Easiest loan to get with bad credit

The easiest loans to get approved for would probably be payday loans, car title loans, pawnshop loans, and personal installment loans. These are all short-term cash solutions for bad credit borrowers in need. Many of these options are designed to help borrowers who need fast cash in times of need. 

Personal Installment Loans – These are unsecured personal loans for borrowers with less-than-perfect credit scores. You can usually get more money with a personal installment loan than you can with some of the other fast-cash options like payday loans. You’ll also have more time to repay it with a personal installment loan. Generally, borrowers have several months up to a couple of years in some cases to repay the loan and interest. 

Payday Loans – These are also unsecured loans, but they offer smaller amounts of money and less time to repay the loan plus interest. Usually, borrowers have to repay these loans within two weeks, or by their next payday. The higher interest rates combined with the short repayment period can make them difficult to repay on time. Even if you need money now, consider them carefully before you take out this type of loan. 

Car Title Loans – This is a secured loan which means you’ll need collateral to get one. The collateral would be the title to your vehicle. This means that if you can’t repay the loan by the due date, the lender can legally seize your vehicle and sell it. This makes these loans very risky if your vehicle is crucial to your everyday life. 

Pawn Shop Loans – These are also secured loans. But the collateral, in this case, may be any valuable item you own that the lender will accept. It could be jewelry, electronics, musical equipment, or any other valuable item. The lender gives you cash based on the value of the item, then you get your item back when you return the loan and interest. But if you can’t pay it back they can keep your item and sell it. 

Think very carefully, and do plenty of research before choosing any loan. Make sure you’re capable of paying it back on time to avoid any negative effects on your credit score.

A low credit score doesn’t have to stand in your way of getting a personal loan to cover an emergency or consolidate debts.

Borrowers with bad credit (a 629 or lower score) may need to put in some extra work to qualify, but doing so can help you get approved and could get you a lower interest rate.

5 steps to get a personal loan with bad credit

1. Check your credit. Lenders typically have a minimum credit score requirement, and you could be rejected if you don’t meet it. Many financial companies, including NerdWallet, provide free access to your credit score, and annualcreditreport.com offers a free, detailed look at your credit behavior over the years. You may find errors on your report, and fixing them could boost your credit.

2. Compare lenders. No two lenders have the same borrower requirements or rates, so it pays to compare multiple options. The best bad credit lenders offer a rate you can afford and other helpful features like credit-building tools, fast funding or a mobile app to manage loan payments.

3. Pre-qualify. Pre-qualification shows you what rate, loan amount and repayment term to expect, and it doesn’t affect your credit score. It’s especially useful if you’re trying to determine whether you qualify for a loan and want to compare offers. Many online lenders and banks offer this feature.

4. Add to your application. Co-signed and secured loans can help you qualify or get a lower rate on a personal loan. With a co-signed personal loan, another person’s credit and income information are added to the application, and that person agrees to pay the loan if the borrower can’t. Secured loans let you offer up collateral — typically a car or savings account — that a lender can take if the loan isn’t repaid.

5. Apply. It’s helpful to gather the documents you need to apply for a loan beforehand, to speed up the process. These can include W-2s, pay stubs, financial statements and your Social Security number. Some lenders will give you a decision the same or next day after applying.

See if you pre-qualify for a personal loan – without affecting your credit score

Just answer a few questions to get personalized rate estimates from multiple lenders.

How bad credit affects a personal loan application

When reviewing your loan application, lenders decide not only whether to approve it, but also what interest rate to charge and how much money to lend to you.

A low credit score tells a lender you may have struggled to make payments toward credit cards or other debt in the past, so the lender may be taking on more risk by loaning you money. This would cause the lender to deny your application or approve a small loan at a high annual percentage rate. If you don’t need the loan urgently, take the time to build your credit before applying.

Here are the average APRs for borrowers in each credit band.

Source: Average rates are based on aggregate, anonymized offer data from users who pre-qualified in NerdWallet’s lender marketplace from March 1, 2022, to Aug. 31, 2022. Rates are estimates only and not specific to any lender. The lowest credit scores — usually below a 500 credit score — are unlikely to qualify. Information in this table applies only to lenders with APRs below 36%.

Each lender weighs credit scores differently. Your debt-to-income ratio, employment history and even whether you rent or own your home could also be considered on an application.

Where to get a loan with bad credit

Credit unions. You must be a member of a credit union to borrow from it, but they’re one of the best places to turn if you have bad credit.

Credit unions consider a loan applicant’s history as a member when making a decision, which means a good relationship with the credit union could help with approval.

You may also get a lower rate at a federally chartered credit union because APRs are capped at 18%. Rates from other lenders can go up to 36%.

Online lenders. Some online lenders, like Avant and Universal Credit, lend to bad-credit borrowers. Online lenders may include consumer-friendly features, like fast funding and advice to help build your credit.

It’s best to compare online loans with offers from other types of lenders to find the lowest rate.

🤓Nerdy Tip

Some bad-credit lenders tack on an origination fee that’s usually 1% to 10% of the loan amount. Most lenders take the fee from the loan before depositing the funds into your account, meaning you could end up with less money than you expected. If the fee is included, be sure the remaining loan amount is enough to cover your expense.

Avoid no-credit-check loans

It might seem appealing to borrow from a lender that won’t even look at your credit score, but these lenders often provide predatory high-interest installment or payday loans.

A lender that doesn’t review information like your credit score isn’t thoroughly assessing your ability to repay. Some lenders that offer no-credit-check loans trap borrowers in a cycle of debt by charging high rates that make payments unaffordable, causing them to borrow again when the payment is due.

Calculate bad-credit loan payments

Understand the loan’s monthly payment and total interest costs before you borrow. Making payments on time can help you build credit while missing payments could damage your credit even more. And knowing how much you’ll pay in total interest can help you decide if the loan is worth it.

Many lenders let you preview loan payments during pre-qualification, but you can also use a personal loan calculator to get an estimate.

Frequently asked questions

What type of loan is the easiest to get with bad credit?

Secured, co-signed and joint loans are the easiest to get with bad credit. A secured loan requires collateral like a car or savings account, which the lender can take if you fail to repay. A co-signed or joint loan requires you to add someone with better income and credit than you to the application. The co-applicant is responsible for missed payments.

What disqualifies you from getting a personal loan?

Not meeting the lender’s requirements will disqualify you from getting a personal loan. Disqualified applicants may have too low of a credit score, insufficient income, too much outstanding debt or short credit history.

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