Bad credit personal loans not payday loans

Writer and editor - Joseph Smith | Updated on 2023-03-05
Disclosure: Our goal is to help you find a lender even if you have a bad credit score. To maintain this site we may receive compensation from the products listed here. See our Advertiser Disclosure. Thanks for understanding.

If you have bad credit, you have limited options for getting a loan. Let’s take a look at what getting a bad credit loan entails and what your best options are for getting the funds you need.

What are bad credit personal loans?

Bad credit personal loans, such as installment loans, are a great choice if your credit score is below 600. Even though you have a less-than-stellar credit history, you can access loan amounts between hundreds and thousands of dollars that you can pay back over a period of months or years.

But unlike regular personal loans, the interest rate on bad credit personal loans is typically higher. That’s because the lender considers such borrowers to be high risk due to their credit history.

Depending on the terms of the bad credit personal loan, the interest rate may be fixed or variable. Every month, the borrower will have to pay back a bit of the principal, plus interest, until the entire loan is repaid.

Best Bad Credit Personal Loans Alternatives

Loans Amount Loan term / Interest Benefits
Personal Loans (Personal loan) Ranges from: $500
To: $35,000
3 Month to 6 Years
APR: 5.99 - 36%
Bad Credit: Accepted
Creditscore: At least 580
Minimum Income: $2000 per month
Type of service ?
RubikLoan (Personal loan) Ranges from: $100
To: $5,000
Up to 1 year
Show loan fees ?
Bad Credit: Accepted
Minimum Income: $1000 per month
Type of service ?
QuickLoanLink (Personal loan) Ranges from: $300
To: $35,000
2 Month to 7 Years
APR: 6.90 - 530%
Bad Credit: Accepted
Creditscore: At least 550
Type of service ?
LifeLoans (Personal loan) Ranges from: $500
To: $40,000
2 Month to 5 Years
APR: 5.99 - 36%
Bad Credit: Accepted
Creditscore: At least 580
Type of service ?

Bad Credit Personal Loans not Payday Loans – Your options

Compared to regular personal loans, the requirements for a bad credit loan are less stringent. In fact, you can access a bad credit loan for thousands of dollars, even if your credit score is poor.

And the requirements for payday loans are even less stringent than those of a bad credit personal loan. You can access a payday loan without having to go through a hard credit check. Approval occurs within minutes, and you can get the loan sum in your bank account almost immediately after.

The speed and hassle-free nature of payday loans may seem attractive. But they come at a price.

Some of the major drawbacks include:

  • You typically can’t access more than $500
  • Higher interest rates with an APR that can exceed 400 percent
  • Higher one-off payment
  • It’s a short-term loan that you need to pay back within 15 to 30 days

Unless it’s an emergency and you need a small amount of money immediately, payday loans may not be the best choice.

The difference between personal loans and payday loans

Personal loans (installment loans and signature loans) and payday loans are ideal for people with bad credit. But there are clear differences between them.

The biggest differences are the interest rates and structured monthly payments of bad credit personal loans. These are much more reasonable than what you will find with payday loans.

Other differences include:

  • The APR for a personal loan is usually not higher than 36 percent. The APR for a payday loan can be higher than 400 percent.
  • Personal loans are repaid over the course of months or years. The principal and interest of payday loans are repaid with a single lump sum. And this happens within two to four weeks of your next paycheck.
  • You can borrow thousands of dollars via a personal loan. A payday loan can’t offer more than $500.
  • A personal loan lender may perform a hard credit check before approving your loan. They will also report your loan repayment history to the credit bureaus. A payday lender won’t do either, protecting your credit score.
  • You can receive a payday loan within the same business day of applying for it. A personal loan may take longer.

Improve your credit score and increase your loan options

By improving your credit score, you’ll have access to loan options that offer higher sums with less interest. Some of the fastest ways to boost your credit score include:

  1. Merge your credit debts: Pay off the smaller debts on all of your credit cards and consolidate the remaining debts onto one credit card. This will improve your credit score by reducing your overall debt.
  2. Get more credit cards: Add two more credit cards to the one you already have. More cards means more available credit, resulting in a lower debt-to-credit ratio. But don’t open too many new accounts at once, and be sure to maintain a zero balance on the new cards. If not, this tactic won’t work.
  3. Increase credit card payments: Pay more each month to settle your credit card debt. By keeping your debt less than 30 percent of your credit balance, your credit rating will go up. It’ll go even higher if you can maintain an 8 percent debt-to-credit balance.
  4. Switch to a secured credit card: A secured credit card prevents you from accumulating more debt. That’s because you can only spend money that’s already deposited into the card account.
  5. Make early credit card repayments: Pay your credit card bills before your issuer submits your credit report to the bureaus. It will ensure that the debt on your bill doesn’t affect your credit score.
  6. Minimize loan applications: For most personal loan applications, there’s a hard credit check that will negatively affect your credit score. Avoid this by applying for fewer loans, or applying to lenders that use soft checks during the pre-approval stage.
  7. Pay your bills on time: A history of paying utility bills, rent, and other bills on time will make you appear creditworthy and positively affect your credit score.
Joseph Smith

Joseph Smith
Writer and editor

Joseph Smith is an experienced freelance writer with over 11 years of experience. His area of expertise includes finance, loans and lending. His work has been featured on various large websites including this one.
Read more about us »

Write a comment

All fields are required


Main menu