Best Personal Loans For Bad Credit (Credit Score Under 580)
Getting a loan when you have poor credit can seem impossible, but it can be done, as long as you make sure to make on-time monthly payments.

Poor credit is that status no one wants to be in voluntarily. But sometimes it happens to the best of us. It can be due to pure financial mismanagement, but it can just as easily be the result of the difficulties of life. A divorce, the onset of a serious illness, or career crisis can turn good credit into bad credit in short order.

But there may still be loan options available to you if you have bad credit. They won’t be under the best of terms, but they can be a godsend when absolutely necessary.

The best lending sources for people with bad credit

Loan aggregators

These are another excellent source of financing when you have bad credit. Loan aggregators aren’t direct lenders, but a large number of lenders participate in the platforms. Since they serve all credit levels, you may be able to get a loan even with poor credit. You fill out a loan request, and lenders that will lend to your credit profile will make offers.

The most popular aggregators include Credible, and Fiona (formerly Even Financial).

  • Credible is an aggregator, they’re best known for finding quotes for student loans, but they also offer quotes for mortgages and personal loans. Credible even lets you compare credit cards.
  • With Fiona (also an aggregator), you complete a single loan request, and potentially dozens of lenders come to you and make offers. You can select the one you like best.

Peer-to-Peer (P2P) lenders

These may be the best sources for financing when you have poor credit. You’ll pay high interest rates—maybe as high as 36 percent. But they do offer fixed rate, limited term loans that don’t require collateral.

Perhaps best of all, loans can be taken for just about any purpose. You can use them for debt consolidation, starting a business, or even purchasing a car.

The most popular P2P lenders include LendingTree, Prosper.

LendingTree lets you compare rates for nearly every loan type you can think of – from personal loans to mortgages to student loans. You can compare multiple quotes all in one place, so you can be sure you’re getting the best price.

Prosper focuses on personal loans. Their application takes just a few minutes, and you can get approved for loans up to $40,000. Prosper offers a number of term lengths, so you can pick the one that fits your budget.

Loan sources to be careful of

Banks and credit unions

These institutions are strongly credit score driven. If your credit score is below 580, most will not make a loan to you. Credit unions are the better of the two, particularly if you have money on deposit with them. They may make a loan if you add a cosigner, but it will depend on the credit union. Most have credit score cutoffs, and will not lend below that level.

Payday loans

These are predatory loans, designed specifically for people with bad credit. That’s why they’re best avoided. Basically, they provide a loan advance against your next paycheck. The interest rate can exceed 300 percent, and they will require access to your bank account to withdraw funds when your next paycheck comes in. If you fail to get paid, and pay off the payday loan, things can get seriously ugly.

The worst thing about payday loans is that when you take one you’re practically doomed to take another—and another…Most people who use payday loans get trapped on a cycle that doesn’t end until they default. And payday loan companies can be particularly nasty adversaries when that happens.

Subprime loans

These are mostly a consideration with auto loans. If you don’t qualify for bank or credit union loans, car dealers will put you with one of these lenders. It may be necessary if you absolutely need a car, and there’s no other lending choice. But the cost is steep. Subprime auto loans are famous for ridiculously high interest rates (20 percent or more), and extended loan terms (up to 84 months). They’re a major reason why people with poor credit are more likely to end up owing more on their cars than they’re worth.

Credit cards for people with bad credit

There are a few basic credit card choices for those with poor credit. You can get unsecured credit cards that have more lenient credit requirements (they usually don’t offer rewards), credit cards specifically for people with bad credit, and secured credit cards.

Any of these options will come with limited benefits. Those can include low credit limits, high interest rates, and high fees. They typically lack the usual credit card benefits, such as airline miles, cash back rewards, or collision damage waiver coverage for rental cars.

However, they will give you a credit card, which is absolutely necessary in certain situations, like purchasing airline tickets or booking car rentals. And just as important, they’ll report your good credit history to the three major credit bureaus, giving you a real chance to improve your credit scores.

Below are credit cards generally available for people with bad credit:

Credit One Bank® Unsecured Visa® with Cash Back Rewards

Apply Now On the Secure Website Rates & Fees

In A Nutshell

Designed for consumers with modest credit histories, The Credit One Bank® Unsecured Visa® with Cash Back Rewards offers 1% cash rewards on eligible purchases, zero fraud liability and no annual fee. Terms Apply.

Read review
Credit score requirements: Credit Score requirements are based on Money Under 30’s own research of approval rates; meeting the minimum score will give you the best chance to be approved for the credit card of your choice. If you don’t know your credit score, use our free credit score estimator tool to get a better idea of which cards you’ll qualify for.
Poor 500-599
Fair 600-699
Good 700-749
Excellent 750-850

What we like:

  • 1% cash back on all eligible purchases

  • No annual fee. Terms Apply

  • No security deposit required; and your credit score is not affected when you pre-qualify

  • See if you Pre-Qualify in less than 60 seconds–without affecting your credit score. It's fast, easy, and secure.
  • Get 1% cash back rewards on eligible purchases including gas, groceries, and services such as mobile phone, internet, cable and satellite TV. Terms apply.
  • This is a fully functional, unsecured credit card–not a debit card, prepaid card, or secured credit card with deposit requirements.
  • Credit One Bank evaluates every account for credit line increase opportunities. We'll let you know as soon as you're eligible for a higher credit line.
  • Take advantage of free online access to your Experian credit score and credit report summary so you can track the key factors impacting your credit health. Terms apply.
  • Zero Fraud Liability protects you if your card is ever lost or stolen. Rest easy knowing you won't be held responsible for unized charges.
  • Access your account easily from your computer, smartphone, or tablet at or the Credit One Bank Mobile App. You can make payments, see recent transactions, and update your account preferences all at the click of a button.
  • Carry a card that makes you smile by choosing from over 20 unique card designs in Credit One Bank's card gallery. A fee may apply.
Annual Fee
$0 - $99
Regular APR
17.99% to 23.99% Variable
Intro APR
Intro APR Purchases N/A , 0 months
Intro APR Balance Transfers N/A , 0 months

Apply Now >>

The Credit One Bank® Unsecured Visa® with Cash Back Rewards lets you build credit, continuously monitoring your progress. As soon as you qualify for a credit line increase, Credit One contacts you.

You can monitor your card activity at all times through the mobile app. You’ll also get the following benefits:

  •     1% cash back on certain purchase categories.
  •     Free online access to your credit score.
  •     Choice of more than 20 different card designs.

With the Credit One Bank® Unsecured Visa® with Cash Back Rewards, the variable purchase APR is 17.99% to 23.99% Variable. Also, you’ll want to pay special attention to the fact that the late payment fee is up to $39 (terms apply).

Learn more: See card details/where to apply or read our Credit One Bank® Unsecured Visa® with Cash Back Rewards review.

Milestone® Gold Mastercard®

Apply Now On the Secure Website

In A Nutshell

If you have lousy credit and are looking for a way to build it back; the Milestone® Gold Mastercard® is a strong option. There’s a quick pre-qualification process with no impact to your credit score, modest interest rate and an annual fee of $35 – $99.

Read review
Credit score requirements: Credit Score requirements are based on Money Under 30’s own research of approval rates; meeting the minimum score will give you the best chance to be approved for the credit card of your choice. If you don’t know your credit score, use our free credit score estimator tool to get a better idea of which cards you’ll qualify for.
Poor 500-599
Fair 600-699
Good 700-749
Excellent 750-850

What we like:

  • $35 – $99 annual fee

  • Easy pre-qualification process

  • Previous bankruptcy is OK

  • Quick pre-qualification available with no impact to your credit score
  • Easy pre-qualification process with fast response
  • Choose your custom card design - Free
  • Free online account access
  • Protection from fraud, if your card happens to be lost or stolen
  • Accepted at over 35 Million Locations Worldwide!
  • Previous bankruptcy OK
Annual Fee
Regular APR
24.90% (Fixed)
Intro APR
Intro APR Purchases N/A , 0 months
Intro APR Balance Transfers N/A , 0 months

Apply Now >>

The Milestone® Gold Mastercard® is similar to a secured credit card in that its purpose is to help you build credit. It is unsecured, though. It even offers a few rewards.

You’ll get Identity Theft Resolutions Services that can help you fight fraudulent charges and close down accounts you didn’t open. You’ll also get the following:

  • Extended Warranty Coverage.
  • Price protection.
  • And a custom credit design.

The Milestone® Gold Mastercard® has a flat rate of 24.90% (Fixed). While it’s not the lowest, it isn’t bad for those with poor credit.

Learn more: See card details/where to apply or read our Milestone® Gold Mastercard® review.

Indigo® Platinum Mastercard®

Apply Now On the Secure Website

In A Nutshell

The Indigo® Platinum Mastercard® offers consumers with poor credit the opportunity to use a credit card for everyday spending. Pre-qualification is quick and easy and if you have the credit profile needed, you might be able to secure a credit card with no annual fee. ($0 – $99 annual fee).

Read review
Credit score requirements: Credit Score requirements are based on Money Under 30’s own research of approval rates; meeting the minimum score will give you the best chance to be approved for the credit card of your choice. If you don’t know your credit score, use our free credit score estimator tool to get a better idea of which cards you’ll qualify for.
Poor 500-599
Fair 600-699
Good 700-749
Excellent 750-850

What we like:

  • $0 – $99 annual fee

  • Easy pre-qualification process

  • Previous bankruptcy is OK

  • Pre-qualification available with no impact to your credit score
  • Previous bankruptcy OK
  • Easy pre-qualification process with fast response
  • Free online account access (mobile friendly)
  • Protection from fraud, if your card happens to be lost or stolen
  • Accepted at over 35 Million Locations Worldwide!
Annual Fee
Regular APR
24.90% (Fixed)
Intro APR
Intro APR Purchases N/A , 0 months
Intro APR Balance Transfers N/A , 0 months

Apply Now >>

The Indigo® Platinum Mastercard® is another unsecured credit card for those with poor credit. It offers a few rewards, including:

  • Master RoadAssist services
  • Travel assistance services
  • Rental insurance
  • Extended warranty coverage
  • Price protection

While it’s not much in cash value, it’s better than some of your alternatives.

What’s especially nice about this card, though, is the fact that you can submit a pre-qualification application. That way you’ll be able to know if the card is worth applying for in the first place, without hurting your credit score.

Learn more: See card details/where to apply or read our Indigo® Platinum Mastercard® review.

Getting an auto loan with bad credit

If you have poor credit, there are two basic choices when it comes to getting an auto loan. You can either get a subprime loan from the car dealer, or get a loan from a bank or credit card with compensating factors.

If you go the dealer route, expect to pay an interest rate in excess of 20 percent. They can usually get financing for scores of 580 and above, but if you’re below it’s probably a 50-50 chance you’ll be approved.

A better option may be to check out a loan matching service, like Fiona (formerly Even Financial).  By filling out a one-page application, you can get the best offers from various lenders who are competing for your business. If you have bad credit, you’ll see high interest rates. But at least it will give you an opportunity to take advantage of the lowest rates available. It’s likely to be a better deal than dealer financing.

If you apply at a bank or credit union, you’ll get a much better interest rate. But to do it, you’ll have to get a cosigner with strong credit. Banks and credit unions generally prefer credit scores of at least 650. Your cosigner should be at least at that level, and preferably higher.

They may also require a down payment of between 10 percent and 20 percent of the purchase price, as well as approve a smaller loan then you hope to get.

Getting a mortgage with bad credit

Prior to the Financial Meltdown of 2008 it was possible to get a mortgage with poor credit. But this was done through subprime mortgages, which are no longer commonly available. That’s not a bad thing either. Subprime loans usually required down payments of 20% or more, came with high interest rates, had a two-year fixed payment, then adjusted every six months thereafter, and charged a fat penalty if you tried to pay off the loan within the first two or three years.

As a result of that debacle, the mortgage industry has tightened credit standards. As a general rule, lenders won’t make loans to borrowers whose credit scores are below 620. And even if you are a little above 620, you’ll pay a higher interest rate.

Even now, some mortgage lenders will approve an FHA mortgage with a credit score as low as 580.

But 580 to 620 is in the “fair” credit category. If you have bad credit, your credit score is below 580.

If it is, your best option is to try an FHA mortgage with a 10 percent down payment. FHA loans normally require 3.5 percent down. But with a higher down payment, they may accept a credit score below 580. Best of all, the entire 10 percent down payment can be a gift from a family member.

Complications of the FHA 10 percent down strategy

There are some complications with that strategy:

  • Not all lenders will offer that type of arrangement. Most won’t go below 580, even on an FHA loan. You’ll have to do some serious research to find a lender who will.
  • The reason for the low credit score will matter. For example, if your credit score is 525, because you had foreclosure two years ago, you probably won’t get the loan. The same is true if you had a bankruptcy within the past year.
  • The reason for the bad credit will have to be “extenuating circumstances”. That can include a divorce, a serious illness, or some other event of that magnitude. You’ll need to provide documentation supporting your claim.
  • All other aspects of your loan application—income, job stability, and debt ratios—will need to be well within acceptable limits.

Salvation on the refinance front

It may be easier to get a mortgage for a refinance than for a purchase, even if you have poor credit. There are three programs you may be interested in if you need a refinance.


This is a government refinance program for conventional mortgages. To be eligible, you must meet the following criteria:

  • Your mortgage must be held by either Fannie Mae or Freddie Mac.
  • It must have been originated and closed before May 31, 2009
  • You haven’t used the HARP option in the past.
  • You’re “upside down” on your app德扑圈官方网址home – meaning either the property has declined in value, you owe more on the property than it’s worth, or you have very little equity.
  • You can have no more than one 30-day late on your mortgage within the past 12 months, and none in the past six months.

FHA Streamline Refinance

This is a simplified refinance program strictly for existing FHA mortgages. The loan offers reduced documentation, and on the credit side, requires only that your existing mortgage be current (all payments made up to date).

VA Interest Rate Reduction Refinance Loan (IRRRL)

If you’re an eligible veteran, and you’re looking to refinance a VA mortgage, you can use this program to do it, even if you have bad credit.

These refinance programs are available through most mortgage lenders.

Solutions for people with bad credit


Earnin lets you get access to your paycheck before payday actually rolls around. But that’s not the only good news – Earnin is completely free!

You can get access to up to $100 per day and the next time you get paid, Earnin will automatically deduct the amount borrowed from your paycheck. There’s no interest to worry about, and you can pay whatever fee you think is fair.

You can also set an overdraft alert that lets you know when you’ve gone below a certain amount in your bank account.


Though we suggested using cosigners in different situations, it’s not always an option when you have poor credit. But if it is, tread lightly.

Your performance on a cosigned loan will directly affect your cosigner. If you make any late payments, they show up as late payments on your cosigner’s credit report as well. And if you default on the loan, the lender will move against your cosigner for payment. It’s an excellent way to ruin a good relationship.

Borrowing from family and friends

Use this option only in an emergency situation. It’s bad enough if you have late payments or if you default on a third-party loan. But if you do it with a personal loan from family or friends, it can permanently destroy your relationship.

What is considered bad credit?

There are five levels of credit—Exceptional, Very Good, Good, Fair and Very Poor. According to Experian—one of the three major credit bureaus—bad credit is a credit score below 580.

Unlike good and fair credit, there’s not much wiggle room when it comes to bad credit. Not only is 580 a pretty strong dividing line, but some lenders will even lump those with scores between 581 and 620 in the bad category. However, since we included the 581 to 620 band in Borrowing When You Have Fair Credit, we’re going to focus on those with credit scores below 580 in this article.

bad credit drill down – what makes it up

One of the basic problems with a credit score below 580 is that it’s usually the result of either a very serious credit issue, or a series of smaller ones.

A bankruptcy or foreclosure within the past two years could certainly make it happen. So could a tax lien. If any of those situations is the major reason for your low credit score, you’ll just have to wait until enough time passes for them to become less important (though a tax lien MUST be paid off).

In the meantime, it’s important to make any and all payments on time. That includes rent, utilities, phone and cable services, and medical bills. Unfortunately, none of those vendors will report your good payment history, but any of them will report a past due balance or a broken lease or contract.

If you have a long history of late payments it may be an indication you don’t fully understand the importance of making payments on time.

Lenders will consider these factors in a low credit score. But each will present unique challenges in improving your score. Generally speaking, a score that low won’t have an immediate fix. And that’s why you may need to borrow before you have a chance to make improvements.

With that in mind, let’s look at borrowing when you have bad credit for credit cards, auto loans and mortgages.

Common document requirements for a loan application when you have bad credit

When you apply for a loan there are certain documents you’ll be required to furnish, though those can vary from lender to lender, and from one loan type to another. Here are the documents typically required when you apply for most loans:

  • Your most recent pay stub and W-2(s) to document your income.
  • Evidence of Social Security or pension income (award letter or 1099).
  • Contact information for your employer (the lender will verify your employment directly).
  • Copies of completed income tax returns for the past two years, if you’re self-employed or work on commission.
  • Make, model and value of your car; VIN number if you’re applying for an auto loan.
  • If you’re paying or receiving child support or alimony, list the amount you’re paying or receiving.
  • Bank or brokerage statements, or even retirement account statements.
  • Written explanations for credit problems, including documentation of extenuating circumstances (job loss, medical events, divorce, etc.).

If you’re applying for a loan with poor credit, especially with a bank or credit union, you should be fully prepared to go big on the last item above.

The idea is to show that your credit problems originate from an extenuating circumstance. That can be a job loss, medical events or divorce. You’ll need to provide both documentation of the events, and a well-worded explanation of what happened, and why it won’t continue in the future. In some loan situations, the additional credit documentation can turn a decline into an approval.

How to improve your credit

Simply put, bad credit locks you out of mainstream lending sources, forces you to find loans in unlikely places, and leaves you paying high interest rates under very strict terms.

That’s a situation you need to get out of—as soon as possible. In fact, the best borrowing strategy of all if you have bad credit is to improve your credit before applying for the next loan.

There’s no magic way to improve your credit. It will take months, even years, depending on the causes of your rating. You should also avoid shortcuts, like turning to credit repair services. They’ll charge you a bunch of fees, and they may or may not significantly improve your credit.

Throwing out some options:

  1. One option is to try Experian Boost – it’s free and an alternative to credit repair services which can be costly, fraudulent or possibly ineffective. Experian Boost can be ideal for a lot of people who need to increase their credit score, but just don’t have the time or money for other solutions.
  2. Start by getting a copy of your credit report, and paying close attention to any derogatory information it provides. If you see any information that’s reported in error, you’ll need to contact the creditor and get resolved. You’ll probably need to provide documentation proving your point. And if the entry is resolved in your favor, make sure the creditor reports the correct information to all three credit bureaus.
  3. If there are any past due balances, pay them off promptly. For larger balances, see if the creditor will accept a smaller amount in full payment of the balance due. Always get written confirmation of the settlement from the lender!
  4. If you have high credit card balances, gradually pay them down. High credit card usage, also known as a high credit utilization ratio is almost as bad as having late payments.
  5. Finally, avoid applying for new loans until you substantially improve your credit. Too many credit inquiries can also hurt your credit score.


In a perfect world, you would improve your credit score before applying for a loan of any type. But since the need for financing often happens on short notice, you may have to get a loan, bad credit and all. Check out the lenders in this article, and you can get a decent deal, if not a perfect one.

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About the

Total Articles: 160
Kevin Mercadante is a freelance personal finance blogger and the owner of his own personal finance blog, A recent transplant to New England, he has backgrounds in both accounting and the mortgage industry.

Article comments

We invite readers to respond with questions or comments. Comments may be held for moderation and will be published according to our comment policy. Comments are the opinions of their s; they do not represent the views or opinions of Money Under 30. Comments have not been reviewed or approved by any advertiser, nor are they reviewed, approved, or endorsed by our partners. It is not our partner’s responsibility to ensure all posts or questions are answered.
Steve Trooper says:

Kevin mentioned subprime loans, this is probably the best option behind family. Yes, the interest rates are high but companies like Big Picture Loans offers installment loans that can be paid back over a specified period of time. Of course the sooner you can pay back the loan the less interest you will pay.

Dwayne says:

Another option for people with poor credit is a title loan. Car title loans would fall under subprime lending. The benefit of this type of loan is that a borrower can use the title of their vehicles as collateral to secure a loan. In essence, title loans are equity loans, much like a app德扑圈官方网址home equity loan. However, just like any other type of short-term loan, title loans come with risks. Particularly, the threat of repossession. So it’s best to apply for a title loan only if you actually plan to pay-off the loan in less than 2 months.


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