No matter where you stand with your savings, sometimes, life gets the better of you. Even those of us lucky enough to build up substantial cushions have found ourselves in a crunch every once in a while.
Couple an unexpected financial scenario with bad credit, and you’re looking at an even more stressful experience. After all, the creditworthiness you need to obtain those emergency loans is dependent on your ability to repay the debts you already owe. And if you’re having trouble making ends meet, it can quickly become a downward spiral.
Fortunately, though, there are emergency loans online for borrowers with poor credit. This is especially true if you’re in need of a relatively small emergency loan. The loan options below have much better interest rates than you will find with payday loans.
Best Emergency Loans for Bad Credit of 2023
Whether you need a quick $500 or a more substantial, five-figure sum, here are some of the best emergency loans for people with bad credit.
MoneyMutual is a contemporary lending firm that understands that your financial needs move “at the speed of life.”
That’s why they connect their customers with online lenders offering emergency loans of up to $2,500. And the loan proceeds can hit your bank account in as little as one business day.
- Loan Amount: Up to $2,500
- APR: Variable
- Loan Term: Variable
No matter what you need an emergency loan for, CashUSA can supply it—and quickly. The service matches borrowers with multiple lenders offering up to $10,000, and you can see the money in your bank account as soon as the next business day.
- Loan Amount: $500 to $10,000
- APR: 5.99% to 35.99%
- Loan Term: 3 to 72 months
If you’re worried about having your loan application approved, well, just look at the name of this lender: Bad Credit Loans. It’s literally directed specifically towards borrowers with bad credit.
Bad Credit Loans understands that nobody plans to have a financial emergency (or poor credit scores) and does everything in its power to get you the money you need to rectify your situation.
- Loan Amount: $500 to $10,000
- APR: 5.99% to 35.99%
- Loan Term: 3 to 60 months
Trusted by customers since 1997, Cash Advance is a great place to turn if you’re just in need of a small financial boost to get ahead in the short term.
They connect borrowers with lenders offering short-term loans up to $1,000. They work with institutions that can get you the emergency loan you need even if you have bad credit.
- Loan Amount: $100 to $1,000
- APR: Variable
- Loan Term: Variable
Yet another big-spender lender. With Upgrade, you can get an emergency loan with bad credit up to $50,000 with interest rates starting as low as 7.46%.
You’ll have up to five years to pay off your debt in regular monthly payments, and checking to see your approval rate won’t impact your credit score.
- Loan Amount: $1,000 to $50,000
- APR: 7.46% – 35.97% APR
- Loan Term: 36 to 60 months
OneMain offers personal loans from $1,500 to $30,000, making it a good choice if you’re in need of a more substantial windfall.
In fact, taking out a sizable personal loan is a great way to consolidate your debt, which could put you in a more strategic position the next time you need an emergency loan.
Although OneMain’s easy application process starts online, you will have to meet with a loan specialist at a branch to verify your loan approval. That said, it’s well worth a short drive and a half-hour meeting if the emergency loan can help you secure your financial freedom in the long run!
- Loan Amount: $1,500 to $30,000
- APR: 16.05% to 35.99%
- Loan Term: 24, 36, 48 or 60 months
Another company offering substantial personal loans, Lending Club could cut you a check for up to $40,000. And they give you up to five full years to repay it.
Depending on your credit score, you may even be able to get an interest rate of less than 10% APR!
LendingClub requires a minimum credit score of 600 to qualify.
- Loan Amount: Up to $40,000
- APR: 6.95% to 35.89%
- Loan Term: 36 to 60 months
Installment Loans for Bad Credit
Installment loans are a type of personal loan that you pay back over time, usually monthly, over a course of up to five years. Most installment loans offer fixed interest rates, but the actual APR will vary depending on your credit score.
However, today’s personal loan lenders understand that not everybody has a perfect credit history. And some of them are willing to help you with an emergency loan even if your credit leaves something to be desired.
Repaying these loans on time and in full can boost your credit score as long as they are reported to the three major credit bureaus. Having positive payment history on your credit report can make for better repayment terms the next time you’re seeking an emergency loan.
What is Considered Bad Credit?
If you’re unsure about your current credit standing, you might also be wondering what exactly constitutes bad credit.
The FICO credit scoring system is the industry standard, so most lenders will use this scoring model to determine your creditworthiness. There is also an alternative scoring model known as VantageScore.
When trying to get a handle on your credit standing, it’s best to start by checking your FICO credit score. Here’s how the FICO credit ratings are broken down:
- Excellent Credit: 720-850
- Good Credit: 680-719
- Fair Credit: 630-679
- Bad Credit: 550-629
- Poor Credit: 300-549
So bad credit is generally any credit score below 630. However, even with a bad credit score you will still find a fair number of reliable and safe lending options. Knowing how to choose between bad credit lenders, however, can be a challenge.
How to Choose the Right Emergency Loan
Even with a bad credit score, it is worth shopping around and comparing loan emergency loans for bad credit. You’ll find plenty of emergency loan lenders, as well as lenders offering products designed for bad credit borrowers.
Understanding these elements can help you confidently compare and find the best emergency personal loan:
Annual Percentage Rate
The most important aspect to consider with any loan offer is the APR. This figure will include the interest rate and all fees. You can quite easily use the APR to compare different loan offers.
Taking the time to search for the lowest APR available to you is worth it, as even a small difference could mean significant savings over the course of your loan.
Time to Funding
When searching for an emergency loan, time to funding is likely to be a high priority for you. Some emergency loan lenders can deposit your loan funds into a checking account on the day of approval, but you won’t be guaranteed same-day funding even with an emergency loan.
Loan Repayment Terms
The period of time during which you have to make monthly repayments on a loan is known as the loan term. The longer your term, the smaller your monthly payments will be, but you’ll pay more in interest.
It’s extremely useful to have a good idea of what your ideal loan term is before shopping for a lender. With emergency loans, you may have less room to maneuver here, but it still helps to know what your ideal monthly payment is.
Fees & Penalties
You’ll want to consider closely the fees associated with your loan offers. Some are standard, such as origination or late payment fees, but you may also find variations especially with penalties. You may also need to request a higher loan amount when accounting for mandatory fees.
Where to Find Emergency Loans for Bad Credit
The online loan market is a huge source of loans, with many online lenders specializing in emergency and bad credit loans. Online personal loans are also often easier and faster to apply for. Depending on your preferred online lender, you may even be able to prequalify for a loan just a soft credit check.
Keep in mind, however, that the majority of predatory lenders operate online. Make sure you know how to spot suspicious online personal loans before signing for a loan.
Most traditional banks offer loans to those with good or excellent credit scores. However, there are some exceptions, so you may want to check with your current bank to see if there are loans available.
If you do qualify for a loan from your bank, you can often access your loan funds quickly. That said, you won’t generally find the most competitive rates from a traditional bank.
If you’re a member of a credit union, you’ll want to inquire about loan availability there. Credit unions offer some of the most affordable emergency loan rates around. A credit union is also more likely to consider an applicant’s membership history, in addition to their credit score, when making a loan decision.
How to Spot Loan Scams
As mentioned above, when preparing to shop for a loan it’s important to know how to spot a scam. This is especially important if you’re considering emergency loans for bad credit, as scammers often target people who are badly in need of a good deal.
Below is a list of the biggest red flags to look for:
- No credit check – Serious lenders will always check your credit history before approving you for a loan.
- Selling pressure – A legitimate loan provider won’t ever pressure you into purchasing a loan, or making a quick decision.
- No business address – An authentic lender will always have an easily searchable physical address displayed on their website.
- Cold calling – A trustworthy lender will not reach out to you first and offer a loan.
Alternatives to Emergency Loans for Bad Credit
Bad credit borrowers should keep in mind that those with low credit scores don’t necessarily need an emergency loan for quick funding. Plus if you’re struggling to meet the minimum credit score requirement on a loan, you might want to look at some potential alternatives.
Depending on your situation, some of these options below might suit you.
Explore Charitable Finance Grants
Some folk with poor credit scores might instead find funding through an emergency assistance grant or loan. Certain states and cities offer hardship grants to residents, depending on their circumstances. If you’re in need of emergency funding it could be worth checking within your state or local community for charitable finance options.
Loan or Advance from Employer
If you’re employed you might consider asking your employer to help you manage a short-term financial emergency. Before deciding that a personal emergency loan is the right option, check in with your employer to see if they can offer you a loan, or an advance on your next paycheck.
Credit Cards Are Another Option
Using a credit card could be a viable alternative, depending on the interest rate. If you have bad credit, credit cards aren’t easy to get and the interest rate will most certainly be higher.
However, if you can get a cosigner or find a good starter credit card online or from a credit union, it might be worth looking into. In fact, just like a personal loan, they can help you build your credit score as long as you make your payments on time.
Why You Should Avoid Payday Loans
Payday loans can be found everywhere and they’re easy to get. Unfortunately, getting a payday loan is almost always a bad idea due to astronomical finance charges you will be charged.
Payday loans are typically small and must be paid back within a week or two. Most payday lenders also don’t require a credit check. You can get them easily as long as you provide proof of income.
Avoid Auto Title Loans Also
Auto title loans require you to put your car up as collateral. The loan is usually for much less than your car is worth. They typically must be paid back within 2 to 4 weeks and you don’t need a credit check for this type of loan either.
So, what could go wrong?
Well, you could lose your car. These loans come with very high interest rates and are notorious for trapping borrowers who can’t afford to pay them back. In fact, they’re so bad that they’re now illegal in 23 states. Getting an unsecured loan, like the ones mentioned above, is always a better option.
Tips for Building an Emergency Fund
However, you decide to navigate your current financial emergency, knowing how to build for future emergencies is vital. Building an emergency fund doesn’t have to be complex, but there are some things to keep in mind:
Set a Savings Goal
One of the easiest ways to get savings down is to set a savings goal. While your emergency fund will ideally be around three to six months’ worth of living expenses, you don’t have to aim for that off the bat. Consider setting a smaller goal with a deadline, and figure out how much you need to save weekly to meet your goal.
Once you reach your goal, you can continue saving by establishing another goal and savings deadline.
Automate Your Savings
Once you’ve gotten clear on how much you want to save each week or month, you can lock it in by setting up automatic savings. This removes the potential for human error, and means you don’t have to even think about transferring money to a savings account.
Most banks will allow you to set up recurring transfers from your checking account to a savings account.
Use Windfalls to Boost Savings
Whenever you receive a windfall of cash, consider putting it straight into your savings account. This is a great way to bring a boost to your emergency fund if you’re fortunate.
Emergency Loans for Bad Credit FAQ
What is an emergency bad credit loan?
Emergency loans for bad credit are personal installment loans used to cover an urgent or unexpected expense for bad credit borrowers. Emergency loans are typically unsecured, in other words they are rarely guaranteed by collateral. Instead, lenders will evaluate your credit history, credit score and other financial information to judge your application.
Emergency loans usually come with rates ranging from 6% to 36%. Although most lenders will have both minimum credit score and maximum debt-to-income ratio requirements, there are emergency loans available for those with bad credit.
How do emergency loans work?
Emergency loans are not much different from regular personal loans. These loans are installment-based, and you’ll receive your loan funds in a lump sum.
You will then repay the loan amount in monthly installments, with interest. Emergency loans tend to come with fixed interest rates, so your monthly payment will remain the same for the entire repayment term.
Can you get an emergency loan with bad credit?
Yes, you can. Having a bad credit score doesn’t make getting an emergency loan impossible. However, the reality is that you’ll have much less options when it comes to finding good rates and terms. Once you can show you’ve got sufficient income to make the monthly payments, you should be able to find an emergency loan.
The best rates available to you will also depend largely on your entire credit standing. For example, a high debt to income ratio or large outstanding debts could make it extremely difficult to find a loan.
Applying for a loan with a co-applicant or cosigner might be a good way to access better rates and loan options if your credit is poor.
Will an emergency loan impact my credit score?
This depends on the exact loan you purchase. For example, if a lender doesn’t report your loan account to the three major credit bureaus, it won’t affect your credit score – unless you default on the loan. However, most lenders will report your activity monthly. It’s good to know whether a lender will make these monthly reports or not, so always be sure to check before taking on any loan.
In addition, how you manage your loan payments is the next biggest factor. If you can make consistent on time payments, then regular credit reporting will help you increase your credit score over time.
Late or missed payments, however, will naturally have the opposite effect and cause your credit score to decrease.
Can you get an emergency loan with no credit check?
It is possible to find a no-credit check emergency loan, but these loans can be problematic. Most lenders offering these types of loans are payday lenders, which are typically seen as predatory. These loans will come with high origination fees, extremely high APRs, and other penalties that are often more risky than they’re worth.
No matter what kind of emergency expenses have popped up in your life, we hope you find the help you need to get back on your feet. We also wish you the best of luck in building that credit history for tomorrow. Your future self will thank you!