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Finding a low credit score loan

The Best Personal Loans for Borrowers with a Low Credit Score

Getting approved for a loan these days might feel a bit trickier than it used to be because some traditional lenders have tightened their credit requirements. But don't worry, there's some good news too! There are more online lenders available than ever before, which can be a real lifesaver, especially if you're dealing with a lower credit score.

Let's take a look at the bigger picture of credit in the United States. When we consider the percentages, things don't seem too bad. Only 16% of Americans are classified as having "bad credit," and around 20% have no credit history at all.

However, when we put these percentages into real numbers, it paints a much different picture. That's roughly 37 million folks with bad credit and another 46 million who don't have any credit history. These people might face some challenges when they need financing for urgent situations like buying a new fridge, fixing a leaky roof, getting a new heating and air system, or repairing their car's brakes.

The key takeaway here is that you're not alone in facing these credit challenges, and there are options out there to help you find the financing you need, even if your credit history isn't perfect.

Key Takeaways

  • Low credit score loans from online lenders offer a lifeline to those facing challenges with traditional lenders.
  • About 37 million people with bad credit and 46 million with no credit history highlight the importance of low credit score personal loans for urgent financial needs.
  • Despite a low credit score or no credit history, low credit score loans offer accessible solutions by distinguishing online lenders from traditional banks.
  • Whether it's online personal loans, personal lines of credit, or secured personal loans, tailored low credit score loans suit various financial needs.

What Is a Low Credit Score?

So, what exactly is a low credit score? No problem if you don't know, most people don't even know their score or overestimate it. Your credit history, or how well you've managed repayments in the past, is measured using a scoring system that goes up to 900, with 900 being a perfect score. Fair scores typically start at around 630, and anything above 680 is considered good. If your score falls below 630, it's considered on the lower side, and if it dips under 600, it's categorized as a bad credit score.

Now, here's where it gets interesting. While some banks might approve individuals with a score of 600 or higher, most prefer to start at 630 or above. And, yes, it's even possible to have a score below 500, which is so low that no traditional bank or financial institution is likely to entertain your loan application.

But here's the good news: if you have a low or no credit score, there are still options available. The key is understanding the differences between traditional banks and online lenders to find the loan that's right for you and where your chances of approval are higher.

Qualifying for a Loan with a Low Credit Score

So, if you find yourself with a low credit score or no credit history, qualifying for a personal loan may require a few extra steps. Here's what you can do to improve your chances:

  • Check Your Credit Score. We've talked about it quite a bit, but now you need to get down to business. Go check your credit score to get a clear picture of where you stand. Knowing your credit score will help you explore your options.
  • Additional Income. Consider adding additional sources of income, such as a spouse's income, when applying for a loan. This can boost your overall financial picture.
  • Pre-Qualify. To gauge your eligibility without affecting your credit score, consider pre-qualifying. This process lets you see if you'll be approved for a loan and provides estimates of interest rates (more on this topic below).

For those in need of quick funds, online lenders are often a more straightforward and speedy option, especially if you have low credit or no credit history. The application process varies by lender, but some can offer instant decisions and fund your loan within 48 hours. This can be a helpful way to access the money you need, even if your credit situation is less than perfect.

Related: Understand the difference between a hard and soft credit check.

What Is Pre-Qualification?

Pre-qualification is like a sneak peek into the world of lending. It allows you to test the waters without taking a full plunge. During the pre-qualification process, you provide some basic financial information to a personal lender, typically online, and they perform a soft inquiry or soft pull on your credit report. This soft pull is different from a hard inquiry, which is what happens when you officially apply for credit. Importantly, soft inquiries do not impact your credit score.

Pre-qualifying empowers you to make informed decisions about your financial future without worrying about credit score damage. Remember that while pre-qualification offers valuable insights, it's not a guaranteed approval. You'll still need to complete a formal application if you decide to move forward with a specific loan offer. So, go ahead and explore your prequalification options - your credit score will thank you for it!

Best Personal Loan Types | One Size Does Not Fit All

When securing a personal loan, one size does not fit all. Whether you're looking for financing to cover an unexpected expense, make a significant purchase, or consolidate debt, finding the right loan with terms that suit your needs is crucial. 

Fortunately, there's quite a variety of loan options available today. To help you navigate this financial landscape, we've broken down some of the best loan choices for various situations. Let's dive in and explore the pros and cons of each.

Best for People Without Credit History: Online Personal Loan

Are you just starting your financial journey and finding yourself without much of a credit history? Don't worry; you're not alone. Many individuals, especially young adults, face this challenge. But the good news is that there are financial tools designed specifically to help people in your situation, such as online personal loans.

The Pros

  • Accessibility. Online personal loans are often tailored to individuals with limited or no credit history. This means that even if you're just beginning to establish your financial track record, these loans can be accessible to you.
  • Budgeting. One of the significant advantages of taking out an online personal loan is that online personal loans usually have fixed repayment schedules. This means that predictability is baked into the loan type allowing for easy budgeting and financial planning.

The Cons

  • Limited loan amounts. Some lenders may impose caps on loan amounts for borrowers without a credit history. This limitation could affect your ability to secure larger loans for significant expenses.

Best for Flexible Terms: Personal Line of Credit

When it comes to loans, flexibility can be a game-changer. Personal lines of credit offer precisely that: the ability to adapt your borrowing to your unique financial situation. Furthermore, personal lines of credit are similar to a credit card because they are both a revolving access to cash. When you pay back the personal line of credit, you can reuse the paidback amount.

The Pros

  • Tailored repayment. Personal lines of credit allow you to customize your repayment schedule to align with your specific financial needs. This flexibility can be a significant advantage, especially if you anticipate variations in your income or expenses.
  • Variable loan amounts. Depending on the lender and your creditworthiness, you may have more flexibility in determining the amount you can borrow. This can be a valuable feature for various financial needs.

The Cons

  • Potentially higher costs. While flexibility is undoubtedly advantageous, some personal lines of credit may come with higher interest rates compared to more rigid loan options. These rates are often associated with the convenience of adaptable terms.
  • Complexity. Managing a personal line of credit can be more complex than a traditional loan with fixed terms. You'll need to decide on repayment schedules that align with your budget and financial goals.

Best for Quick Funding: Secured Personal Loan

Sometimes, life throws unexpected expenses your way, and you need access to funds in a hurry. In such situations, secured personal loans can be your financial lifeline. If you are unfamiliar with the term, a secured personal loan uses collateral of some kind to secure the loan.

The Pros

  • Rapid access to cash. Secured personal loans are designed for quick funding. They often feature streamlined application processes, which can lead to speedy approvals and access to the funds you need.
  • Ideal for emergencies. These loans are your go-to solution for unexpected emergencies, such as medical bills or home repairs. When time is of the essence, secured personal loans can provide the financial support you require.

Related: Common collateral loan assets

The Cons

  • Higher fees. The convenience of quick funding often comes with a price. Secured personal loans may have higher fees and interest rates compared to other types of loans. It's essential to factor in these costs when considering this option.
  • Shorter terms. Secured personal loans may come with shorter repayment terms. This means you'll need to repay the loan more quickly, which can impact your monthly budget.

Related: Unsecured personal loans guide

Each of these loan options caters to different financial needs and situations. The key to making the right choice is understanding your unique circumstances, weighing the pros and cons, and selecting the option that aligns best with your financial goals. Whether you're building credit, seeking flexibility, or in need of quick funding, there's a loan solution out there for you.

Getting approved for a loan these days might feel a bit trickier than it used to be, but remember, you're not alone in facing credit challenges. Whether you're looking for a loan tailored to those without credit history, craving the flexibility of a personal line of credit, or in need of quick funding through a secured personal loan, the right financial solution is within reach. Take the first step towards financial empowerment by exploring your options today.

Don't let credit concerns hold you back. Start your journey towards financial freedom now. Reach out to our team at Simple Fast Loans to discuss your unique needs and goals.

Related Frequently Asked Questions

If you are looking for a personal loan and you have a low credit score, here are some additional questions people ask.

What's the Minimum Credit Score for a Bad Credit Loan?

The minimum credit score needed for a bad credit loan isn't set in stone — it varies from one lender to another. Simple Fast Loans does not have a credit requirement and works with all credit scores. Generally, these loans are designed for folks with credit scores below 600, but some lenders might be open to even lower scores.

How Fast Can I Get Approved for Low Credit Loans?

Some online lenders are lightning-quick, handing you an approval within minutes. Others might take a bit longer, maybe a few business days, to sort things out. Simple Fast Loans can get you money on the same-day. 

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