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 good 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.
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
There’s no need to be worried or embarrassed about your credit history 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
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.
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 online loan application. 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.
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
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
What is The Definition of Bad Credit?
Whether you’re a veteran or not, landing a personal loan with a good interest rate is tough when you’ve got bad credit. But what exactly counts as bad credit?
The majority of lenders use the FICO credit scoring system. Others use an alternative scoring model known as VantageScore. When trying to gauge creditworthiness, it’s best to start by checking your FICO credit score.
The FICO credit ratings are divided as follows:
- Excellent Credit: 720-850
- Good Credit: 680-719
- Fair Credit: 630-679
- Bad Credit: 550-629
- Poor Credit: 300-549
If you do have a bad credit score, don’t despair. Yes, it’s true that you won’t have access to the most competitive interest rates. However, between general lenders and those working specifically with veterans, you’ll find you still have options for a personal loan.
How Your Credit Score is Calculated
It’s also useful to know why your credit score is where it is. Knowing what goes into its calculation can help when it comes to trying to improve your credit before taking out a loan.
Your payment history is the biggest factor in calculating your credit score, with a weight of 35%. Credit scoring models prioritize how reliable you are with making on-time monthly payments on your bills.
Credit Utilization Ratio
Your credit utilization accounts for 30% of your FICO credit score. Credit utilization (also known as ‘amounts owed’) is the amount of your total available credit that you actually use. The lower your credit utilization ratio is, the better – aim for 30% or lower.
Your credit history accounts for 15% of your FICO credit score. Simply put, the longer your credit history is the better you’ll score here. Thin credit history represents a bit of an unknown to creditors, who like to see evidence of reliable credit management over time.
Having a mix of credit types helps to boost your score. Lenders like to see that you are capable of managing several types of debt all at once, which demonstrates financial responsibility. This accounts for 10% of your FICO score.
Each time you apply for a new source of credit, a hard inquiry will be taken on your credit history. This often reduces your credit score temporarily. This is because taking on more credit could be an extension of risk, depending on your situation. New credit accounts for just 10% of your score, however.
What You Need Before Applying for a Personal Loan
Take the time to gather the documents and details necessary before applying for any loan.
- Personal information such as your address, ID and Social Security Number.
- Employment information including your job history and income.
- Debt and savings records such as bank, credit accounts and investments.
- Loan details including the purpose of the loan, as well as your desired loan funding.
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:
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.
A lot of personal loan lenders will offer you the chance to prequalify. This involves submiting basic information and getting back detailed information 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.
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 a military personal loan, 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
Along with checking your credit score, calculating your desired loan funds is good preparation. This will allow you to quickly find accurate quotes and prequalification opportunities. It also helps you to ensure you only borrow what you need, and get a picture of the actual loan terms you’d prefer.
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 situation. 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
If you’re having a hard time qualifying for a short-term personal loan, other options may be available. In addition, there are other financial resources available to help veterans get back on their feet.
The best place for veterans to start is by checking out the U.S. Department of Veterans Affairs (VA). The VA created a federal benefits guide to let veterans and their spouses know what options are available to them. This guide provides information on disability compensation, housing relocation, and educational assistance.
There are also several federal grants available to veterans and family members. For instance, the Rural Veterans Coordination Pilot was created for veterans living in rural or underserved communities. The goal of the project is to provide financial help to veterans to readjust to civilian life.
The Unmet Needs Program is a grant for military families facing financial struggles as a result of a deployment. The program comes with a grant for up to $1,500. It can be used for expenses like housing, utilities, food, and clothing.
And veterans who are looking to start a business may qualify for a small business grant. Plus, they may be eligible for additional training and development.
Blue Star Families is an organization that specializes in helping veterans get back into the workforce. The nonprofit offers job training, mentoring, and networking events for veterans.
And the U.S. Chamber of Commerce launched a program for veterans called Hiring Our Heroes. This initiative helps veterans find employment opportunities through job fairs. The program also provides mentorship and free job skills training.
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. 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 for a VA loan:
- Documented military service (war or peacetime)
- Members of the Selected Reserve or National Guard
- Surviving spouses
- Proof of sufficient income
- Satisfactory credit
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 active-duty members.
Are there grants available for disabled veterans?
Yes. There are housing grants for veterans and service members with disabilities available through the Department of Veterans Affairs. 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) grant.
What are military spouse loans?
These are personal loans that cater to veterans and active-duty military 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.
As our nation’s first line of defense, our veterans and military members shouldn’t have to worry about dealing with a financial headache once they’re back on homeland soil. So choose one of the personal loans or credit unions above that offers financial assistance to military service members. They can help you get yourself back on your financial footing and managing your wealth on your own terms.