While having poor credit can feel inhibitive, online bad credit loans can be instrumental in helping to repair and build credit scores. Bad credit online loans are best for borrowers who don’t have a lot to their credit history or made a few financial mistakes in the past and are now paying for it. A bad credit score is determined to be below 579.
We rated and reviewed the best online bad credit personal loans using our SimpleScore method to compare lenders’ rates, loan size, terms, support and fees.
The best bad credit online loans of 2020
We found results in California.
Best bad credit online loans at a glance
| Brand | APR | Terms | Loan Amount | Credit Score Requirement | SimpleScore |
| RISE Credit | 50%–299% | 4–26 months | $ 300-$ 5,000 | NA | 2.5/5.0 |
| PersonalLoans.com | 5.99%–35.99% | 90 days–72 months | $ 500-$ 35,000 | NA | 4.25/5.0 |
| BadCreditLoans.com | 5.99%–35.99% | 3–36 months | Up to $ 10,000 | NA | 3.6/5.0 |
| Peerform | 5.99%–29.99% | 3 years | $ 4,000–$ 25,000 | 600 | 4.0/5.0 |
| NetCredit | 34.00%–155% | 6–60 months | Up to $ 10,000 | None | 3.2/5.0 |
Rates accurate as of December, 2020, and exclude autopay discounts
[ Read: Is a Personal Loan My Best Option? ]
Best for Short-Term Loans – RISE Credit
RISE Credit is a quick way to acquire a loan; however, the high rates, short terms and rapidly accruing interest may warrant wariness for borrowers already struggling to manage their credit.
While RISE Credit isn’t for everyone, borrowers who need cash quick and are struggling to find a loan elsewhere can find a solution here. RISE Credit comes with high rates — typical for even the best bad credit loans — but borrowers have the opportunity to lower the interest rate on their loan through timely monthly payments. Since RISE Credit personal loans cap at $ 5,000, this lending option isn’t a viable choice for those looking for larger loan amounts.
Highest Loan Amount – PersonalLoans.com
You don’t have to burn holes into your cash flow with payday loans when sites like PersonalLoans.com exist — offering borrowers perks like up to 72 months to pay back loans.
The good news about PersonalLoans.com is that you can find loans with interest rates that fall in the lower median range. If you’re looking to pay off a loan quickly, PersonalLoans.com allows you to make payments twice a month without penalizing you. It’s crucial that borrowers remember, though, that PersonalLoans.com is a lending network, not the actual lender so be sure to review all lender policies that you are considering.
Best Bad Credit Marketplace Lender – BadCreditLoans.com
The online bad credit loans world is your oyster when it comes to BadCreditLoans.com, but you will need to read carefully through the terms and conditions as each bad credit loan agreement will depend on the lender.
While APR on online loans from Bad Credit Loans ranges from 5.99 percent to 35.99 percent, it is free to apply. An important note to remember, however, is that, like PersonalLoans.com, BadCreditLoans.com is not a lender. It is an aggregate of lenders that are willing to work with your poor credit score and history. You can receive a loan for up to $ 10,000.
Best Bad Credit P2P Lender – Peerform
Trying to land a bad credit loan through traditional means can feel like a gut punch to the wallet which is why PeerForm is an alternative worth considering for their long-term options and fixed interest rates.
It can be difficult to acquire a loan from a financial institution if you have poor credit; however, an alternative to commercial lenders are peer-to-peer lenders. Peerform brings together borrowers with private individuals who wish to lend money. This company is mostly focused on online bad credit loans and offers services that contour to borrowers needs such as pre-qualifications, soft credit pulls, and competitive rates. On the down side, borrowers are limited in their repayment-length options, the minimum loan amount is $ 4,000, and Peerform only reports to TransUnion as opposed to all three credit bureaus.
Best for Really Bad Credit – NetCredit
If you need two nickels to rub together fast, NetCredit is a better alternative to predatory payday lenders; however, the high APRs and poor customer reviews should inspire caution from anyone looking for bad credit online loans.
If you’re in a hurry for some cash, NetCredit is a much less predatory option than payday lenders. This lender doesn’t require an application fee or prepayment fee, and it’s application process is user friendly. However, NetCredit still has high APRs — ranging from 34%-155% — making it much more expensive than other lender options as well as poor reviews on Better Business Bureau. These circumstances don’t bode well for a pleasant, non-stressful experience with this online bad loans lender, but if you’re tight for money and you’re in need of some quick money, NetCredit is still a preferred option over payday lenders.
[ Read: Can Personal Loans Improve Your Credit Score? ]
What is a bad credit online loan?
Bad credit online loans are loans specifically geared toward borrowers with bad and poor credit or need to build their credit history. You can apply online for these types of loan and they come in the form of secured or unsecured. A secured loan requires collateral — like a house or vehicle. Unsecured loans do not require collateral but can be more difficult to attain as a result. Interest rates, fees and loan terms depend on the individual lender and the borrower’s credit score and financial history. The type of credit score lenders accept also vary depending on how strict the loan requirements are.
How bad credit loans work
When you decide on a lender for your online bad credit loan, you’ll need to apply on the lender’s website. While applying, you may need information such as identification, employment verification, pay stubs, proof of address and tax documents. The good news with online bad credit loans is that the process tends to be quick. Once you’re approved for the loan, it can take anywhere from a matter of 24 hours to a few days to receive your loan, depending on the lender.
There are also a few individual concepts you should be aware of when applying for an online bad credit loan.
High APR
While it isn’t impossible to obtain a loan with poor credit, you’re not going to qualify for good APR if you’re taking out a bad credit online loan. At least, not until that credit score comes up a bit. Borrowers with poor credit (300-579) will get an estimated APR of 28.5%–32% while an individual with a fair credit score (580-669) will receive an estimated APR of 17.8%–19.9%.
Short repayments
Depending on the type of loan you get and the lender, your repayment period could last anywhere from 90 days to three years. Online bad credit loans tend to have shorter terms which means higher payment amounts, but in those cases you’ll have paid your loan off faster and avoid the stress of having a long-term loan hanging over your head for years. On the other hand, you’ll want to be sure to budget to make sure you can afford a short-term loan. Short repayment plans tend to have higher rates than longer repayment periods.
How to get an online loan with bad credit
- Regularly check your credit score. You can do this by downloading a free credit report from AnnualCreditReport.com.
- Get your finances organized and budgeted to make sure you’re in a position to pay off a new loan.
- Organize any financial documents that will help streamline the loan application process including identification, employment documents, tax information and verification of income.
- Do your research — there are a variety of bad-credit personal loans. Pick a lender that works for you by paying attention to the terms and conditions as well as customer reviews.
- Think about bringing in a trusted co-signer. A cosigner with good credit can help you get loans with lower interest rates. However, cosigners will be required to take responsibility for the loan if you fall behind on payments.
- Consider applying for secured loans which tend to be easier to acquire for those with less than ideal credit because it requires collateral.
- Check for prequalification options — some lenders offer the chance to see if you qualify for a loan by performing a soft pull on your credit so as not to negatively impact your credit score.
- When you submit your application for an online, prepare for a hard credit check, which can impact your score.
Pros and cons of bad credit loans
Pros
- Helps rebuild credit
- Quick cash
- Longer terms than payday loans
Cons
- Fees may apply
- High interest rates
- Possible collateral requirements
[ Read: How to Get a Loan with Bad Credit ]
Things to consider when getting a bad credit online loan
- Predatory lenders: Beware of predatory lenders and scammers who may try to take advantage of you. Predatory lenders tend to charge exorbitant interest rates — sometimes up to 400%, charge unnecessary fees, require gratuitous insurance or apply balloon payments so after a short amount of time you’ll be required to pay off the remaining loan balance in one sum.
- Hard credit check: While some bad credit online loans offer a soft pre-qualification check, when you officially apply for the loan, a hard credit pull will be done that could impact your credit score.
- Repayment terms: Consider what type of repayment terms you would prefer when taking out online bad credit loans. A longer repayment period will mean smaller payments. A shorter term repayment period will require larger payments, but your loan will be paid off more quickly.
How to improve your bad credit
- Paying your bills on time will help positively build up your credit history and keep you from getting reported to the credit bureaus.
- Be sure to download a free credit report and check for any inaccuracies that might have been placed by a company. If you find a mistake on your report, dispute the claim and the credit bureau will remove it an investigation finds it was made in error.
- An important tip in improving your bad credit is to keep your monthly loan or credit card balance lower than 30% of your total credit line. This is because credit bureaus tend to see those who keep a low credit utilization ratio as responsible borrowers because of their distance from the spending cap.
Online bad credit loans FAQs
Whenever you take out any type of loan, there is risk involved, even if you have good credit. Unfortunately, if you need an online bad credit loan, it can be even more of a gamble. Be wary of predatory lenders and scams when looking for bad credit online loans.
If you’re desperate for some quick cash and have a not-so-great credit score, the easiest loans you’ll be able to attain will be from predatory lenders such as payday loans and no-credit-check lenders. Beware — some of these lenders are scammers and these types of loans tend to accompany very short repayments and high APR.
If you have a score of 550, obtaining a personal loan can be challenging. If you are successful in getting approved, unfortunately that loan will probably come with a lot of fees as well as high APR.
Too long, didn’t read?
While obtaining a personal loan with a poor credit score can be a challenge, it’s well inside the realm of possibility to get approved for one. Before taking the “easy” route of applying for a payday loan, consider the above options as much more viable alternatives. While even some of the best online bad credit loans have high APR, there are various flexible plans and platforms that are willing to work with you, even if you decided to go a less traditional route such as peer-to-peer lending. Your future self will thank you.
We welcome your feedback on this article and would love to hear about your experience with the online bad credit loans we recommend. Contact us at inquiries@thesimpledollar.com with comments or questions.
