Personal Loans with Bad Credit and Low Income

Don't let your bad credit history or low income stop you from borrowing money when you really need it. Find out the best personal loans for you here.

A personal loan can help you get extra funds to manage your expenses, especially in times of crisis.

But what if you're not earning that much, and your credit score isn't the best? Can you still borrow money?

Of course, you can! There are tons of low-income and bad credit loan options to choose from. Read on to take your pick.

Best Personal Loans for Bad Credit and Low Income

It's not too good to be true to be able to borrow money with bad credit and low income. But you do have to watch out for loan terms and interest rates, starting with Upstart.

Upstart: Best Overall

Upstart is a well-known lender for those with bad credit. Sometimes, you may not even need a credit score at all.

And for those who need fast cash, you can expect approval within a matter of minutes. The automated system can grant applications almost instantly.

Pros + Cons:

Upstart Personal Loan:

• Minimum Credit Score: 300^[1]
  
• Loan Amount: $1,000 to $50,000
  
• Loan Terms: 36 to 60 months

Why Choose Upstart:
Upstart doesn't focus on your credit score or credit history when you apply for a loan. The AI lending platform takes note of your education and employment, too.

And if you're struggling financially? There's no better way to manage your cash flow than by choosing your own repayment date. Upstart lets you do just that.

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Upgrade: Best for Debt Consolidation

To make paying off your other dues simpler, consider a personal loan with Upgrade. They offer direct payment to creditors, which removes the hassle of manually making your repayments.

Pros + Cons:

Upgrade Personal Loan:

• Minimum Credit Score: 560
  
• Loan Amount: $500 to $25,000
  
• Loan Terms: 24 to 84 months

Why Choose Upgrade:
Aside from paying your dues, you can use an Upgrade personal loan to refinance your credit cards. This way, you can avoid paying too much interest.

But you can also direct the funds to house repairs, medical bills, wedding costs, etc. The loan amount can be large enough for your extra needs.

LendingPoint: Best for Low Interest Rates

If you want to save on rates, LendingPoint can help you out. They offer fixed-rate loans with low interest.

You can save a lot from your monthly installments, too, after 6 months of timely payments with no prepayment fees and late fees.

Pros + Cons:

LendingPoint Personal Loan:

• Minimum Credit Score: 580
  
• Loan Amount: $2,000 to $36,500
  
• Loan Terms: 24 to 72 months

Why Choose LendingPoint:
Like Upgrade, LendingPoint uses other factors other than credit scores for easier loan approval. But they do require a minimum annual income of $35,000.^[2]

The good news is, this doesn't have to come from your main salary alone. It can be from other income sources like side hustles or passive income.

LendingTree: Compare Multiple Lenders

Unlike the others on this list, LendingTree isn't exactly a lender. Instead, it lets you find personalized loan offers from different lenders. You can compare your options to see which fits your needs best.

Pros + Cons:

LendingTree Personal Loans:

• Minimum Credit Score: 580^[4]
  
• Loan Amount: $1,000 to $50,000
  
• Loan Terms: 12 to 144 months

Why Choose LendingTree:
LendingTree has multiple partners, which means you're likely to find a loan according to your qualifications and capabilities.

You can also get a free credit check on their website to see which offers you qualify for. Then, you can use their loan calculator to estimate your installments and interest rates.

Universal Credit: for Quick Approvals

Like LendingTree, Universal Credit also works to find loan offers that fit your needs. But compared to LendingTree, Universal Credit requires a lower minimum credit score.

You can also get approved instantly and get your funds right away when you apply online. It's a good option for emergencies.

Pros + Cons:

Universal Credit Personal Loans:

• Minimum Credit Score: 560
  
• Loan Amount: $1,000 to $50,000
  
• Loan Terms: 36 to 60 months

Why Choose Universal Credit:
LendingTree isn't partnered with all available lenders. So exploring Universal Credit may give you better options.

But keep in mind that Universal Credit personal loans have a shorter loan term range and higher starting APRs. So be extra thorough in checking your loan offers. Ensure that the loan is manageable for you and your budget in the long run.

Let's say you found an option to your liking. How do you increase your chances of approval?

How to Qualify for a Personal Loan

The personal loans on this list already require a low credit score and income. But here are some things you can do so you can more likely get approved.

• Increase your credit score
  While there are lenders that offer loans for those with low to no credit scores, improving yours can get you better offers.

  A score of 600+ can be good enough. But the higher, the better. Check with your bank to find out yours, or go to www.annualcreditreport.com for a free yearly report.

  Think of your credit score as a track record of all your previous loans. If you've paid your dues consistently and on time, you're likely to have a good credit score. Consequently, that's what you need to do to improve your score.
  

• Manage your debt
  Lenders take your debt-to-income ratio (DTI) into account to see if you can manage to take on more loans. Hence, it's best to settle pending debts before you apply.

  Ideally, you'll want a DTI ratio of less than 36%. To compute your DTI, just add up all your bills and dues and divide the total by your monthly income.

• Stabilize your income
  Lenders consider your income to determine how much they can lend you. They also factor in deductions to see if you can realistically pay for the monthly installments.

  That said, a stable income can certainly help you pay off your balances with no problem. You can avoid getting buried with debt in the long run.

• Get a cosigner or co-borrower
  A cosigner or co-borrower gives lenders more assurance that you'll be able to pay them back.
  A cosigner is anyone who can take on the responsibility of loan repayments when you are unable to. Meanwhile, a co-borrower is someone who is required to make repayments as you are, regardless of your ability to fulfill the monthly installments.
  

• Ask for a reasonable loan amount
  Lenders are more likely to approve your application if your request is realistic. Your income and other factors often dictate how much you can borrow. So, ensure the amount you ask for is suitable for your circumstances.

Having said all that, how do you know which offer is best for you?

How to Choose a Personal Loan Offer

There are a few things to consider when applying for a personal loan. Carefully look at these factors to know the best loan offer.

• Loan Term
  The loan term refers to the period you are given to complete your repayments. For personal loans, it can range from around 1-12 years.

  Note that a longer term typically equals a lower monthly installment. But you can end up paying more than a short-term loan due to interest.

• Interest Rate
  Think of interest as additional payments on top of your regular payments. Lenders take a percentage of your loan, around 6% to 35%, and charge it in addition to your repayments to pay for the loan services.

  Watch out for these numbers since they significantly impact the total cost of your loan.

• Fees
  Some lenders charge fees in addition to your monthly payments. This could include prepayment fees (if you pay before the due date), late fees, or maintenance costs.

  You can avoid these fees by looking for lenders that don't have them. Find those that offer discounts instead.

Personal Loans: Borrow Between $5k-$100k

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Say you've done the search and got approved for a personal loan. What do you do next?

How to Manage Your Loan

Once you get approved, you want to make sure that you don't damage your credit and finances further. Here are some things you can do to avoid that:

• Set a budget
  Surviving on a low income is difficult but also doable if you budget carefully. The same goes for when you take on a personal loan. By setting an amount for your expenses and dues, managing your money becomes easier.
  When budgeting, you can maximize the technology we have today and create a spreadsheet, find a template, or use a budgeting app. You can also simply track your expenses by writing them down.
  

• Be punctual with your payments
  Late repayments, or even early ones, can subject you to additional fees. They can even damage your credit score.

  Meanwhile, paying at the right time can increase your credit score and gain you more favor with the lender. It may even lead to more lenient loan terms.

• Settle your debts before taking another loan
  With the availability of loans to those with bad credit and low income, borrowing money is now more accessible. But don't get too tempted and bite off more than you can chew.

  You'll have better chances of getting approved for a loan if you settle most, if not all, of your debt first. It can make managing your finances easier, too.

• Communicate with your financial partners
  Having a good relationship with your bank or lender can be really helpful when managing your finances.

  If you find yourself unable to make your repayments, let your lender or bank know immediately. Most of them are surprisingly considerate and will even offer ways to help you out. They may extend your due date, for example.

But what if, after all the search, you still can't find a suitable loan? There are alternatives.

Personal Loan Alternatives

Whether you don't get approved for a loan or are having second thoughts about applying, consider these alternatives.

• Use a credit card
  A credit card might be a better option if you just need to make a few purchases. If you're on time with your payments, you can build up your credit score to qualify for larger loans with better terms in the future.

• Borrow from friends and family
  If you have a few people in your life who can help you out and are willing, consider borrowing money from them first. As long as you come to an agreement and can pay them back, it can be a good financial solution.

  Not to mention, you get to avoid high-interest rates and strict loan terms when you borrow from a loved one.

• Start a side hustle
  If time and energy are on your side, you could try to squeeze in more work to get extra cash. You can also consider selling any preloved items or pawning off any of your assets.

What the Experts Say

CreditDonkey asked a panel of industry experts to answer readers' most pressing questions. Here's what they said:

Bottom Line

Lenders of the best personal loans for bad credit and low income can help you even if you're not typically qualified with other lenders. It's a good option to borrow money in times of need.

However, beware of high-interest rates, high maximum and low minimum loan amounts, and shorter loan terms. If you prefer to have better loan conditions, you'll have to improve your credit score and settle other debts first.

If it's still challenging to get approved, there are alternatives you can check out. A side hustle or borrowing from a loved one can be more accessible for you.

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