to determine if your loans are federal

The first thing you should do to see if you have federal loans is log on to the National Student Loan Data System. The only loans listed here are federal.

If you’ve never used the NSLDS before, you’ll want to click the “Financial Aid Review” button on the homepage, hit “Accept,” and then enter your credentials.

If you have a Federal Student Aid (FSA) ID, you can enter it here. If not, there’s an option to create one. In May 2015, the government redesigned its student loan system, and you can now use your FSA ID to log on to multiple government sites. But if you haven’t visited in a while, you might need to create one.

In the event you forgot your credentials, you can click the “Forgot my username/password” button and have the information emailed to you or answer a challenge question. You’ll just be required to enter your Social Security number, last name and date of birth.

Once you log on, you’ll see a list of all the student loans that were disbursed to you. This page will also show you what your original loan amount was, and how much you currently owe.

Click on the numbered box to the left of your loan to determine your loan servicer. This will display all the information about that particular loan. Your loan servicer will be listed under the “Servicer/Lender/Guaranty Agency/ED Servicer Information” section. The name, address, phone number and website should all be displayed.

Additionally, this page will also inform you of your loan terms. Along with your original loan balance and current outstanding balance, it will tell you what the interest rate is and the current status of the loan.

How to determine if your student loan is private

As discussed, private student loans are loans not made by the government — banking institutions, such as Sallie Mae, Wells Fargo, Citizens Bank and others offer them. As a result, there are more lenders to look out for when it comes to private loans.

Unfortunately, there’s no central reporting system for private loans like there is for federal loans, which makes them slightly more tricky to track down.

Your first stop should still be the NSLDS to at least see if you have any federal loans. In 2015, just 5% of undergraduate borrowers had private student loans, so your student loans are more likely to be federal than private.

But in order to make sure you have no outstanding private student debt, you’ll want to take a look at your credit report. You can view your reports from the three main credit bureaus for free by visiting AnnualCreditReport.com.

Some lenders may not look familiar to you. Searching the lender’s name online may help you find out who the parent company is. Don’t hesitate to call the numbers available on your credit report if you’re still unsure.

If you graduated a while ago, some older loans may look unfamiliar. You might see “federal direct loan,” “federal Perkins,” or “Stafford” on your report — these are federal loans, so ensure they match up with what’s in your NSLDS file.

You might also be able to call your school’s financial aid office to see if they have records of your loans.

What should you do once you find out?

Knowing whether your student loans are private or federal can be important as you repay you college debt.

For example, knowing the difference is crucial if you ever decide to refinance or consolidate your student loans. You can only combine your debt under a direct consolidation loan if you have federal loans. Likewise, refinancing through a private lender will cause you to lose access to federal repayment and forgiveness programs, while private loans would be unaffected.

So, by knowing which type of student loans you have, you’ll get a better idea of what options you have to knock them off.

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Dori Zinn contributed to this report.

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The 8 Best Personal Loans for 600 to 700 Credit Scores

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Disclosure : By clicking “See Offers” you’ll be directed to our parent company, LendingTree. You may or may not be matched with the specific lender you clicked on, but up to five different lenders based on your creditworthiness.

7 Personal Loans for 600 to 700 Credit Scores

Updated May 01, 2019

If you have a less-than-perfect credit and want to pay off credit card debt, fund home improvement projects, or pay for unexpected expenses, then finding a lender that will consider your credit might seem like an uphill battle.

Refinancing high-interest debt with a personal loan can quickly cut down the amount of interest you’re paying, which effectively allows you to pay it off in less time. You particularly want to avoid payday and title loan lenders at all costs.

Many personal loan companies approve people with scores as low as 600. The best way to shop for a loan is to pre-qualify with as many lenders as possible who perform a soft credit pull (which doesn’t harm your credit score). With our first recommendation, LendingTree, simply fill out an online form and obtain up to 5 lender quotes (including all of those on our list below) with one online form and no negative impact to your score.

Company
APR
Terms
Credit Req.
LendingTree

As low as 3.99%

24 to 60

months

Minimum 500 FICO®

SEE OFFERS Secured

on LendingTree’s secure website

LendingTree is our parent company

Advertiser Disclosure.

Disclaimer

A Personal Loan can offer funds relatively quickly once you qualify you could have your funds within a few days to a week. A loan can be fixed for a term and rate or variable with fluctuating amount due and rate assessed, be sure to speak with your loan officer about the actual term and rate you may qualify for based on your credit history and ability to repay the loan. A personal loan can assist in paying off high-interest rate balances with one fixed term payment, so it is important that you try to obtain a fixed term and rate if your goal is to reduce your debt. Some lenders may require that you have an account with them already and for a prescribed period of time in order to qualify for better rates on their personal loan products. Lenders may charge an origination fee generally around 1% of the amount sought. Be sure to ask about all fees, costs and terms associated with each loan product. Loan amounts of $1,000 up to $50,000 are available through participating lenders; however, your state, credit history, credit score, personal financial situation, and lender underwriting criteria can impact the amount, fees, terms and rates offered. Ask your loan officer for details.

As of 28-Feb-2019, LendingTree Personal Loan consumers were seeing match rates as low as 3.99% (3.99% APR) on a $10,000 loan amount for a term of three (3) years. Rates and APRs were based on a self-identified credit score of 700 or higher, zero down payment, origination fees of $0 to $100 (depending on loan amount and term selected).

3.99%-16.99%

24 to 144

months

660

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure.

Your APR may differ based on loan purpose, amount, term, and your credit profile. Rate is quoted with AutoPay discount, which is only available when you select AutoPay prior to loan funding. Rates under the invoicing option are 0.50% higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice. Payment example: Monthly payments for a $10,000 loan at 3.99% APR with a term of 3 years would result in 36 monthly payments of $295.20.

6.95%-35.89%

36 or 60

months

600

SEE OFFERS Secured

on LendingTree’s secure website

Our Commitment We'll receive a referral fee if you click here. This does not impact our rankings or recommendations.
Marcus by Goldman Sachs®

5.99%-28.99%

36 to 72

months

Varies

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure.

Your loan terms are not guaranteed and are subject to our verification of your identity and credit information. To obtain a loan, you must submit additional documentation including an application that may affect your credit score. Rates will vary based on many factors, such as your creditworthiness (for example, credit score and credit history) and the length of your loan (for example, rates for 36 month loans are generally lower than rates for 72 month loans).Your maximum loan amount may vary depending on your loan purpose, income and creditworthiness. Your verifiable income must support your ability to repay your loan. Marcus by Goldman Sachs is a brand of Goldman Sachs Bank USA and all loans are issued by Goldman Sachs Bank USA, Salt Lake City Branch. Applications are subject to additional terms and conditions. For New York residents, rates range from 5.99% to 24.99% APR.

Up to 29.99%

36 or 60

months

700

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure.

*The Annual Percentage Rate (APR) is the cost of credit as a yearly rate and ranges from 5.99%-29.99%, which may include an origination fee from 0.99% - 5.99%. Any origination fee on a 5-year loan will be at least 4.99% and is deducted from loan proceeds. The APR offered will depend on your credit score, income, debt payment obligations, loan amount, loan term, credit usage history and other factors, and therefore may be higher than our lowest advertised rate. Requests for the highest loan amount may resulting an APR higher than our lowest advertised rate. You need a minimum 700 FICO® score and a minimum individual annual income of $100,000 to qualify for our lowest rate.

Best Egg loans are unsecured personal loans made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC. Equal Housing Lender. "Best Egg" is a trademark of Marlette Funding LLC. All uses of "Best Egg" on this site mean and shall refer to "the Best Egg personal loan" and/or "Best Egg on behalf of Cross River Bank, as originator of the Best Egg personal loan," as applicable. Loan amounts generally range from $2,000-$35,000. Offers up to $50,000 may be available for qualified customers who receive offer codes in the mail. The minimum individual annual income needed to qualify for a loan of $50,000 is $130,000. Borrowers may hold no more than two open Best Egg loans at any given time. In order to be eligible for a second Best Egg loan, your existing Best Egg loan must have been open for at least six months. Total existing Best Egg loan balances must not exceed $50,000. All loans in MA must exceed $6,000; in NM, OH must exceed $5,000; in GA must exceed $3,000.

Borrowers should refer to their loan agreement for specific terms and conditions. A loan example: a 5–year $10,000 loan with 9.99% APR has 60 scheduled monthly payments of $201.81, and a 3–year $5,000 loan with 5.99% APR has 36 scheduled monthly payments of $150.57. Your verifiable income must support your ability to repay your loan. Upon loan funding, the timing of available funds may vary depending upon your bank's policies.

To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you.

9.95%-35.99%

24 to 60

months

Varies

SEE OFFERS Secured

on LendingTree’s secure website

Avant branded credit products are issued by WebBank, member FDIC.

16.05%-35.99%

24 to 60

months

Varies

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure.

Not all applicants will qualify for larger loan amounts or most favorable loan terms. Loan approval and actual loan terms depend on your ability to meet our credit standards (including a responsible credit history, sufficient income after monthly expenses, and availability of collateral). Larger loan amounts require a first lien on a motor vehicle no more than ten years old, that meets our value requirements, titled in your name with valid insurance. Maximum annual percentage rate (APR) is 35.99%, subject to state restrictions. APRs are generally higher on loans not secured by a vehicle. The lowest APR shown represents the 10% of loans with the most favorable APR. Active duty military, their spouse or dependents covered under the Military Lending Act may not pledge any vehicle as collateral for a loan. OneMain loan proceeds cannot be used for postsecondary educational expenses as defined by the CFPB’s Regulation Z, such as college, university or vocational expenses; for any business or commercial purpose; to purchase securities; or for gambling or illegal purposes. Borrowers in these states are subject to these minimum loan sizes: Alabama: $2,100. California: $3,000. Georgia: Unless you are a present customer, $3,100 minimum loan amount. Ohio: $2,000. Virginia: $2,600.

Borrowers (other than present customers) in these states are subject to these maximum unsecured loan sizes: Florida: $8,000. Iowa: $8,500. Maine: $7,000. Mississippi: $7,500. North Carolina: $7,500. New York: $20,000. Texas: $8,000. West Virginia: $7,500. An unsecured loan is a loan which does not require you to provide collateral (such as a motor vehicle) to the lender.

5.99%-29.99%

24 to 60

months

Varies

SEE OFFERS Secured

on LendingTree’s secure website

All loans available through FreedomPlus.com are made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC, Equal Housing Lender. All loan and rate terms are subject to eligibility restrictions, application review, credit score, loan amount, loan term, lender approval, and credit usage and history. Eligibility for a loan is not guaranteed. Loans are not available to residents of all states – please call a FreedomPlus representative for further details.

6.95%-35.99%

36 or 60

months

640

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure.

For example, a three-year $10,000 loan with a Prosper Rating of AA would have an interest rate of 5.31% and a 2.41% origination fee for an annual percentage rate (APR) of 6.95% APR. You would receive $9,759 and make 36 scheduled monthly payments of $301.10. A five-year $10,000 loan with a Prosper Rating of A would have an interest rate of 8.39% and a 5.00% origination fee with a 10.59% APR. You would receive $9,500 and make 60 scheduled monthly payments of $204.64. Origination fees vary between 2.41%-5%. APRs through Prosper range from 6.95% (AA) to 35.99% (HR) for first-time borrowers, with the lowest rates for the most creditworthy borrowers. Eligibility for loans up to $40,000 depends on the information provided by the applicant in the application form. Eligibility is not guaranteed, and requires that a sufficient number of investors commit funds to your account and that you meet credit and other conditions. Refer to Borrower Registration Agreement for details and all terms and conditions. All loans made by WebBank, member FDIC.

Consider LendingTree

With LendingTree, you only need to fill out one short online form. A soft pull will be performed – so your credit score will not be harmed. LendingTree has a panel of dozens of lenders who will then compete for your business. You may be able to see how much you can borrow and the interest rate. This is a great place to start – especially for people with credit scores below 700.

LendingTree
APR

As low as 3.99%

Credit Req.

Minimum 500 FICO®

Minimum Credit Score

Terms

24 to 60

months

Origination Fee

Varies

SEE OFFERS Secured

on LendingTree’s secure website

LendingTree is our parent company

Advertiser Disclosure

LendingTree is our parent company. LendingTree is unique in that you may be able to compare up to five personal loan offers within minutes. Everything is done online and you may be pre-qualified by lenders without impacting your credit score. LendingTree is not a lender.


A Personal Loan can offer funds relatively quickly once you qualify you could have your funds within a few days to a week. A loan can be fixed for a term and rate or variable with fluctuating amount due and rate assessed, be sure to speak with your loan officer about the actual term and rate you may qualify for based on your credit history and ability to repay the loan. A personal loan can assist in paying off high-interest rate balances with one fixed term payment, so it is important that you try to obtain a fixed term and rate if your goal is to reduce your debt. Some lenders may require that you have an account with them already and for a prescribed period of time in order to qualify for better rates on their personal loan products. Lenders may charge an origination fee generally around 1% of the amount sought. Be sure to ask about all fees, costs and terms associated with each loan product. Loan amounts of $1,000 up to $50,000 are available through participating lenders; however, your state, credit history, credit score, personal financial situation, and lender underwriting criteria can impact the amount, fees, terms and rates offered. Ask your loan officer for details.

As of 28-Feb-2019, LendingTree Personal Loan consumers were seeing match rates as low as 3.99% (3.99% APR) on a $10,000 loan amount for a term of three (3) years. Rates and APRs were based on a self-identified credit score of 700 or higher, zero down payment, origination fees of $0 to $100 (depending on loan amount and term selected).

1. LightStream

LightStream offers personal loans for between $5,000 and $100,000. It requires a minimum credit score of 660 and offers APRs between 3.99% and 16.99%. That low 3.99% APY includes a 0.50% rate discount for signing up for automatic payments.

To check rates, you’ll need to submit to a hard credit check. Don’t let that scare you off from this lender, though. LightStream offers a Rate Beat Program, where it’ll outmatch any qualifying rate. And if you’re unhappy with your loan, you can earn $100 for completing a questionnaire that helps LightStream improve its services.

The Fine Print

LightStream doesn’t offer fees, but in order to qualify for a loan, you’ll need to have good credit. On its website, LightStream says it finds borrowers with good credit tend to have the following characteristics:

  • Healthy credit history showing a variety of accounts, such as lines of credit (credit cards) and installment debt (auto loan, mortgage)
  • Solid payment history
  • Evidence that you know how to save and manage money, such as by having retirement savings and balancing revolving debt
  • Good income and assets that show you can repay your outstanding debts and a loan offered to you by LightStream

You can use a LightStream personal loan for a variety of purposes, from buying a car to consolidating debt. However, LightStream personal loans can’t be used for college expenses or to refinance college loans.

Pros

  • Low-interest rates
  • No fees
  • Loans for between $5,000 and $100,000
  • You may receive same-day funding
  • Will beat qualifying competitor rates
  • Offers $100 Guarantee Program

Cons

  • Requires a minimum 660 credit score
  • Hard Pull to check rates
  • You can’t change the payment due date
  • Doesn’t offer preapproval
  • Can’t refinance student loans

LightStream is a solid choice for borrowers with solid credit who want fast funding. LightStream’s Rate Beat Program means you can receive a competitive rate, while its $100 Guarantee Program shows that this lender cares about your satisfaction.

APR

3.99%
To
16.99%

Credit Req.

660

Minimum Credit Score

Terms

24 to 144

months

Origination Fee

No origination fee

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

LightStream is the online lending division of SunTrust Bank.... Read More


Your APR may differ based on loan purpose, amount, term, and your credit profile. Rate is quoted with AutoPay discount, which is only available when you select AutoPay prior to loan funding. Rates under the invoicing option are 0.50% higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice. Payment example: Monthly payments for a $10,000 loan at 3.99% APR with a term of 3 years would result in 36 monthly payments of $295.20.

2. LendingClub

LendingClub offers loans of up to $40,000, for individuals with a minimum credit score of 600. Its APR ranges from 6.95% to 35.89%. LendingClub also uses a soft credit pull to determine your rate, which will not affect your credit.

The Fine Print

In order to qualify for a LendingClub personal loan you must:

  • Not have more than 5 hard credit inquiries in the last 5 months
  • Have at least two active credit accounts open
  • Have a credit history of at least 36 months
  • Debt-to-income ratio of less than 40%
  • Be able to verify employment and income

Once you have met the minimum criteria, LendingClub uses its own scoring system to determine what amount you can borrow as well as your rate.

You can borrow money for 36 or 60 months, but it does charge up-front (origination) fees ranging 1.00% - 6.00% depending on credit worthiness, which come out of the loan amount.

Pros

  • Can see your rate with a soft credit pull
  • Will consider applicants with credit scores as low as 600
  • Offers very competitive interest rates for people with scores below 700
  • The application process only take a few minutes

Cons

  • Missed payments or items in collections will result in your application being rejected
  • Loan processing could take a week or more
  • APR can be as high as 35.89%
  • It does charge origination fees (1.00% - 6.00%)
  • Is not available in Iowa or West Virginia

LendingClub will approve people with credit scores as low as 600. If approved, the interest rates offered can be very competitive and the online application process is easy. This is good first stop for anyone with a score of 600 or higher to find the best deal.

APR

6.95%
To
35.89%

Credit Req.

600

Minimum Credit Score

Terms

36 or 60

months

Origination Fee

1.00% - 6.00%

SEE OFFERS Secured

on LendingTree’s secure website

LendingClub is a great tool for borrowers that can offer competitive interest rates and approvals for people with credit scores as low as 600.... Read More

3. Marcus by Goldman Sachs®

Marcus by Goldman Sachs® offers personal loans for up to $40,000 for debt consolidation and credit consolidation. With APRs ranging from 5.99% to 28.99% they offer one of the best personal loan options that is available from a traditional lender. While Goldman Sachs Bank USA has been around for over a century, Marcus is a completely online, streamlined experience that lets you complete your application and submit all of the needed documents from your computer.

The Fine Print

There are no specific credit requirements to qualify for a personal loan through Marcus by Goldman Sachs®, though, the company does target those with “prime” credit, which usually includes those with a FICO score higher than 660. While the credit requirements are lower than many other lenders, you will more than likely be rejected if you have missed payments recently or have any other negative marks on your credit report.

Applicants must be over 18 (19 in Alabama and Nebraska, 21 in Mississippi and Puerto Rico) and have a valid U.S. bank account. You are also required to have a Social Security or Individual Tax I.D. Number.

Terms currently range from 36 to 72 months and there is no origination fee. They also will only do a soft pull on your credit if you want to compare your loan options, which won’t affect your credit score. Additional perks of getting a personal loan through Marcus are no late fees (if you miss a payment, your loan will be extended and more interest will be added) and the ability to defer payments after you have made on time payments for a full year.

Pros

  • No origination fee
  • No late fees
  • Ability to defer payments after a year of on time payments
  • Wide range of repayment terms available between 36 to 72 months
  • Can see rates with a soft pull

Cons

  • Currently not available in Maryland
  • Rates up to 28.99% APR
  • No clear qualification information
  • Late payments will accumulate more interest, resulting in a larger final payment.

Marcus is a great option if you have good credit and want to get a personal loan that has a lower rate. It is also a great option for those that want to work with a traditional lender.

Marcus by Goldman Sachs®
APR

5.99%
To
28.99%

Credit Req.

Varies

Minimum Credit Score

Terms

36 to 72

months

Origination Fee

No origination fee

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

Marcus by Goldman Sachs® offers personal loans for up to $40,000 for debt consolidation and credit consolidation. ... Read More


Your loan terms are not guaranteed and are subject to our verification of your identity and credit information. To obtain a loan, you must submit additional documentation including an application that may affect your credit score. Rates will vary based on many factors, such as your creditworthiness (for example, credit score and credit history) and the length of your loan (for example, rates for 36 month loans are generally lower than rates for 72 month loans).Your maximum loan amount may vary depending on your loan purpose, income and creditworthiness. Your verifiable income must support your ability to repay your loan. Marcus by Goldman Sachs is a brand of Goldman Sachs Bank USA and all loans are issued by Goldman Sachs Bank USA, Salt Lake City Branch. Applications are subject to additional terms and conditions. For New York residents, rates range from 5.99% to 24.99% APR.

4. BestEgg

BestEgg offers personal loans up to $35,000 for people with credit scores as low as 700. APRs range from 5.99% to 29.99%. You can check your rate without hurting your credit score, and BestEgg has an excellent application process (that can result in funding your loan very quickly).

The Fine Print

BestEgg does charge an origination fee, which can be between 0.99% - 5.99%. However, there is no prepayment penalty, and you can pay off your loan early without penalty.

Pros

  • Can see your rate with a soft pull
  • Will consider applicants with credit scores as low as 700
  • Offers very competitive interest rates
  • Fast application process and fast funding

Cons

  • APR can be as high as 29.99%
  • It does charge origination fees

BestEgg offers competitive rates and a quick online process to get your loan. It is an excellent option for people with less than perfect scores.

APR

Up to 29.99%

Credit Req.

700

Minimum Credit Score

Terms

36 or 60

months

Origination Fee

0.99% - 5.99%

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

People looking for a process that is fast and straightforward can’t go wrong when applying through Best Egg for a personal loan. ... Read More


*The Annual Percentage Rate (APR) is the cost of credit as a yearly rate and ranges from 5.99%-29.99%, which may include an origination fee from 0.99% - 5.99%. Any origination fee on a 5-year loan will be at least 4.99% and is deducted from loan proceeds. The APR offered will depend on your credit score, income, debt payment obligations, loan amount, loan term, credit usage history and other factors, and therefore may be higher than our lowest advertised rate. Requests for the highest loan amount may resulting an APR higher than our lowest advertised rate. You need a minimum 700 FICO® score and a minimum individual annual income of $100,000 to qualify for our lowest rate.

Best Egg loans are unsecured personal loans made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC. Equal Housing Lender. "Best Egg" is a trademark of Marlette Funding LLC. All uses of "Best Egg" on this site mean and shall refer to "the Best Egg personal loan" and/or "Best Egg on behalf of Cross River Bank, as originator of the Best Egg personal loan," as applicable. Loan amounts generally range from $2,000-$35,000. Offers up to $50,000 may be available for qualified customers who receive offer codes in the mail. The minimum individual annual income needed to qualify for a loan of $50,000 is $130,000. Borrowers may hold no more than two open Best Egg loans at any given time. In order to be eligible for a second Best Egg loan, your existing Best Egg loan must have been open for at least six months. Total existing Best Egg loan balances must not exceed $50,000. All loans in MA must exceed $6,000; in NM, OH must exceed $5,000; in GA must exceed $3,000.

Borrowers should refer to their loan agreement for specific terms and conditions. A loan example: a 5–year $10,000 loan with 9.99% APR has 60 scheduled monthly payments of $201.81, and a 3–year $5,000 loan with 5.99% APR has 36 scheduled monthly payments of $150.57. Your verifiable income must support your ability to repay your loan. Upon loan funding, the timing of available funds may vary depending upon your bank's policies.

To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you.

5. Avant

Avant offers access to loans from $2,000 to $35,000. There is no prepayment fee. It is possible to get your loan as soon as the next business day. Although every case is unique, we have seen Avant accept people with credit scores as low as 580 be approved.

The Fine Print

APRs range from 9.95% to 35.99%. The Avant platform does charge an up-front origination fee of up to 4.75%, which is lower than most of the competition.

Checking your Loan Options through Avant only requires a soft pull to see your rate, which does not affect your credit score, and there are no prepayment fees.

A personal loan through Avant received an “A” from MagnifyMoney’s Transparency Score.

Pros

  • Approved people with lower credit scores
  • “A” Transparency Score
  • Can see your Loan Options with a soft pull
  • Fixed terms, fixed interest rate, no prepayment fees

Cons

  • Interest rates as high as 35.99%
  • Charges an origination fee
  • Not available in Colorado, Iowa, West Virginia, and Vermont

Avant is a good option for people with less than perfect credit. You can check your Loan Options without hurting your score and it has an “A” transparency score.

APR

9.95%
To
35.99%

Credit Req.

Varies

Minimum Credit Score

Terms

24 to 60

months

Origination Fee

Up to 4.75%

SEE OFFERS Secured

on LendingTree’s secure website

Avant branded credit products are issued by WebBank, member FDIC.

Avant is an online lender that offers personal loans ranging from $2,000 to $35,000. ... Read More

6. OneMain

OneMain Financial offers loans up to $30,000 for individuals with credit scores starting at 600. It offers terms of up to 60 months and APR ranges from 16.05% to 35.99%.

The Fine Print

In order to be accepted for a OneMain Loan, you must live near a OneMain branch, as a face-to-face meeting is required to finalize the loan. OneMain personal loans are not available in Alaska, Arkansas, Connecticut, Massachusetts, Nevada, Rhode Island, Vermont, or Washington D.C.

In order to qualify you must have:

  • Verifiable, steady income
  • No bankruptcy filings, ever
  • Be at least 18 years of age
  • Have at least some established credit history
  • Credit score of at least 600

If, at any time during the application process, OneMain becomes aware that you intend to use the personal loan for gambling, your loan application will be cancelled. OneMain personal loans cannot be used for business expenses or tuition.

Pros

  • Credit score as low as 600
  • Fixed Rates
  • No Prepayment penalty
  • Fixed terms

Convenient location, at OneMain branches

Cons

  • APR ranges from 16.05% to 35.99%
  • Loans cannot be used for business expenses or tuition
  • See potential rate with a hard pull
  • Personal loans only available up to $30,000
  • Loans not available in Alaska, Arkansas, Connecticut, Massachusetts, Nevada, Rhode Island, Vermont, or Washington D.C.
  • You must visit a OneMain branch to complete the loan.

The OneMain personal loan caters to people with low credit scores, or who would prefer to complete the personal loan application process at a branch, rather than online.

APR

16.05%
To
35.99%

Credit Req.

Varies

Minimum Credit Score

Terms

24 to 60

months

Origination Fee

Varies

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

If you have a credit score below 600, OneMain Financial is one of the few lenders that you can use to get a personal loan.... Read More


Not all applicants will qualify for larger loan amounts or most favorable loan terms. Loan approval and actual loan terms depend on your ability to meet our credit standards (including a responsible credit history, sufficient income after monthly expenses, and availability of collateral). Larger loan amounts require a first lien on a motor vehicle no more than ten years old, that meets our value requirements, titled in your name with valid insurance. Maximum annual percentage rate (APR) is 35.99%, subject to state restrictions. APRs are generally higher on loans not secured by a vehicle. The lowest APR shown represents the 10% of loans with the most favorable APR. Active duty military, their spouse or dependents covered under the Military Lending Act may not pledge any vehicle as collateral for a loan. OneMain loan proceeds cannot be used for postsecondary educational expenses as defined by the CFPB’s Regulation Z, such as college, university or vocational expenses; for any business or commercial purpose; to purchase securities; or for gambling or illegal purposes. Borrowers in these states are subject to these minimum loan sizes: Alabama: $2,100. California: $3,000. Georgia: Unless you are a present customer, $3,100 minimum loan amount. Ohio: $2,000. Virginia: $2,600.

Borrowers (other than present customers) in these states are subject to these maximum unsecured loan sizes: Florida: $8,000. Iowa: $8,500. Maine: $7,000. Mississippi: $7,500. North Carolina: $7,500. New York: $20,000. Texas: $8,000. West Virginia: $7,500. An unsecured loan is a loan which does not require you to provide collateral (such as a motor vehicle) to the lender.

7. Freedomplus

FreedomPlus offers loans ranging from $7,500 to $40,000 that can be used for everything from debt consolidation, to unexpected expenses. APR ranges from 5.99% to 29.99%.

Its biggest selling point is the same-day approval and availability of funds within 48 hours, a lifesaver in some circumstances.

The Fine Print

In order to qualify for a Freedomplus loan, you must:

  • Be 18 years or older
  • Be a legal US resident
  • Have a valid ID
  • Minimum credit score of 0
  • At least $25,000 in verifiable income
  • No bankruptcies in the last two years

Freedomplus charges origination fees ranging from 0.00% - 5.00%, which is deducted from the loan amount before you receive the funds. There are no prepayment penalties.

The Freedomplus personal loan scores a “B” Transparency score because its fee structure and much of the fine print is unclear or not covered by the final contract.

You can prequalify with a hard pull, which does not affect your credit score. However, Freedomplus requires a phone screening with each applicant before the loan is approved.

Pros

  • Will approve credit scores as low as 0
  • The phone screening may improve your chances of being approved for the loan
  • Same-day approval and funds within 48 hours
  • No prepayment penalty
  • Can prequalify with a hard pull

Cons

  • APR ranges from 5.99% to 29.99%
  • The fee structure is not readily available for review
  • Origination fee of 0.00% - 5.00% applies

The Freedomplus personal loan is a good option for you if you have less than perfect credit, and need access to funds quickly, without visiting a physical branch.

APR

5.99%
To
29.99%

Credit Req.

Varies

Minimum Credit Score

Terms

24 to 60

months

Origination Fee

0.00% - 5.00%

SEE OFFERS Secured

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With a personalized application process that includes a phone interview, FreedomPlus gives people with below average credit a shot at getting approved for a personal loan.... Read More

8. Prosper

The Prosper personal loan process is a little different than a traditional lender. It is not a bank, but rather a peer-to-peer lender. Once you have applied, and checked loan terms and rates, you create a loan “listing” that then appears on in the Prosper marketplace.

From these listings, peers (investors) choose which loans they would like to finance. When your loan listing is financed, the money is transferred to your bank account.

Prosper offers loans from $2,000 to $40,000, and APR ranges from 6.95% to 35.99%. It offers loans terms of either 36 or 60 months. Your APR is determined during the application process, and is based on a credit rating score created by Prosper. Your score is then shown with your loan listing to give potential lenders an idea of your creditworthiness.

The Fine Print

Your loan listing will remain active for 14 days. After 14 days, your loan must be at least 70% funded to receive the funds. If you are not 70% funded within 14 days, you must reapply to have your loan re-listed.

Origination fees range from 2.41% - 5.00% and are based on your Prosper score. In order to qualify, you must:

  • Have a bank account
  • Have a social security number
  • No more than 7 inquiries on your credit in the last six months
  • A verifiable, steady income
  • A credit-to-debt ratio of less than 50%
  • At least three open accounts, such as checking, savings, and credit card.
  • No bankruptcies in the last year

A returned payment may result in a $15 fee, and late payments past 15 days are charged a 5% fee, with a minimum of $15.

Prosper’s overall fine print is very clear is its fees are quite minimal, so it scores it an “A” Transparency Score. Also, you can check your Prosper rate with a soft credit pull, which will not affect your credit score.

Pros

  • Minimum credit score of 640
  • Can see your rate with a soft pull
  • No prepayment penalties
  • Paying off a Prosper loan can reduce your APR on future Prosper loans

Cons

  • Only 14 days to secure financing from peer lenders
  • Origination fee of 2.41% - 5.00% applies
  • APR varies from 6.95%– 35.99%

Prosper is a flexible alternative with a low-end APR that beats a credit card.

APR

6.95%
To
35.99%

Credit Req.

640

Minimum Credit Score

Terms

36 or 60

months

Origination Fee

2.41% - 5.00%

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

Prosper is a peer-to-peer lending platform that offers a quick and convenient way to get personal loans with fixed and low interest rates. ... Read More


For example, a three-year $10,000 loan with a Prosper Rating of AA would have an interest rate of 5.31% and a 2.41% origination fee for an annual percentage rate (APR) of 6.95% APR. You would receive $9,759 and make 36 scheduled monthly payments of $301.10. A five-year $10,000 loan with a Prosper Rating of A would have an interest rate of 8.39% and a 5.00% origination fee with a 10.59% APR. You would receive $9,500 and make 60 scheduled monthly payments of $204.64. Origination fees vary between 2.41%-5%. APRs through Prosper range from 6.95% (AA) to 35.99% (HR) for first-time borrowers, with the lowest rates for the most creditworthy borrowers. Eligibility for loans up to $40,000 depends on the information provided by the applicant in the application form. Eligibility is not guaranteed, and requires that a sufficient number of investors commit funds to your account and that you meet credit and other conditions. Refer to Borrower Registration Agreement for details and all terms and conditions. All loans made by WebBank, member FDIC.

Shop Around to Find the Best Deal

If you have made past credit mistakes, or have very little credit, there are personal loans out there for you. Many of these lenders offer rates much lower than what you would be paying on a credit card, shaving month and hundred or thousands of dollars off of your debt.

Don’t give up on a personal loan just because of your credit – there are options out there for you. It never hurts to shop around and look for the best rates available, especially if the lender does a soft credit pull to show you your options.

*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.

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Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Gretchen Lindow
Gretchen Lindow |

Gretchen Lindow is a writer at MagnifyMoney. You can email Gretchen at [email protected]

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