A Guide to Loans for Bad Credit: Finding Financial Solutions

1. Navigating Loans for Bad Credit: Options and Strategies

Getting a personal loan when you have bad credit or no credit history can be tough. Like most financial products, borrowers have to submit an application listing their income information and agree to a credit check before getting approved for a loan. Lenders prefer to work with customers who have a proven track record of paying their bills on time and earning enough money to stay on top of their debt while honoring all terms and agreements.

2. Understanding the Credit Score Basics

A good credit score starts at 670 on the FICO scale (661 for VantageScore). Anything over 740 is considered very good, and above an 800 FICO® score (or 781 VantageScore) is considered excellent.

3. Borrowing with Bad Credit: What Are Your Options?

If your credit score is less than 670, you may feel like your score is a roadblock to getting access to good financial products. However, there are a few lenders that work with such candidates, helping them to borrow money for emergency expenses including medical bills and auto repairs, refinancing high-interest debt or even consolidating debt payments.

But proceed with caution: Lenders may charge higher interest rates or tack on origination fees, early payoff penalties, and late fees to borrowers they consider to be “riskier.” Therefore, if you have less-than-perfect credit, it’s important to do your homework before signing on the dotted line to make sure you’re comfortable with the terms of the loan.

4. Top Picks for Bad Credit Loans

CNBC Select rounded up the top personal loans for bad credit, looking at fees, interest rates, and flexible repayment options for different credit scores. We tried to prioritize loans with no origination or sign-up fees, but since this list is for borrowers with lower credit scores, many of the loans you see below come with added costs.

Upstart Personal Loans - Best for people without a credit history

• Annual Percentage Rate (APR): 4.60% - 35.99%
• Loan purpose: Debt consolidation, credit card refinancing, home improvement, wedding, moving, or medical
• Loan amounts: $1,000 to $50,000
• Terms: 36 and 60 months
• Credit needed: Credit score of 300 on at least one credit report (but will accept applicants whose credit history is so insufficient they don’t have a credit score)
• Origination fee: 0% to 12% of the target amount
• Early payoff penalty: None
• Late fee: The greater of 5% of last amount due or $15, whichever is greater

Who’s this for? Upstart is one of the few companies that look at factors beyond your credit score when determining eligibility. It also offers fairly low interest rates.

OneMain Financial Personal Loans - Best for flexible terms

• Annual Percentage Rate (APR): 18.00% to 35.99%
• Loan purpose: Debt consolidation, major expenses, emergency costs
• Loan amounts: $1,500 to $20,000
• Terms: 24, 36, 48, 60 Months
• Credit needed: Poor/Fair
• Origination fee: Origination fee starting at $25 to $500 or percentage ranging from 1% to 10% (depends on your state)
• Early payoff penalty: None
• Late fee: Up to $30 per late payment or up to 15% (depends on your state)

Who’s this for? OneMain Financial Personal Loans is a good option for people who want different options when it comes to the length of the repayment period. OneMain doesn’t determine the terms of your loan just based on your credit score, and there is no minimum credit score.

Avant Personal Loans - Best for quick funding

• Annual Percentage Rate (APR): 9.95% to 35.99%
• Loan purpose: Debt consolidation, major expenses, emergency costs, home improvements
• Loan amounts: $2,000 to $35,000
• Terms: 12 to 60 months
• Credit needed: Poor/Fair
• Origination fee: up to 4.75%
• Early payoff penalty: None
• Late fee: Up to $25 per late payment after a 10-day grace period

Who’s this for? Avant Personal Loans can be a good option for those who need money in a pinch. If you’re approved by 4:30 p.m. CT Monday through Friday, you’ll receive your funds the next day.

LendingPoint Personal Loans - Best for fast approval

• Annual Percentage Rate (APR): 7.99% to 35.99%
• Loan purpose: Debt consolidation, wedding, car repair, home renovations, and more
• Loan amounts: From $2,000 to $36,500
• Terms: 24 to 72 months
• Credit needed: Poor/Fair
• Origination fee: Origination or other fees from 0% to 8% may apply depending upon your state of residence
• Early payoff penalty: None
• Late fee: Currently, LendingPoint does not charge any late fees but reserves the right to assess late fees of up to $30. Fees vary by state.

Who’s eligible to apply for a LendingPoint loan? LendingPoint is a good option if you want a loan with a decent APR and origination fee. Much like other personal loans, LendingPoint offers prequalification so you can check the terms of your potential loan without harming your credit score. LendingPoint will also inform you of the approval decision within seconds of applying.

5. Compare Your Options

When it comes to personal loans for bad or no credit, you have options. Compare offers from these lenders to find the best loan that suits your financial needs. Remember, even with bad or no credit, there are financial products available to help you navigate through life's unexpected expenses.

In conclusion, while bad credit may limit your choices, there are lenders willing to work with you. These lenders offer various terms and interest rates, so be sure to carefully review the terms and select the one that aligns with your financial situation and goals. Always make an informed decision when borrowing money, and ensure that you can comfortably meet your repayment obligations.