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Personal Loans for Bad Credit for 2020

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Len Penzo
Personal Loans for Bad Credit for 2020

Bad Credit Loans Online

We know that having a low credit score may lead you to think that you can’t search for the best personal loans. However, your bad credit score doesn’t disqualify you from borrowing money. You can get online personal loans if your financial situation isn’t perfect, but you’ll need to know where to look and what to expect.

That’s where we come in. When it comes to checking your options for bad credit loans online, you might find that your options are limited. You can still find loans from reputable lenders, although the interest rates can be higher. We’ve set out some things to consider here.

What Is Considered Bad Credit?

The first step in understanding where to look for loans online is knowing what bad credit is and how it’s measured. Lenders use scores to categorize and rate borrowers. Having a low score, also known as a FICO score, classes a borrower as one with bad or very poor credit.

Credit scores range from 300 to 850. A higher score is a positive sign and will mean that a borrower is likely to be approved for a loan. Middle scores, which sit around the 650 mark, give borrowers a fair rating. Typically, this means lenders will provide a loan, although interest rates could be slightly higher. Credit score companies such as Experian consider anything under 580 as very poor. 

When applying for a loan, a lender will perform a reference check, which will reveal your credit score. Using this score, the lender will determine whether to offer a loan and what the terms will be. Lower scores can result in higher interest rates, smaller loan amounts, and shorter repayment periods.

What Can Contribute To A Low Credit Score?

There are a number of factors that can decrease a borrower’s credit score. It’s often a combination of occurrences in your payment history that make up a low score. They include:

  • Missing repayments
  • Defaulting on credit
  • Applying for credit too often
  • Bankruptcy or Part IX debt agreement

What Are The Consequences Of Bad Credit?

Once a lender gives a borrower a credit score, there are consequences, especially if it’s a low score. It can take some time to improve your FICO score, although if it’s a result of applying for credit too often, it may improve over time. 

While it makes sense to take action to improve your score in the long term, one of the best ways to do this is to take sensible actions when borrowing in the short term. Fortunately, there are online personal loans for those with credit challenges, and making regular repayments can help to improve your score.

The immediate consequences of a low credit score will still need to be considered. The choice of lender and terms of the loan may be more restricted. For example, borrowers may need to consider a co-signer option, accept higher interest rates, a shorter loan term, origination fees, or a smaller loan amount.

It’s crucial to remember that not all terms are acceptable, and things that seem too good to be true often are. You may see debt consolidation loans for bad credit with no credit check or bad credit personal loans with guaranteed approval. While they may seem like answers to a problem, they generally lead to loans with unacceptable terms. There are trustworthy lenders available that won’t make promises but will give borrowers a loan on more reasonable terms.

Credit 

Score Range

APR % Estimate

Excellent

720-850

14%

Good

690-719

18%

Fair

630-689

22%

Bad

300-629

27% Very low scores may not qualify

What Are The Options For Someone With Bad Credit?

Qualifying for a loan means finding the best personal loans for bad credit. It can seem challenging, but often it is a matter of knowing where to look. If bankruptcy, in particular, is an issue, then you may need to narrow your search to specific lenders. Either way, you have two options to explore.

  • Online personal loans for bad credit 

Establishing what you need from your loan will help you to find the right online personal loan. For example, if you require a loan of around $30,000 with a low starting interest rate, then Avant, who work with borrowers who have challenging credit circumstances, should be added to your list.

On the other hand, if a larger lending amount is required, you may need to look further afield to find a lender. The peer to peer borrowing site LendingClub is a good option for looking for a higher loan amount for low credit scores.

  • Direct lenders for bad credit personal loans

You can go directly to lenders to discuss your needs and your score. OneMain Financial has branches in over 40 states, which means you can talk things over face to face. Local credit unions are another excellent option as they look at your financial picture as a whole.

Personal Loans For Bad Credit Vs. Payday Loans

When looking for a loan, especially if it’s an emergency, finding a loan that you qualify for can be a relief. Some loans, such as payday loans, are easier to qualify for, but they aren’t the same as personal loans.

A payday loan often has a short term, for example, a month or two weeks. However, during that time, the APR can be as high as 200, 300, or even 400%. In comparison, a high-interest personal loan could have an APR of 35%. The result is less money to pay back and usually lower fees too.

Which Online Lender Is The Best For My Bad Credit and Me?

We want you to know that you have options, even when searching for a personal loan with a low credit score. We review, rate, and suggest trustworthy lenders that are transparent when it comes to loan terms, what they offer, and what’s expected of the borrower. Find out what we say about specific lenders that could provide a loan, including