When you’re brave enough to risk it all for your country, there’s no excuse to be left in a sticky financial situation once you’re back in your civvies. But unfortunately, unemployment and poor credit history are financial realities facing many of our veterans today, especially those who valiantly served post-9/11.
Even more shocking is that the government has yet to establish a direct personal loan program specific to our nation’s heroes, despite the abundance of veteran-focused financial and educational resources.
This means military veterans who find themselves unable to make ends meet are left with the same personal loan options as the rest of us. Unfortunately, traditional personal installment loans with interest rates and credit score requirements, are just not a viable option.
However, there are some online lenders that can help you obtain the financial resources you need, even if you have bad credit.
Top 6 Personal Loans for Veterans with Bad Credit
No matter what you need a personal loan for, here are some of the best online lenders and personal loan providers to consider if you’re a veteran with bad credit.
1. CashUSA
CashUSA is an online lending platform that offers personal installment loans of up to $10,000. These unsecured loans can be used for any purpose.
CashUSA is a great resource to turn to for veterans working on building their credit score. Its easy application process is done entirely online, and you may be able to receive the funds in as little as one business day.
- Loan Amount: $500 to $10,000
- APR: 5.99% to 35.99%
- Loan Term: 3 to 72 months
2. BadCreditLoans
There’s no need to be worried or embarrassed about your credit scores when you apply for a personal loan at BadCreditLoans.
Along with actually getting you the personal loan you need, BadCreditLoans is also committed to helping veterans get back on their feet with as much empowerment and information as possible.
The company offers a wide range of free financial resources, including information on how to spot scams and basic personal finance best practices.
- Loan Amount: $500 to $10,000
- APR: 5.99% to 35.99%
- Loan Term: 3 to 60 months
3. PersonalLoans.com
This large online lender network is available to borrowers in all 50 states, and you don’t have to have a perfect credit score to achieve application approval.
You’ll find out your decision in seconds and could have the funds within as little as one business day. With a maximum loan of $35,000, PersonalLoans.com is a great option for veterans who need a fairly substantial windfall.
- Loan Amount: $500 to $35,000
- APR: 5.99% to 35.99%
- Loan Term: 3 to 72 months
Banks and Credit Unions for Veterans and Their Families
Another option available to veterans (and not the general public) is to open a bank account with a military-focused credit union, association, or bank. You may be able to obtain exclusive financial products from these institutions. These products include personal, auto, and home loans that will help you take control of your financial future for the long run. They generally come at substantially lower fees, and a lower interest rate than traditional lenders might offer.
4. USAA
Proudly serving veterans and their families since 1922, the United States Automobile Association (also known as the USAA) is so much more than a military-focused bank.
USAA also offers investment products, retirement accounts, and auto, homeowners, and rental insurance. And yes, they have a competitive personal loan program that can help you get where you’re going.
USAA membership is open to both active duty military and veterans, as well as their families. In most cases, you’ll learn your approved interest rate within seconds of submitting your application online. The money is typically deposited into your USAA bank account on the same day.
- Loan Amount: $2,500 to $20,000 or more
- APR: 9.49% to 11.49%
- Loan Term: 12 to 84 months
USAA also provides a military separation checklist to assist with the transition from active duty to veteran status that helps you plan for the future.
5. Navy Federal Credit Union
Membership at Navy Federal Credit Union is open to veterans, active-duty military members, ex-member of the armed forces, National Guard members, Department of Defense civilian employees, and family members of current members.
Along with a slew of other convenient and well-priced banking services, Navy Federal Credit Union offers personal loans of up to $50,000. Interest rates start as low as 8.19%.
NFCU’s unsecured personal loans come with much longer repayment terms (up to 15 years) than most lenders.
NFCU doesn’t have a minimum credit score requirement, but good credit borrowers have a better chance of qualifying and receiving favorable loan terms.
- Loan Amount: Up to $50,000
- APR Range: 8.19% to 18.00%
- Loan Term: Up to 180 months
6. Pentagon Federal Credit Union
PenFed offers membership and services to those eligible via association membership, employment, military affiliation, and more. With its mobile-friendly customer service options, you’ll have access to and control over your account 24/7.
What’s more, PenFed offers personal loans starting with interest rates as low as 6.49%. Plus, you won’t have to worry about any origination fees or varying loan rates that can ruin your budget. You can use the money however you see fit, and you’ll have up to 60 months to repay it.
- Loan Amount: Variable
- APR Range: Starting at 6.49%, but depends on creditworthiness
- Loan Term: Up to 60 months
Understanding Your Credit Score
Credit scores serve as financial snapshots, informing lenders about your borrowing habits. Whether you’ve served in the military or are a civilian, navigating the loan landscape with unfavorable credit can be challenging. So, what exactly does it mean to have “bad credit”?
Most lenders primarily use the FICO scoring system to evaluate potential borrowers, while some might opt for the alternative VantageScore. To truly grasp where you stand, it’s beneficial to familiarize yourself with your FICO score.
Here’s a breakdown of the FICO score ranges:
- Excellent Credit: 720-850
- Good Credit: 680-719
- Fair Credit: 630-679
- Bad Credit: 550-629
- Poor Credit: 300-549
Having a score in the “bad credit” range might initially feel discouraging, especially when aiming for favorable interest rates. Yet, it’s essential to remember that many avenues remain open.
While the best interest rates may be out of reach, both mainstream lenders and those who cater specifically to veterans provide viable personal loan opportunities. Over time, with consistent financial discipline, your credit score can improve, granting you better borrowing terms in the future.
How Your Credit Score is Calculated
To make informed financial decisions and boost your credit score, it’s crucial to understand the factors that shape your credit score. Knowing the underlying components not only helps you understand your score but also equips you to enhance it, especially if you’re gearing up to secure a loan.
Payment History
Accounting for a significant 35% of your credit score, your payment history stands as the cornerstone. This metric assesses your consistency in meeting monthly bill obligations. Punctual payments reflect your trustworthiness and commitment to financial responsibilities.
Credit Utilization Ratio
Making up 30% of your FICO score, credit utilization indicates the percentage of available credit you’re currently using. Often referred to as ‘amounts owed,’ it’s best practice to keep this ratio at 30% or below. A lower ratio signals prudent credit management and reduces potential red flags for lenders.
Credit History
Taking up 15% of your FICO score, the length of your credit history provides insights into your long-term financial behavior. Lenders favor borrowers with an extensive track record as it showcases a history of reliable credit management and reduced unpredictability.
Credit Mix
Possessing a varied mix of credit types—like credit cards, mortgages, and personal loans—can be advantageous. It indicates your adeptness at handling multiple credit responsibilities concurrently. This aspect determines 10% of your credit score.
New Credit
New credit inquiries, accounting for the remaining 10%, focus on recent loan or credit applications. Each new application triggers a hard inquiry, which can momentarily dip your score. Lenders might perceive frequent applications as a sign of financial stress or risk. However, this is a smaller piece of the larger credit puzzle and can bounce back with time and stable financial behavior.
Preparing for Your Personal Loan Application
When applying for an unsecured personal loan, it’s crucial to have all your ducks in a row. Proper preparation can make the process smoother and enhance your chances of approval. Here’s a succinct rundown:
Personal Identification
- Ensure you have a valid address proof, such as a utility bill or lease agreement.
- Keep your government-issued ID, like a passport or driver’s license, handy.
- Your Social Security Number will be vital for identity verification and credit checks.
Employment and Income Proof
- Ready details of your employment over recent years.
- Prepare recent pay stubs to showcase your current income.
- An employment verification letter might be a plus.
Financial Statements
- Bank statements from the past few months can highlight your financial behavior.
- Information on current loans, credit cards, and other financial obligations provide a fuller picture.
- If available, details of investments, like stocks or bonds, can be beneficial.
Loan Details
- Clearly outline the purpose of your loan.
- Determine the specific amount you wish to borrow based on your needs and repayment capability.
By having these documents and details organized, you’re setting yourself up for a more streamlined and efficient application process.
Consider Applying with a Cosigner
If your credit score is preventing you from qualifying for competitive rates, you might want to consider seeking a cosigner. Applying with a cosigner who has a better credit score could help you secure much more competitive rates. However, not every lender allows cosigned loans, so this may limit your options.
Tips for Comparing Personal Loans
Figuring out how to decide between lenders and loan offers can be tough. Here are some tips to help:
Compare Rates
Interest and APR rates are crucial with any unsecured loan. This is especially so for bad credit borrowers. In particular, you’ll want to keep a close eye on the top end of rates available to you. While you won’t have access to the best rates, you’ll still find that shopping around turns up considerable differences in rates.
Prequalify
A lot of personal loan lenders will offer you the chance to prequalify. This involves submitting basic information and getting back detailed information about loan rates, terms and amounts available to you.
Prequalifying usually only requires just a soft credit check, so it won’t negatively affect your credit score. This makes prequalification a great way to shop around and gather quotes that you can use to negotiate with other lenders.
Additional Fees
When it comes to fees, personal loans can vary widely. Some fees are quite standardized, such as origination fees. However, you might find more variety when it comes to things like a prepayment penalty or other late fees. When comparing military personal loans, make sure you check out the structure beyond just the interest rate.
The best personal loans will be clear and upfront about all loan fees.
Evaluate Customer Support Options
Once you’ve found a couple of personal loan lenders worth considering, check out their reviews and resources. Customer support never seems important until we really need it, so it’s always worth weighing this into your decision.
When taking out an unsecured personal loan, you’ll want to have good customer service on your side, just in case.
Tips for Applying for Personal Loans
Although the loan application process may vary slightly between lenders, generally speaking, they will follow the same pattern. Here are some tips to help you prepare and apply for your desired loan.
Check Your Credit Score
Your first step is to check your credit score if you haven’t already done so recently. This is crucial to getting a lay of the land, and understanding your options. Good rates and terms will usually require a credit score over 600, at least.
If your credit score is below 600, or below the minimum credit score requirement for a loan you’d love, consider waiting. It will benefit you in the long term if you can improve your credit score before taking out a loan.
Determine Loan Amount
Before seeking a loan, it’s not just about checking your credit score but also determining how much you need to borrow. Calculating your desired loan funds is essential for securing accurate quotes and prequalification opportunities.
Equally important is ensuring you can manage the monthly payments comfortably. This approach not only helps you borrow within your means but also provides a clearer picture of the loan terms that best suit your needs.
Review Outstanding Credit
Remember that lenders might be hesitant to lend you money if you already have outstanding debts. To increase your chances of approval, try to clear up or improve any significant debts.
Military Loans for Veterans to Pay Bills or Consolidate Debt
It’s never ideal to borrow money to cover unsecured loans you already owe. However, unemployed or disabled veterans may sometimes find themselves with few other options. This is true, especially if they’re already drowning in debt.
If you’re dealing with revolving balances and unpaid bills, the minor windfall of a personal loan can help you get out of a challenging financial bind. In fact, many veterans use debt consolidation loans to consolidate credit card debt. This helps them move forward on building stronger credit for the future.
Debt consolidation loans can help you simplify things with one monthly payment and potentially save you money, especially if you’re able to pay it off aggressively.
Best Resources for Veterans and Active-Duty Military
Veterans and active-duty military personnel have access to a myriad of resources beyond just personal loans. These specialized programs and benefits are designed to assist with both immediate financial needs and long-term goals, ensuring that service members and their families are adequately supported.
VA Benefits
The primary port of call for veterans should be the U.S. Department of Veterans Affairs (VA). They’ve curated a comprehensive federal benefits guide that delineates the various options accessible to veterans and their families. Key areas covered include disability benefits, assistance with housing relocation, and educational support.
Grants
For veterans seeking financial support, a variety of federal grants are available:
- Rural Veterans Coordination Pilot: Specifically designed for veterans residing in rural or underserved locales, this initiative’s chief aim is to provide monetary aid to veterans transitioning back to civilian life.
- Unmet Needs Program: This program offers tangible support to military families experiencing financial difficulties due to deployments. With grants up to $1,500, beneficiaries can cover essential expenses such as housing, utilities, food, and clothing.
- Veteran Entrepreneur Portal (VEP): Spearheaded by the VA Office of Small & Disadvantaged Business Utilization (OSDBU), the VEP exists to streamline the entrepreneurial journey for veterans. By connecting veterans with pivotal resources, it facilitates easier access to federal services and introduces veterans to pertinent business networks.
- American Legion’s Temporary Financial Assistance (TFA): A compassionate initiative, the TFA is dedicated to the minor children of eligible American Legion member veterans. These cash grants are a lifeline for families, aiding them in meeting fundamental costs associated with shelter, utilities, food, and healthcare.
Job Training
Organizations like Blue Star Families focus on the reintegration of veterans into the professional sphere, offering a suite of services including job training, mentorship, and networking events.
Similarly, the U.S. Chamber of Commerce’s Hiring Our Heroes initiative bridges the gap between veterans and employers. Beyond job fairs, it equips veterans with crucial job skills training and provides valuable mentorship avenues.
Additional Financial Resources
Several platforms serve as reservoirs of information and support:
- USA.gov: An all-encompassing source that offers insights into various military and veteran benefits. Whether it’s health care, housing, education, or even support during deployments and assistance in job hunting for spouses, this site covers it all.
- PenFed Foundation: A valuable resource offering a plethora of emergency financial aids designed specifically for veterans and active-duty service members.
- The Wounded Warrior Project (WWP): A charity and veterans service organization that offers a variety of programs, services, and events for wounded veterans of the military actions following the events of 9/11. They provide both direct programs and services to meet the needs of wounded veterans.
- Veterans Families United: This platform encompasses a wide spectrum of aid for military personnel and their families. The offerings range from financial assistance, career advice, and housing support to recreational therapy programs, assistance for the injured, mortgage assistance, and advocacy support.
Personal Loans for Veterans With Bad Credit FAQ
Does the VA offer personal loans?
The Veterans Affairs (VA) offers military service members, veterans and their families the opportunity to purchase a home with a VA loan. However, it does not offer personal loans for veterans. All VA loans are designed purposefully for the purchase or significant upgrade of a home. They cannot be used to finance personal expenses.
How hard is it to get a VA loan?
VA loans are designed to be easily accessible to qualifying veterans and their families. As such, there is no down payment required, no minimum credit score, and less strict rules around the limits of loan proceeds.
Below are the qualifying requirements:
- Documented military service (war or peacetime)
- Members of the Selected Reserve or National Guard
- Surviving spouses
- Proof of sufficient income
- Satisfactory credit
Can I get a military loan from a bank or credit union?
Yes, many banks and credit unions offer military loans specifically tailored for military members and veterans. These loans often come with competitive interest rates and favorable terms in recognition of their service. It’s advisable to check directly with your bank or credit union to see if they offer such loans and to understand the application criteria.
What credit score do I need to get a personal loan as a veteran?
The minimum credit score will vary between lenders. But even if you’ve got less than stellar credit, you will still find access to loan funds via military veterans loans and bad credit loans.
Can an active-duty military member get a loan?
Yes, it is totally possible for active-duty military members to access loan financing. Just as veterans, active-duty members can choose to seek a personal loan through a general or military-specific lender. But keep in mind that credit unions that require military service for membership tend to have more perks and benefits compared to public lenders.
Do veterans get free loans?
Neither veterans nor military members with active duty status are eligible for free loans. The closest would be a VA home loan, which is designed to be extremely accessible. Having said that, veterans are in some cases eligible for interest-free loans under certain circumstances.
There are also a wide range of grants available to veterans and military members.
Are there grants available for disabled veterans?
Yes. There are housing grants for veterans and service members with disabilities available through the VA. These grants are designed to help disabled veterans buy or upgrade a home for accessibility reasons. These include the Special Housing Adaptation (SAH) and Temporary Residence Adaptation (TRA) grants.
What are military spouse loans?
These are personal loans that cater to veterans and active-duty service members, including their spouses. All three of the military lenders on our list above offer loans with eligibility extending to spouses. These loans can help reduce the financial burden on families of military members.
Bottom Line
Navigating the financial landscape as a veteran with bad credit can be challenging, but not impossible. There are numerous personal loan options tailored specifically to honor the service of our military personnel, even those with less-than-perfect credit histories.
By researching and opting for the right loan that fits your individual circumstances, you can secure the funds you need while also working towards improving your financial future. Remember to always borrow responsibly and seek financial advice when needed.
