A credit score of 580 or lower can make it challenging to secure traditional personal loans from banks or credit unions. However, there are still options available for individuals with less-than-stellar credit scores. Bad credit loans, specifically tailored for those with poor credit histories, can provide a lifeline during financial emergencies or when in need of extra funds. In this article, we’ll explore four personal loan options suitable for individuals with credit scores of 580 or lower.
Best Personal Loans To Apply to for a credit score of 580 and lower
Online Lenders
Online lenders have become a popular alternative for borrowers with bad credit due to their flexibility and accessibility. These lenders often consider factors beyond just credit scores when evaluating loan applications, such as income and employment history. Some reputable online lenders that offer personal loans to individuals with credit scores of 580 or lower include:
- BadCreditLoans.com: As the name suggests, BadCreditLoans.com specializes in connecting borrowers with poor credit to lenders willing to work with them. They offer personal loans ranging from $500 to $10,000, with varying repayment terms depending on the lender’s terms and the borrower’s financial situation.
- OppLoans: OppLoans provides personal installment loans to borrowers with bad credit. While their interest rates may be higher compared to traditional lenders, they offer flexible repayment options and typically do not require a minimum credit score for approval. Borrowers can apply online and receive funds as soon as the next business day.
- Avant: Avant offers personal loans to individuals with credit scores as low as 580. They focus on borrowers who may have been rejected by traditional lenders but demonstrate the ability to repay the loan based on factors such as income and employment stability. Avant provides loan amounts ranging from $2,000 to $35,000, with fixed-rate terms and no prepayment penalties.
Credit Unions
Credit unions are non-profit financial institutions that often have more lenient lending criteria compared to traditional banks. Many credit unions offer personal loans specifically designed for members with poor credit histories. Here are some credit unions that may consider borrowers with credit scores of 580 or lower:
- Navy Federal Credit Union: Navy Federal Credit Union offers personal loans to both members and non-members with credit scores as low as 580. Their loan terms range from 12 to 84 months, with competitive interest rates and no prepayment penalties. Borrowers can apply online, by phone, or in-person at a branch location.
- State Employees’ Credit Union (SECU): SECU provides personal loans to members with credit scores below 580 through their “Fresh Start” program. This program is designed to assist individuals with poor credit in rebuilding their financial health by offering low-interest loans with manageable repayment terms. SECU also offers financial counseling services to help members improve their credit scores over time.
Peer-to-Peer Lending Platforms
Peer-to-peer (P2P) lending platforms connect borrowers directly with individual investors willing to fund their loans. These platforms often have more relaxed credit requirements compared to traditional lenders and may be willing to work with borrowers with credit scores of 580 or lower. Some popular P2P lending platforms include:
- LendingClub: LendingClub is one of the largest P2P lending platforms in the United States, offering personal loans for various purposes, including debt consolidation, home improvement, and medical expenses. While they do have minimum credit score requirements, they consider other factors such as income and debt-to-income ratio when evaluating loan applications.
- Prosper: Prosper is another well-known P2P lending platform that connects borrowers with individual investors. Borrowers with credit scores as low as 580 may qualify for a personal loan through Prosper, although interest rates may be higher compared to borrowers with excellent credit. Prosper offers fixed-rate loans with terms ranging from three to five years.
Secured Personal Loans
Secured personal loans require collateral, such as a vehicle or savings account, to secure the loan. Because the lender has recourse if the borrower defaults, secured loans are often more accessible to individuals with bad credit. Here are two types of secured personal loans to consider:
- Title Loans: Title loans allow borrowers to use their vehicle’s title as collateral for a loan. While title loans typically have high-interest rates and short repayment terms, they may be an option for individuals with poor credit who need quick access to cash. It’s essential to carefully consider the risks associated with title loans, as defaulting can result in the loss of the borrower’s vehicle.
- Secured Credit Builder Loans: Some banks and credit unions offer secured credit builder loans designed to help individuals with bad credit improve their credit scores. These loans require a deposit into a savings account or certificate of deposit (CD), which serves as collateral for the loan. As the borrower makes on-time payments, the lender reports positive activity to the credit bureaus, helping to rebuild credit over time.
List of 4 Companies that offer personal bad credit loans of credit scores that are 580 or lower
- OneMain Financial: OneMain Financial is a well-known lender that provides personal loans, including to individuals with less-than-perfect credit. They typically offer secured and unsecured loan options.
- Avant: Avant offers personal loans to borrowers with low credit scores. They consider various factors beyond credit history when making lending decisions.
- LendingPoint: LendingPoint is known for providing personal loans to individuals with credit scores as low as 580. They focus on factors beyond credit score, such as income and employment history.
- OppLoans: OppLoans specializes in offering installment loans to borrowers with poor credit. They have relatively lenient eligibility requirements compared to traditional lenders.
FAQs
Can I get a personal loan with a credit score of 580?
Yes, it is possible to get a personal loan with a credit score of 580 or lower. However, borrowers may need to explore alternative lenders such as online lenders, credit unions, or P2P lending platforms that specialize in bad credit loans.
Will applying for a personal loan with bad credit affect my credit score?
Yes, applying for a personal loan with bad credit may temporarily lower your credit score due to the hard inquiry that occurs when the lender checks your credit report. However, if you’re approved for the loan and make timely payments, it can have a positive impact on your credit score over time.
Are there any alternatives to personal loans for individuals with bad credit?
Yes, there are alternative financing options for individuals with bad credit, including secured credit cards, payday alternative loans (PALs), and borrowing from friends or family members. It’s essential to compare the terms and interest rates of each option carefully before making a decision.
Conclusion
While having a credit score of 580 or lower can present challenges when seeking a personal loan, there are still viable options available. By exploring alternative lenders, credit unions, P2P lending platforms, and secured loan options, individuals with bad credit can find the financial assistance they need to cover expenses or consolidate debt. However, it’s essential to carefully consider the terms and repayment obligations of any loan before proceeding to ensure it aligns with your financial goals and capabilities.
Also Read: How To Secure A Business Loan Credit From £1,000 – £250k
