Hardship loans for bad credit can help you when you’re facing an emergency, such as unexpected medical expenses, home repairs, or car repairs. However, these loans can sometimes have very high annual percentage rates (APR), making it difficult to catch up and improve your financial situation.

Before you borrow a bad credit loan, be sure to consider the costs involved. Shop around for the best rates and ensure the monthly payments align with your budget.

“It’s always a good idea to implement a realistic household budget and have an emergency reserve fund with a minimum of three months’ worth of expenses saved up,” says Brad Reichert, a financial expert, and the founder and managing director of Reichert Asset Management LLC. “That way, you don’t have to borrow funds at high interest rates whenever these unexpected financial needs arise,” Reichert shares.

However, when an absolute need arises, a hardship loan may be a necessary lifeline for your financial situation. Here are some tips to help you find the best hardship loan: 

What Are Hardship Loans and How Do They Work?

Hardship loans for bad credit are a type of personal loan. You can use the funds to cover unexpected costs, living expenses, or for any other purpose when you’re facing financial problems.

If you’re facing a temporary setback, you can get hardship loans with bad credit to bridge the gap while you recover financially. They’re usually unsecured personal loans, but you can also get a secured loan for bad credit.

Hardship loans are offered as a lump sum and have a fixed interest rate, monthly payments, and repayment terms that vary with the loan amount. Because the loan carries a fixed interest rate, your monthly payments will remain the same throughout the term. Some loans may come with additional fees, such as prepayment penalties and origination fees.

Can You Get A Hardship Loan When You Have Bad Credit?

You can get a hardship loan even with bad credit, but it may be difficult. Most loan providers will do a credit check when you apply for a loan. If your credit score is lower than their minimum credit score requirements, it may be difficult to qualify.

Some lenders may look at other criteria when evaluating your loan application, such as your income and employment history. However, if you need money quickly, you can improve your chances of getting approved by either offering collateral or applying with a co-signer or co-borrower.

Lenders usually offer lower loan amounts and shorter loan terms to borrowers with poor credit scores.

How To Increase Your Chances of Getting Approved for a Hardship Loan

When applying for hardship loans for bad credit online, there are several things you can do to improve your chances of getting approved. Consider the tips we’ve discussed below.

Pay Bills On Time

On-time payments can help boost your credit score and loan application, regardless of the type of loan you’re applying for. If you’re not planning to borrow a loan right away, you may want to take the time to improve your credit and avoid late fees by paying all your bills in full on time. We recommend setting up autopay to make sure you don’t miss due dates.  

Reduce Debt

Even though some lenders may offer guaranteed hardship loans for bad credit and may overlook your credit score, they’ll look at other factors like your debt-to-income ratio.

If you already have a lot of credit card debt and loans, consider paying them down to improve your DTI ratio and get better loan offers. With more of your income freed up, it’ll be easier to demonstrate that you’ll be able to afford the loan payments on the new hardship loan.

Check Credit Reports for Errors

Before you apply for a loan, check your credit reports from all three credit bureaus (Experian, Equifax, and TransUnion). This will allow you to understand where you stand and what type of bad credit personal loans you may qualify for.

Check your credit history for errors and dispute them before you apply for the loan. This may improve your credit score.

Add a Co-Signer

You can also improve your chances of qualifying for hardship loans with bad credit if you apply with a co-signer. Ask a friend or family member with good credit to be a co-signer. Keep in mind that co-signing a loan means they’ll be equally responsible for repaying the loan if you fail to make payments.

Apply for a Secured Loan

If you have a savings account, vehicle, or other valuable asset, you can also apply for a secured personal loan. It may be easier to qualify for a secured loan and get better loan rates when you put up collateral as security for your loan’s repayment. However, the lender can seize the asset if you default on the loan and sell it to recover the money they lent to you.

5 Top Lenders Offering Hardship Loans for Bad Credit

While you’ll find plenty of options when you search for “hardship loans for bad credit near me,” not all loans are the same. We reviewed 15 lenders offering hardship loans to narrow down our top five picks offering the best rates and terms.

We prioritized lenders based on the following criteria:

  • Accessibility of their loans. Lenders with fewer eligibility requirements, an easy application process, and next-business-day funding were prioritized.
  • Reputation and reviews. Lenders with better customer reviews and industry reputations ranked higher in our review.
  • Rates and fees. We prioritized lenders offering fewer fees and lower interest rates.
Loan AmountsAPRRepayment TermsMinimum Credit Score
Upstart$1,000-$50,0006.40%-35.99%36-60 months300
Universal Credit$1,000-$50,00011.69%-35.99%36-60 months560
Upgrade$1,000-$50,0008.49%-35.99%24-84 months560
Avant$2,000-$35,0009.95%-35.99%12-60 months550
Prosper$2,000-$50,0006.99%-35.99%24-60 months560

Get a Hardship Loan Today

Hardship loans for bad credit can help you overcome a temporary financial setback. These are personal loans offered by online lenders, credit unions, and banks. However, having a low credit score may make borrowing expensive.

Consider borrowing from family members or friends or making a hardship withdrawal from your 401(k) if you need financial assistance. If not, weigh all your loan options and pre-qualify with multiple financial institutions to find the best loan that fits your budget.