Finding an unsecured personal loan with bad credit is tough. Many lenders either reject applications outright or charge sky-high interest rates that make borrowing expensive. Without collateral to back the loan, lenders see bad credit borrowers as a higher risk, leading to stricter approval requirements.
But some lenders specialize in working with people who have lower credit scores. They offer unsecured loans with flexible terms, giving borrowers a chance to access funds for emergencies, debt consolidation, or other expenses. The key is knowing where to look and comparing your options to get the best deal.
5 Unsecured Loans for People with Bad Credit
Some lenders recognize that bad credit doesn’t mean you shouldn’t have access to financing. The lenders below offer unsecured loans with flexible approval criteria, making it easier to get the funds you need.
1. CashUSA
- Loan amount: $500 – $10,000
- APR range: 5.99% – 35.99%
- Loan terms: 3 – 72 months
- Approval time: Decisions typically within minutes, with funding as soon as the next business day.
2. Upgrade
- Loan amounts: $1,000 – $50,000
- APR range: 7.99% – 35.97%
- Loan terms: 24 – 84 months
- Approval time: Decisions typically within minutes, with funding as soon as one business day
3. MoneyMutual
- Loan amount: $100 – $5,000
- APR range: Varies by lender, often 200% – 1,300%
- Loan terms: Typically short-term, with repayment due on the borrower’s next payday
- Approval time: Potential approval within minutes, with funding as soon as 24 hours
4. PersonalLoans.com
- Loan amount: $250 – $35,000
- APR range: 5.99% – 35.99%
- Loan terms: 90 days – 72 months
- Approval time: Funds may be deposited as soon as the next business day
5. BadCreditLoans.com
- Loan amount: $500 – $10,000
- APR range: Varies by lender
- Loan terms: 3 – 72 months
- Approval time: Decisions typically within minutes, with funding as soon as the next business day
Unsecured Loans: How They Work and Who They’re For
Unsecured loans don’t require collateral, making them an option for borrowers who don’t want to risk personal assets. Instead, lenders evaluate credit scores, income, and financial history to determine eligibility. These loans can be used for a variety of purposes, but interest rates are typically higher than secured loans.
How They Work
- No collateral required: Unlike secured loans, unsecured loans don’t require assets like a car or home as backing.
- Approval based on creditworthiness: Lenders assess credit score, income, and financial history to determine eligibility.
- Fixed repayment schedule: Most unsecured loans have set monthly payments with a fixed interest rate.
- Higher interest rates: Since there’s no collateral, lenders charge higher interest to offset their risk.
Who They’re Best For
- Borrowers with decent credit: Higher credit scores qualify for better rates, but some lenders accept lower scores.
- Debt consolidation seekers: Can be used to pay off high-interest debt with a structured repayment plan.
- Emergency expenses: Useful for medical bills, car repairs, or unexpected costs when savings aren’t enough.
Pros & Cons
Pros:
- No risk of losing personal assets
- Can be used for various expenses
- Fixed monthly payments make budgeting easier
Cons:
- Some lenders charge origination fees
- Higher interest rates than secured loans
- Harder to qualify with poor credit
What to Look for When Comparing Loan Options
Not all unsecured personal loans for bad credit are the same. To find the best deal, pay close attention to these key factors:
Interest Rates
The interest rate determines how much you’ll pay to borrow money. Lower credit scores often mean higher rates, so compare lenders to find the most affordable option.
Loan Terms
This is the length of time you have to repay the loan. Shorter terms mean higher monthly payments but less interest overall. Longer terms reduce your monthly cost but increase total interest paid.
Fees and Hidden Costs
Some lenders charge origination fees, late payment fees, or even prepayment penalties. Always check the fine print to avoid unnecessary costs.
Repayment Flexibility
Look for lenders that allow extra payments, early payoff without penalties, or the ability to adjust your due date if needed.
Customer Service and Support
If you run into issues with your loan, good customer service matters. Read reviews and check lender ratings to ensure you’re working with a reputable company.
How to Get an Unsecured Loan With Bad Credit
Getting approved for an unsecured loan with bad credit can be challenging, but taking the right steps increases your chances of finding a lender that meets your needs. Here’s how to improve your approval odds and secure the best loan terms.
1. Check Your Credit Score and Fix Any Errors
Before applying, review your credit report for mistakes that could be dragging down your score. You can get a free report from AnnualCreditReport.com and dispute inaccuracies to boost your chances of approval.
2. Compare Lenders That Accept Bad Credit
Not all lenders work with low-credit borrowers, and those that do may have high interest rates. Look for lenders that specialize in bad credit loans, compare their terms, and check for hidden fees.
3. Gather Documents to Prove Income and Financial Stability
Lenders want to see that you can repay the loan, especially if your credit score is low. Be prepared to provide pay stubs, tax returns, or bank statements to show steady income.
4. Prequalify to Check Potential Rates Without Hurting Your Credit
Many lenders offer prequalification, which lets you see estimated loan terms with only a soft credit check. This helps you compare offers before committing to a full application.
5. Apply and Review the Loan Agreement Carefully
Once you choose a lender, submit your application and wait for a decision. If approved, read the loan terms carefully—look for origination fees, prepayment penalties, and repayment conditions before signing.
6. Accept the Loan and Make On-Time Payments
After receiving your funds, set up autopay or reminders to ensure you never miss a payment. Paying on time can improve your credit score and help you qualify for better loan options in the future.
Other Ways to Borrow Money When You Can’t Get an Unsecured Loan
If you don’t qualify for an unsecured loan or want a more affordable option, these alternatives may be worth considering.
Secured Loans
These loans require collateral, such as a house, car, or savings account, which reduces the lender’s risk and can lead to lower interest rates. Common secured loans include home equity loans, auto loans, and secured personal loans. However, failing to repay means you could lose the asset.
Borrowing From Family or Friends
A loan from someone you trust may come with flexible terms and no interest, but it’s important to treat it like a formal agreement. Set clear repayment expectations to avoid damaging relationships.
Getting a Cosigner
If your credit score is too low to qualify on your own, a cosigner with good credit can help you secure a loan with better rates. Just remember, they’ll be responsible for repaying the loan if you default.
Home Equity Line of Credit (HELOC)
If you own a home, a HELOC lets you borrow against its equity at lower rates than most personal loans. The interest may be tax-deductible, but if you can’t repay, your home is on the line.
Personal Line of Credit
Similar to a credit card, a personal line of credit gives you access to funds up to a set limit, and you only pay interest on what you borrow. Some lines of credit require collateral, while others are based on creditworthiness.
0% Intro APR Credit Cards
Some credit cards offer a 0% introductory APR on purchases or balance transfers for 6 to 21 months, allowing you to borrow interest-free during that period. This can be a smart way to consolidate debt or cover expenses, but be sure to pay off the balance before the standard interest rate kicks in.
Frequently Asked Questions
Can I get an unsecured loan if I’m unemployed?
It’s possible, but it will be more challenging. Lenders want to see proof of income to ensure you can repay the loan. If you’re unemployed, you may still qualify if you have another source of income, such as unemployment benefits, a side business, or a co-signer who can guarantee the loan.
How much can I borrow with bad credit?
Loan amounts vary by lender, but most unsecured personal loans for bad credit range from $100 to $50,000. However, if your credit score is low, lenders may limit the amount you can borrow or require higher interest rates to offset the risk.
Will an unsecured loan improve my credit score?
It can, but only if you make on-time payments. Lenders report your payment history to the credit bureaus, so paying your loan consistently can help build a positive credit history. On the other hand, missing payments can hurt your credit score.
What happens if I can’t repay my unsecured loan?
If you can’t make your payments, your lender may charge late fees, increase your interest rate, or send your account to collections. This can negatively impact your credit score and make it harder to borrow in the future. Some lenders may offer hardship programs, so it’s important to contact them as soon as you anticipate trouble making payments.
Can I refinance an unsecured loan?
Yes, some lenders allow refinancing, which lets you replace your existing loan with a new one—ideally with better terms. Refinancing can help lower your interest rate, reduce monthly payments, or extend the repayment period. However, if your credit score hasn’t improved, you may not qualify for better terms.
Are payday loans the same as unsecured personal loans?
No, payday loans are a type of unsecured loan, but they come with much shorter repayment terms and extremely high interest rates—often over 300% APR. Traditional unsecured personal loans typically have lower rates and longer repayment periods, making them a more affordable option.
Do all unsecured loans require a credit check?
Most lenders perform a credit check before approving a loan, but some offer no-credit-check loans. These often come with extremely high interest rates and fees. If you’re concerned about your credit score, look for lenders that offer prequalification, which lets you check potential loan terms without a hard credit inquiry.
