Got the Worst Credit? These Cards Can Help You Rebuild It

Sounds counterintuitive, we know, but a new credit card can help you re-establish your payment history. Just use it wisely.

Chances are, your credit isn’t actually the worst. According to data furnished to Credit.com by TransUnion, only a very tiny portion of the U.S.’s scoreable population has the lowest VantageScore possible. Of course, escaping the dreaded 300 won’t get your credit out of the woods. Any score below 600 is considered, well, bad, and even a score in the 650 to 699 range will cost you in interest.

Still, there’s no need to despair: Nothing lasts forever, including a terrible credit score. You’ve just got to take steps to rebuild it. Paying down high balances, shoring up delinquencies, paying collection accounts and disputing errors on your credit report are great places to start. (The further you get from 300, the better. You can track your progress using Credit.com’s free credit report summary.)

After that, consider getting a new credit card. It sounds counterintuitive, we know, but that plastic can be instrumental when it comes to reestablishing a solid payment history. Just be sure to pay all your bills on time and keep balances as low as possible.

Here are five cards designed to help people with bad credit rebuild their scores. (See card agreements for full terms and conditions.)

1. OpenSky Secured Visa Credit Card

Annual Fee: $35

Purchase Annual Percentage Rate (APR): Variable 18.14%

Why It’s a Good Option: Yes, secured credit cards are designed for people with bad credit, but most still require a credit check, and there’s no guarantee you’ll be approved. The OpenSky Secured Visa Credit Card foregoes pulling your credit and doesn’t require a checking account either, so if your finances are really damaged, you may want to take up their offer. OpenSky reports to all three credit bureaus, so you’re covered there. And there’s a wide range for a security deposit: You can put down as little as $200 and up to $3,000.

Beyond that, the terms of the card are decent, especially given that there’s no credit check. (There are certainly secured credit cards out there touting higher APRs and annual fees.) One drawback worth mentioning: There’s no built-in way to upgrade to an unsecured credit card, so you’ll have to improve your scores and apply elsewhere.

2. Discover it Secured

Annual Fee: $0

Purchase APR: Variable 23.74%

Why It’s a Good Option: Back in Dec. 2016, Discover announced that Chapter 7 bankruptcy would no longer automatically disqualify Discover it Secured applicants, so someone with that big blemish on their credit report could conceivably get approved. That’s great news for people with bad credit, because this card is pretty tops, as far as secured credit cards go.

There’s no annual fee, account reviews begin at seven months to determine whether to refund your deposit (a minimum of $200 is required to open an account), and there’s even a rewards program. Cardholders earn 2% cash back at restaurants and gas stations on up to $1,000 in combined purchases each quarter, and 1% cash back on everything else. Plus, Discover is currently matching all the cash back you earn at the end of your first year.

Other Big Perks: Discover reports to all three credit bureaus, waives the late fee on your first missed payment and won’t impose a penalty APR if you miss a bill. Just be sure to pay your balances off in full: That APR is on the high side and will quickly negate any rewards you do earn.

3. First Progress Platinum Select MasterCard Secured Credit Card

Annual Fee: $39

Purchase APR: Variable 14.99%

Why it’s a Good Option: There’s no credit history or minimum credit score required for approval — so long as you don’t have a pending bankruptcy. First Progress reports to all three major credit bureaus, offers a flexible deposit range ($200 to $3,000) and features a reasonable annual fee and low APR. Again, the potential drawbacks are that you don’t have a built-in option to upgrade and the card isn’t currently available in Arkansas, Iowa, New York or Wisconsin.

4. primor Secured Visa Gold Card

Annual Fee: $49

Purchase APR: Fixed 9.99%

Why It’s a Good Option: This card touts guaranteed approval so long as your monthly income exceeds your monthly expenses by $100 or more. Plus, while that $49 annual fee can be bested, you’ll be hard-pressed to find a secured credit card with an APR lower than primor’s. There’s no penalty APR either, though you’ll still want to pay your bills on time and ideally in full. Your card use will be reported to all three credit bureaus, and you can put down a deposit of $200 to $5,000. There are no built-in upgrades with an unsecured credit card, however.

5. CreditOne Bank Visa

Annual Fee: $0 to $75, the first year; $0 to $99 thereafter, based on your credit

Purchase APR: Variable 15.90% to 24.40%

Why It’s a Good Option: OK, if you’ve got really bad credit, you’re probably going to pay a high annual fee and receive a high APR with the CreditOne Bank Visa. But it’s an unsecured credit card, meaning you won’t have to put down a deposit that serves as your credit limit. Plus, it’ll let you pre-qualify without incurring an inquiry (which would damage your already-hurt credit score), so it’s worth considering if you don’t want to go the secured-credit-card route. There are also rewards — 1% cash back on eligible purchases, including gas, groceries, mobile phone, internet, cable and satellite TV services. Just be extra careful about paying your balances off in full, and prepare for a fee when looking to get a higher credit limit, as one may apply.

At publishing time, the OpenSky Visa Secured, Discover it Secured, First Progress MasterCard Select Secured, primor Secured Visa Gold and CreditOne Bank Visa credit card are offered through Credit.com product pages, and Credit.com is compensated if our users apply and ultimately sign up for these cards. However, these relationships do not result in any preferential editorial treatment. This content is not provided by the card issuer(s). Any opinions expressed are those of Credit.com alone, and have not been reviewed, approved or otherwise endorsed by the issuer(s).

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4 Ways You Can Wind Up With Bad Credit & Not Even Know it

Did you just check your credit scores and find out the numbers are much lower than you expected?

“While you might remember missing a payment or defaulting on a loan, there could be many other reasons your credit score can take a dive while you are unaware,” said Cary Carbonaro, managing director at United Capital Financial Advisers and author of “The Money Queen’s Guide.”

Here are four ways your credit score can be negatively affected without you knowing it.

1. You Only Pay the Minimum Payment

You may think you have good credit because you are paying all your minimum payments on time every month. While making on-time payments is the largest factor in your credit scores — making up roughly 35% of your scores — the second largest factor is your debt usage in comparison to your total credit limit. Many experts advise keeping that percentage below 30% — ideally 10% — to have the best effect on your scores.

“Making minimum payments while continuing to charge or keeping high balances lowers your credit score, even though you are paying on time,” Carbonaro said. “With high balances, the more you can stop swiping the card and pay over the minimum payment while still paying on time, the more your score will steadily improve.”

2. You Forgot an Outstanding Bill That Went Into Collections

Carbonaro says it’s easy to move away and forget about an outstanding bill you owe. One common example of this happening is when college students move out of apartments at the end of the year without paying the final utilities or cable bill balance. These small forgotten bills can end up as a collection account on their credit report and they find out about it years later when they apply for an auto loan.

Once any type of account is sent to collections for non-payment, your credit score may decrease by more than 100 points depending on other aspects of your credit report, according to a recent VantageScore report on how credit behaviors affect your credit score.

Collections are serious business, no matter what the amount and can stay on your credit report for up to seven years even after they’re paid, Carbonaro said. She advised following up with all billers when you move to provide forwarding addresses and pay all final balances so this doesn’t happen to you.

3. You Are the Victim of Financial Infidelity in a Marriage

Never heard of that?

“That’s when there is hidden spending or debt on either side of a marriage, both of which can destroy your credit without you knowing it,” Carbonaro explained. “Many types of negative marks can end up on your credit report if your spouse is using your credit to open accounts or taking out joint credit cards and spending up a storm while you don’t know about it.”

Her best advice for avoiding additional credit problems during a divorce if you don’t trust your spouse financially is to put a credit freeze on your credit with all three bureaus. This way, at least no one can open any new credit accounts in your name during this time. (And, keep in mind, taking out credit in someone’s else name without their involvement — meaning that person has agree to co-sign or otherwise open a joint account — is considered identity theft.)

“While this makes life tough for you, too, the peace of mind that your credit is safe is worth it,” advises Carbonaro.

4. You Never Check Your Credit Reports or Credit Scores

If you are a victim of identity theft or there are errors reported on your credit report, your credit can take a deep dive.

“But, if you never check your credit score and see the dip or check your credit reports and find the errors, you will be oblivious to credit problems that you didn’t even cause,” Carbonaro said.

She says the more proactive you can be about checking your credit scores and credit reports, the easier it is to dispute mistakes and correct them and to catch identity theft if it happens. (You can pull your credit reports for free each year at AnnualCreditReport.com and see two of your credit scores for free, updated every 14 days, on Credit.com.)

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Here’s How to Tell Your Love Your Credit Stinks

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When you find yourself staring down a mountain of debt, you probably want to just find a cave somewhere and hide. But if the way you’re managing your money has the potential to affect your spouse or significant other, it’s worth talking about it, lest you suffer the fallout of financial infidelity later on.

While everyone’s financial situation may differ, the tips outlined here can help you get started with having that tough conversation.

Know Why You Want to Talk 

Before you sit down with your loved one, “you have to think about why it is you want to discuss this,” said Amanda Clayman, a New York City-based financial therapist who works with people around all aspects of financial behavior and their relationship with money. Ask yourself, “Why is it that you want to come clean about this? Do you want emotional support? Do you need financial help?” Perhaps you feel like you’ve been misleading, or even dishonest, in the way that you held onto this information or disclosed other information in the past. Whatever it is, knowing your own motivations will help you structure the conversation around what needs to be said.

Do Your Homework  

“To prepare, you really need to be clear on the situation,” said Clayman. “You can’t disclose the truth without knowing what the truth is.” Do as much of your own homework as you can before your discussion by pulling your credit report and doing an overall assessment of your finances. (You can view two of your credit scores, updated monthly, on Credit.com.)

Know Your Audience

“It’s a different conversation to have with your parents versus a person with whom you already share finances,” said Clayman. In other words, try to anticipate what you need to disclose to this person in particular. Is the way that you’ve been using your credit card affecting your spouse’s ability to put away savings? If so, you’ll need to be more upfront. If your spending is so out of control that you need to move back home with your parents to pay off the debt, you’ll want to choose your words carefully when telling your parents.

Be Direct 

“The best thing to do is bring it up as its own conversation,” said Clayman. “You want to be direct and honest, and acknowledge why you haven’t talked about [this subject] in the past.” You’ll also want to address any concerns you have about how your loved one may react — and how you hope they’ll respond. Offering some context can be helpful, said Clayman, since being honest is a step toward taking responsibility and hopefully putting yourself on a path to addressing your own financial instability and creditworthiness.

Being upfront about these emotions will also help the other person be aware of their own reaction as they hear this, said Clayman. What’s more, it will give them a sense of why you may not have been so forthcoming up until now.

“It’s not saying that you can’t have your own reaction to it,” she said. “It’s a way of keeping the relational context intact as you talk about something that can be surprising to some people.” She added, “If you’re to say, ‘I’m sharing this, and the reason I didn’t share it [before] was because I was worried you’d see me in a certain way or be disappointed,’ that way the person can address or refute it.”

Give Yourself Space & Time 

When having a talk like this, it’s important to do what you can to make the situation feel less overwhelming, both to you and your loved one. You want to be able to say what needs to be said — and ensure that you have space to do it. “Try to do this at a time when you’re not going to be interrupted,” said Clayman. Also, make sure there’s adequate time. “This is going to be really emotional and a little unpredictable,” she said. “Neither of these things will be improved by having too little time or quiet.”

Focus on Your Loved One 

Discussing your financial woes is never easy, but focusing on your loved one can help you stay connected, even when you feel yourself getting worked up. “Even when people disagree or there’s a breach of trust, look for ways that you’re still connected in other aspects of your relationship,” Clayman says. Reminding yourself of those things will help you get through the worst of the problem — and remind you what you’re working toward.

Remember, disclosing your money woes and/or lousy credit isn’t a time to unburden yourself of your worries and guilt. It’s about finding a way to work through the problem together. Not taking this approach can be destructive, especially if you’re not prepared for your loved one’s “anger, bewilderment and so on,” Clayman says. So take the time to learn where you stand and plan the conversation accordingly. Things may just go more smoothly than you expected.

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A Credit Card That Wants to Teach You How to Use It

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Consumers with low credit scores often have to deal with limited access to credit. After all, they are by definition risky customers for creditors to do business with because their history has shown they are less likely to repay their debts than borrowers with good credit.

Unfortunately, that also means that when credit is available to subprime borrowers (traditionally, those with credit scores lower than 680), loans and credit cards tend to come with higher interest rates and far fewer perks. And some subprime credit cards can be downright predatory in the extra fees they heap onto borrowers.

LendUp, a Silicon Valley-based startup focused on expanding access to safe credit for traditionally underbanked consumers, is trying to change that through its new L Card, which is currently available on a limited basis only.

The card offers credit lines between $300 and $1,000, features an annual percentage rate (APR) between 19.99% and 29.99% with annual fees between $0 and $60 (based on creditworthiness), according to Leslie Payne, head of corporate affairs and social impact for LendUp.

Those interest rates are significantly higher than the average interest rate for all credit card accounts, which is just over 12%, according to the Federal Reserve, but are in keeping with subprime credit card rates, which are traditionally higher.

Where LendUp really stands apart is in their education offerings. Accountholders can take roughly a dozen classes aimed at improving their credit scores and understanding of everything from reading a credit report to protecting their identity online. Those classes can count toward a customer’s increased credit line or lowered APR, Payne said, as can on-time payments and general good management of the card.

“With other cards, you don’t know what you have to do for how long to know when you get a credit increase or a reduction in [APR],” Payne said. “We want to make that process as clear as possible.”

The card has no hidden fees and a grace period for payments, which, as Payne pointed out, can be uncommon among subprime cards. LendUp also provides a smartphone app that lets users freeze charges in case of loss or theft, and a “financial health meter” that TechCrunch.com said “clearly shows how much credit the customer has left to spend.”

“LendUp’s mission is to provide anyone with a path to better financial health,” Payne said.

Besides the L Card, LendUp also offers a variety of loan products. Payne said the company is still focused on learning and will make the L Card more widely available at a later time.

Looking for Credit? 

Remember, no matter what credit card you are considering, it’s important to read the full terms and conditions carefully to be sure it’s right for you. And it’s also a good idea to avoid charging more than you can afford to pay off in full (and on-time) at the end of the month, particularly if you’re focused on building your credit. High credit card balances can hurt your scores. Not to mention, credit card interest can quickly add up. (You can calculate the lifetime cost of your current debts here.)

If you have so-so credit, there are many steps you can take to make improvements, starting with checking your credit scores regularly and requesting your free annual credit reports every year at AnnualCreditReport.com. You can also get your own personal credit report card at Credit.com, which offers you two free credit scores, updated monthly, plus a personalized report that tells you how you’re doing in the five key areas that are included on your credit report and determine your credit score: payment history, debt usage, credit age, account mix and inquiries.

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Can Alternative Credit Scores Hurt You?

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We’ve written quite a bit on alternative credit scores at Credit.com over the years — and on how these non-traditional scores based on things like utility and rent payments can help consumers with “thin” credit files qualify for credit cards and loans. But can the opposite also be true? Can people who have healthy “traditional” credit scores be stymied by the use of alternative scores?

There’s emerging evidence that it is, in fact, possible.

A recent article in the Los Angeles Times recounts the experience of one such man, Joseph, who applied for a travel rewards card through Bank of America only to be rejected because of the bank’s use of an alternative credit score from a company called Credit Optics.

Now, keep in mind that Joseph told the Times that his traditional credit score from FICO is an 820. That’s an excellent score based on FICO’s scale of 300-850 (learn more about what counts as a good credit scores here). And Joseph told the Times that his debt-to-income ratio is below 20%, which you might already know means he carries very little debt based on his ability to repay. While FICO doesn’t measure debt-to-income, the amount of debt you’re carrying compared to your total credit availability is a critical part of your FICO score.

Joseph’s alternative score through Credit Optics was a 374 on a wide scale of 1 to 999, which, a company representative reportedly told the Times was a “pretty good” score. But it wasn’t good enough for Bank of America to approve his request for a new credit card. (Bank of America did not immediately respond to Credit.com’s request for comment.)

The rest of the details around Joseph’s rejection aren’t clear, but it begs the question: Can it happen to you? The short answer is yes.

It Could Happen to You

“When alternative credit data first started to be used, the idea was that this was going to fill in thin files for people who didn’t have a lot of credit history with traditional financial products,” said Thomas Bright, a writer with Clearpoint Credit Counseling Solutions. “That was the idea early on, and this looks like more of a trend toward using these scores for even the traditional consumer who has a positive traditional credit history. That’s a new trend that brings a whole new set of concerns.”

Specifically, those concerns revolve around not knowing what information will be used to make up your alternative credit scores. It could be your utility bills, your rent — essentially every single bill you might receive. Bills for not returning library books on time. Or even your driving and arrest records, as some alternative scores include information from public records. Nearly anything could be fair game when it comes to determining your creditworthiness.

“It’s really comes down to transparency,” Bright said. “When you look at FICO, it’s very clear. There are five categories that make up your score, and then it’s one step from there to figure out how you can influence these five categories. And then you can really take your destiny into your own hands and shape your credit score and credit profile. But when we talk about alternative data, that’s not possible for most people because … it’s not clear how much alternative data there is on them, and they don’t have access to see it.”

What You Can Do

Broader use of alternative scores in conjunction with traditional credit scores means you’ll need to make certain you make timely payments on every financial commitment you have to avoid any blemishes that could negatively impact you, Bright said. You’ll also need to appear stable, so having direct deposit from your employer can be helpful, as can moving infrequently.

Setting up auto-pay for your monthly bills can help ensure you don’t miss or make a late payment. Also, avoiding overdrafts on your bank accounts can also help because some alternative data takes that information into account when determining your credit score.

If you’re ever denied credit, it’s good to review the denial to find out what credit reporting agency the financial institution used. If it’s one of the big three agencies, it’s a good idea to pull your credit reports, which you can do for free every year at AnnualCreditReport.com. You can then begin to clean up any blemishes and improve your credit scores. Likewise, if you see errors on your reports, you can dispute those errors so they are removed.

If you were denied because of a report issued by an alternative credit scoring company, you can contact them and see if they will explain to you what is included in their calculations so you can attempt to dispute, correct or mitigate that data. But that could be easier said than done.

[CREDIT REPAIR HELP: If you need help fixing your credit but don’t want to go it alone, our partner, Lexington Law, can manage the credit repair process for you. Learn more about them here or call them at (844)-346-3295 for a free consultation.]

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See, You Can Get a Mortgage With Bad Credit

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The number of people getting mortgage loans with less-than-stellar credit has steadily grown over the last three years, right alongside those getting loans with excellent credit.

That was the finding of Equifax’s most recent National Consumer Credit Trends Report, which also shows that total mortgages increased in the first quarter of 2016 by 10.3%, home equity lines of credit (HELOCs) increased by 10.2% and home equity installment loans soared by 23.5% to an 8-year high.

New first mortgage accounts to subprime borrowers during the first quarter have “increased on a consistent basis alongside that of prime lending,” the report said, with roughly 95% total mortgages made up of prime loans and 5% subprime.

“The first quarter of 2016 was a strong one for mortgage lending, and underwriting practices appear to have maintained their rigor over the last three years,” said Amy Crews Cutts, chief economist for Equifax. “We anticipate that the second quarter of 2016 will maintain this trend.”

The bottom line is, if you’d like to get a mortgage loan, it’s worth looking into. A mortgage company’s definition of bad credit might not be what a consumer considers it to be. A credit score of 620 or higher is typically required. You can start the process by checking your credit to see where you stand. (You can do that by getting your free credit report summary every month from Credit.com.) Your credit score will also impact the size of your monthly payment. (You can crunch the numbers on how much house you can afford here.)

Keep in mind, buying a home and making on-time payments to your mortgage may cause your score to rise. This improvement, in turn, could help you qualify for a refinancing offer down the road, netting you a lower interest rate and a more affordable monthly payment.

More on Mortgages & Homebuying:

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What to Do When Your Parents Kick You Off Their Credit Card

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Plenty of parents make their kids authorized users on their credit cards, and for good reason. Credit cards provide a way to build credit, giving teenagers an early financial leg up (provided the card is managed responsibly) by establishing a credit history before they’re old enough to get a credit card on their own.

It can also be a great chance for parents to supervise how their children are spending and help them learn financial lessons, like making payments on time or reading a credit card statement. Even checking credit scores and reports through free credit score tools (such as those on Credit.com) and free annual credit reports at AnnualCreditReport.com can help them reach their financial goals.

But at some point, there comes a time when all parents cut the cord (and the card), kids must make it on their own in the world of credit. What now?

If that recently happened to you, there are two starting points where you’ll likely find yourself: having a good credit score or having a not-so-good credit score.

If Your Credit Scores Are Good

If your parents have been making timely payments on the card you also carry, you likely have a credit score that is good enough to get your own credit card. If that’s the case, you can consider some of these credit cards for good credit. If you’re still in school, you might want to consider a credit card specifically designed for students.

Remember, if you’re under 21, you’ll need to demonstrate an ability to repay or have a willing co-signer to qualify — federal law prohibits issuers from extending credit cards to you otherwise. You should also check your credit before applying so you know where your score stands, because the inquiry will temporarily ding it.

If your parents are only just now starting to talk about removing you as an authorized user from their card, it might be a good idea to ask them to wait until you apply for a new card in your own name. This will ensure that your credit score remains high — closing credit card accounts can have a negative impact on your credit scores — while you go through the application process.

Better yet, you can ask your parents to take your card but keep you as an authorized user on their account. As long as they are making payments on time and not carrying high balances, this will help you even further in establishing a good credit history. That’s because roughly 15% of major credit scores is based upon the length of your credit history. So the longer you’ve had credit, the more points you’ll earn toward your total credit score.

If Your Credit Scores Aren’t So Hot

If your parent or parents are having financial difficulties and haven’t been making timely payments on the credit card or have run up a high balance — credit utilization is a big factor in credit scores — you might not have very good established credit.

The good news is, you have options, and getting disconnected from your parents’ credit could be a very good thing for your scores. Authorized users are not considered responsible for making payments, so if negative information is appearing on your credit reports because of the account, you can contact your lender and asked to be removed from it. After that, the account should stop appearing on your credit reports. If it doesn’t, you can file a dispute with the credit bureaus.

Next, you can start on your own financial road by first checking your credit scores to see exactly where you stand. You might also want to check your credit reports to make sure everything on them is accurate (see the free credit scores and reports links in the second paragraph). If afterward you’re certain you have “thin” or “bad” credit, there are some credit cards — both secured and unsecured — that you can consider applying for to help you establish or rebuild credit.

If you find out through checking your credit scores that the situation is actually not all that bad, you can try applying for a credit card for fair credit.

Credit cards can be a simple way to establish and build credit, but they’re not your only option. You can also consider credit-builder loans to get you started.

Whatever your decision, remember that your credit is an important for everything, from getting a car loan to renting an apartment, opening utilities and sometimes even landing a job. So taking care of it should be a top priority. You can build good credit in the long-term by making all loan payments on time, keeping debt levels low, limiting new credit inquiries and only adding a mix of credit accounts as your wallet and score can afford them.

More Money-Saving Reads:

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Personal Loans for People with Bad Credit

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Updated May 19, 2016

When your credit is less than satisfactory, it can be difficult to find a lender willing to give you a personal loan. That doesn’t mean it’s impossible to find one – there are more options available now than ever before to get a personal loan with bad credit. What’s better is you can easily apply online to see the rates for which you qualify.

That’s thanks to lenders such as Springleaf, Avant, and Lending Club. They each have lower credit thresholds and none rely solely on your FICO score when deciding to lend to you, making it easier to qualify.

Even though you might have a poor credit score, your actual credit history may not be that bad. Your credit file could be thin because you didn’t start building any credit until recently, or maybe you’ve only ever had one open line of credit. Whatever the reason, just because your score is low doesn’t mean you’re not creditworthy, and these lenders know that.

Therefore, it’s worth making sure you’re still getting a decent deal on personal loan terms. It can be easy to think that because your score is low, you’ll be approved for a less than ideal interest rate, but you shouldn’t accept the first offer that comes your way.

Let’s take a look at what these three lenders offer so you know what terms are available to you.

Avant Personal Loan

You can borrow anywhere from $1,000 to $35,000 with a personal loan from Avant*. Specific rates and terms vary depending on your state of residence, but in general, terms offered are 2 to 5 years, and APRs range from 9.95% to 39.95%.

An example loan repayment: if you borrow $3,000 with an APR of 36.00% on a 3 year term, you’ll have a monthly payment of $137.41.

Applying with Avant doesn’t affect your credit score – it’s initially just a soft pull. On its FAQ, it states most customers have a FICO score ranging from 600 to 700, though you can still qualify with a score of 580.

Its customer service team is on staff seven days of the week to assist you in case you have any questions. It’s also possible to receive your funds as soon as the next business day.

Avant’s personal loans are currently offered in all states except West Virginia, North Dakota, Iowa, and Maine.

There is no prepayment penalty or origination fee. However, if you’re 10 days past due on a payment, you’ll be charged a $25 late fee. Avant does mention it offers late fee forgiveness, though.

If your payment is returned unpaid, you’ll be responsible for a $15 fee each time your payment fails to go through.

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Apply Now

*referral link

Lending Club Personal Loan

Lending Club* is different than Springleaf and Avant because it’s a peer-to-peer lender. Individual investors can choose to put their money toward your loan – the money isn’t coming from a bank.

As with Avant, you can borrow anywhere from $1,000 to $40,000 with Lending Club. You can borrow for up to 5 years. Its APR ranges from 5.99% to 35.89%.

For example, if you borrow $20,000 on a 5 year term at an APR of 8.91%, your monthly payment will be around $185.24. That’s including an origination fee of 3% (or $600), so the total amount you receive would be $19,400.

There’s no prepayment penalty, but you need to watch out for the origination fees. These range from 1% to 6%, depending on your loan grade. Remember to factor this in when receiving offers, because being charged an origination fee lessens the amount of money you actually receive.

To be eligible for a loan with Lending Club, you must be 18 years or older and have a verifiable bank account. You must be a U.S. citizen, permanent resident, or have a valid long term visa. Your credit score should be at least 600 to qualify.

Lending Club does not offer loans in Iowa and West Virginia.

When determining creditworthiness, it takes the following into consideration:

  • Debt-to-income ratio
  • Credit score
  • Length of credit history
  • Number of open accounts
  • Usage and payment history
  • Other credit inquiries over the past 6 months

It has an A+ rating with the BBB and has been accredited since 2007.

LendingClub

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Springleaf Personal Loan

Springleaf offers personal loans ranging from $1,500 to $10,000. You can apply for a secured or unsecured loan. You can also apply online and have a decision within a day.

Springleaf has been around for over 90 years, has an A+ rating with the BBB. It is a brick-and-mortar bank with over 800 branches across 27 states. Unfortunately, that means it’s limited to those with branches nearby, as you need to physically sign for the loan.

Its website has minimal information on APRs, terms, and fees for loans, but from the calculator provided, we know the APR range is 15.99% to 39.99%, and 2 to 5 year terms are offered.

Springleaf also has a track record for working with borrowers who have low credit. You need a minimum credit score of 550 to qualify.

What would an example loan look like? If you borrow $4,000 on a 3 year term, at an interest rate of 30%, your monthly payment will be around $169.81.

You can check to see if Springleaf has a pre-qualified offer for you, as it doesn’t affect your credit score. If you do accept its offer, then a hard credit inquiry occurs.

Springleaf

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Which Lender is the Best Choice?

It’s largely going to depend on the rates you receive. Luckily, with Avant and Lending Club, you’re able to apply without a hard inquiry on your credit, which allows you to shop around without worry. It’s smart to start with these two lenders and see which of the two offers you better terms.

Here’s a side-by-side comparison of the rates and terms offered by all 3 lenders:

Criteria Springleaf Avant Lending Club
Amount Borrowed Up to $10,000 Up to $35,000 Up to $40,000
APR Range 15.99% – 39.99% 9.95%-39.95% 5.99% -35.89%
Length of Loan Up to 5 years Up to 5 years Up to 5 years
Min. Credit Score 550 550 600

Your best option is to shop around. You can apply to Lending Club, Prosper and Avant without hurting your score. We recommend you start there first.

If you need the money today and live near a Springleaf branch, that is your best option. But if you can wait a day, Avant is able to get the funds to you in one business day.

 

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