Are you looking for a loan but have a poor credit score? Bad credit loans are designed for people with low credit scores, usually 579 or lower. These loans come with fixed interest rates and fixed monthly payments, which must be paid until the loan is fully repaid. If you have home equity, you can apply for a home equity loan or a home equity line of credit (HELOC). Your home is used as collateral and you can get home equity loans regardless of your credit score.
The interest rate is usually low, since the loan is secured by housing. Plus, the interest you pay on a home equity loan is usually tax-deductible. When applying for personal loans for bad credit, be sure to check the fine print to see if you qualify, as factors such as the minimum credit score required may vary by lending institution. Generally, most lenders require a minimum credit score of 600 to get a loan.
If you have bad credit, a personal loan may cost more because lenders may consider you a greater credit risk. Personal loans often require good credit, usually a FICO credit score of 670 or higher, but this is not always the case. The APR includes the interest rate you'll pay to borrow funds, as well as any additional fees. Upstart borrowers cannot use personal loans to finance illegal activities or purchase illegal weapons, firearms or drugs.
An unsecured loan has nothing but a promise that you will pay behind it and could be very difficult to obtain from most banks. Secured loans require you to provide something of value (also known as collateral), such as your car, savings account, or home, to support (or secure) the loan. Treat any loan from someone you know as if it were a major business transaction between you and a stranger. Interest rates on bad credit loans are higher than conventional loans, most of the time considerably higher. It may seem attractive to borrow from a lender who doesn't even check your credit rating, but these lenders can be just as predatory as payday loans.
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