Best Bad Credit Loans


If you need a loan and your credit score is below 640 it can be a very challenging process. Finding a decent loan when your credit score isn’t perfect is hard; there are a ton of lenders out there seeking to take advantage of those with bad credit and when you examine the small print – their deals suck and are more likely to continue to damage your credit than to help you get out of the mess. You want to work with a lender that is clear and transparent about all the fees and the rates they charge and one that offers the most flexible terms to avoid getting caught permanently in the trap of bad debt.

Your Best Option When Your Credit is Really Poor


Those with the worst credit scores simply have next to no decent options. Many of those willing to lend to those with the worst credit scores are “payday” lenders – that is they offer tiny loan amounts with incredibly punitive interest rates and even if they’re paid back; they don’t boost your credit score.

The reputable alternative to these loans is and it’s worth noting that they are not a lender in themselves but rather a broker for a group of reputable lenders that are willing to take on the risk of bad credit loans.

To be able to use their facility, you must fulfill some basic criteria – that is you must be over 18, you have to have a phone number and an e-mail address (and they have to work), you must be able to prove you are either a US citizen or legally resident in the US, and that you’ve held down a job for a minimum of 90 consecutive days by the date of application and that job must pay more than $1,000 a month after tax and finally, you must also have a checking account and it must be in your name.

Now, the bad news. While the principle here is sound; a network of lenders should result in multiple loan offers where you can pick the best deal for your circumstances – you’re not guaranteed to get any offers at all. Worse, some of them are likely to come with very hefty interest rates. So if you’re going to take up a loan offer from; you need to be very, very certain you can pay the money back in the period that you agree to. These loans are particularly problematic when you start to roll the balance over and they incur charges that make loan sharks look generous.

Your Best Option for Secured Bad Credit Loans


Springleaf Financial is a better option for bad credit loans but typically they will require some form of security, though the company does occasionally offer unsecured loans too. They will accept applications from borrowers with credit scores that dip below 600 and they have a good reputation with the Better Business Bureau.

Their interest rates aren’t great and start at 25% typically and run up from there. That makes these loans about the equivalent of a poor credit card deal. However, in some cases APRs will be lower and while they normally lend from $1,500 to $10,000 they may offer more too. Applications can be made online for their loans or in one of their 800+ branches around the U.S. They only operate in 41 states though – so your state may not be covered by their service.

Your Best Option for Bad Credit Loans from Peer to Peer Financing


Peer-to-peer financing isn’t a quick process. It involves the company accepting your application and then putting your loan out to their investors for funding. There are two minor issues with this – firstly it can take up to 2 weeks before your loan is fully approved and secondly, there’s a genuine risk that the investors won’t finance the whole of the loan amount requested.

So why would you want to consider peer-to-peer financing for bad credit loans? The best reason is the low APR rates from just over 7% to a maximum of around 28%.

If you go this route; you should be aware that you’ll need a credit score of at least 600 – those with really poor credit will not get investor funding.

Peerform are considered to be one of the better peer-to-peer lending companies and they will loan up to $25,000. However, you should be aware that there’s a 5% loan arrangement fee which can add up to a substantial amount on the loan value and you can only get loans from Peerform in 37 states. You should also be aware that Peerform is a recent entrant to the market and hasn’t yet established a bankable reputation for how it deals with lenders.

Your Best Option for Unsecured Bad Credit Loans


Unsecured loans are a big challenge for those with low credit scores as they imply a much larger risk for the lender. That means there are very few lenders worth looking at in this space by Avant may be the exception to the rule.

Firstly, you need to know that you’ll need a credit score of 580 to 700 to apply and if your credit score is lower than that – they can’t help you. They also don’t offer secured loans so they’re not the place to turn to if you have security; which can help reduce the APR on bad credit loans.

Then you should be aware there are no loan arrangement fees and that interest rates begin at a very reasonable 9.95% and their service can be found in 44 states. You can borrow up to $35,000 for a period of 1 to 4 years. Avant also has a good Better Business Bureau rating. Finally, unlike peer-to-peer services you should receive an immediate decision and immediate access to funds if you’re approved for a loan.

Final Thoughts on Bad Credit Loans


These forms of loan all offer the potential to help you consolidate debt or get you back on your feet after a period of poor credit performance. However, they will only do that if you take the repayments seriously and make them each and every time across the period of a loan.

It is vital that if you have poor credit that you also examine the reasons for that poor credit score and try to address them.

Before you take on a loan designed for those with poor credit ratings you might want to examine other avenues of credit. Banks may offer you better terms if you can find a guarantor and if you have a mortgage you may be able to extend that mortgage (even with bad credit scores) and get better rates on a loan too.

Written by Lisa Huyhn

Lisa Huyhn is the Politics and Military & Defense Editor at BusinessPundit. She is a fiercely independent voter who believes in full transparency in politics & general government activities. You can reach her