How to Get Approved for Signature Loans With Bad Credit

Having less-than-perfect credit shouldn’t stop you from getting access to financing when you need it, Signature loans allow borrowers to get approved based on income rather than credit scores alone You can use funds from these unsecured personal loans to cover almost any expenses

This guide explains how signature loans work, what credit scores lenders accept, how to improve your chances of approval, and where to find the best signature loan offers. Read on to learn how to secure the financing you need even with bad credit.

What Are Signature Loans?

Signature loans are a type of unsecured personal loan that does not require collateral They are called “signature” loans because your signature promising to repay is the main thing backing the financing

With a signature loan, you receive a lump sum of cash upfront and repay it in fixed monthly installments over a set term. Interest rates are higher since the loan isn’t secured by an asset like your home or car.

Borrowers can use signature loan funds for almost any purpose, including:

• Debt consolidation
• Medical expenses
• Home improvements
• Auto repairs
• Major purchases
• Special events or vacations

Signature loans provide financing based primarily on your income and ability to handle monthly payments. They often have more flexible credit requirements than mortgages, auto loans, and other types of borrowing.

Signature Loan Credit Score Requirements

Many lenders advertise signature loans for bad credit. But what credit scores can you really get approved with?

Here’s an overview of typical minimum credit requirements:

• Excellent credit (720+): Offers the lowest rates, up to 36 months to repay.

• Good credit (680-719): Decent rates, up to 48 month terms.

• Fair credit (630-679): Higher rates, shorter 12-24 month terms.

• Poor credit (300-629): Subprime lenders may approve but with high rates and fees.

Each lender sets its own cutoff scores. Having no credit history won’t necessarily disqualify you. Some lenders consider applicants with no FICO scores.

Those with scores below 580 may need a co-signer with better credit to guarantee the loan. Interest rates exceed 20% for borrowers with very poor credit.

How to Get a Signature Loan With Bad Credit

Follow these tips when applying for a signature loan with less-than-perfect credit:

• Shop with subprime lenders – Avoid mainstream sources that won’t approve credit scores under 670. Compare offers from specialized bad credit lenders.

• Apply with a creditworthy co-signer – Adding a co-signer with a 700+ score can help you secure better rates if your own credit is poor. Make sure the co-signer understands they’ll be responsible for repayment if you default.

• Use an online lender marketplace – Marketplace sites like Upstart let you complete one application for review by multiple subprime lenders. This simplifies rate shopping.

• Consider a secured loan – Using an asset as collateral often yields better terms. A savings account or auto title can back the loan and offset poor credit risk.

• Explain past credit issues – Provide context on late payments, collections, judgments, or other negative items. Extenuating circumstances like medical problems may help.

• Pay down account balances – Lower credit utilization before applying by paying down cards and loans. Wait for updated lower balances to appear on your credit reports.

• Become an authorized user – Ask a family member with good credit to add you as an authorized user to help build your history. Make sure they make on-time payments.

With the right lender, credit scores even in the 500s may qualify for a signature loan. Focus on demonstrating overall financial responsibility.

What to Know Before Applying

Before submitting a signature loan application, understand these key details:

Amounts

• Signature loans range from $1,000 to $40,000 typically. Approval for higher amounts requires stronger credit and income.

• Income requirements vary but expect to need at least $2,500 in provable monthly income.

• Debt-to-income ratio caps often fall between 40-50%. Lower ratios improve your eligibility.

Rates and Terms

• Interest rates run from 4.99% to 29.99% or higher depending on your credit profile.

• Loan terms are usually 12 months, 24 months, 36 months, or 48 months. Better scores qualify for longer terms and lower rates.

• Payments remain consistent each month over the loan term. There are no fluctuating rates or balloon payments.

Fees

• Origination fees from 1-6% of the amount borrowed are common. These get deducted from loan proceeds.

• Some lenders charge prepayment penalties if you pay off the balance early. Avoid these loans if possible.

• Late fees apply if you miss a payment, often $15-$30 per incident.

Read all loan terms carefully and factor fees into the total cost before accepting an offer.

Where to Find the Best Bad Credit Signature Loans

Shopping around helps you secure the most affordable signature loan for your situation. Compare loan marketplaces, online lenders, banks, and credit unions.

Here are some recommended places to find bad credit signature loans:

• Online lenders – Companies like NetCredit, OneMain Financial, and Avant specialize in lending to borrowers with credit challenges. They offer quick approvals for smaller loan amounts.

• Banks and credit unions – Wells Fargo, U.S. Bank, and Pentagon Federal Credit Union are examples of mainstream sources accepting lower credit scores. Credit union signature loans often have lower rates.

• Peer-to-peer lenders – Sites like LendingClub and Prosper connect investors funding loans with borrowers. Individual investors may relax standards.

• Subprime loan marketplaces – Upstart, LendingPoint, and other marketplaces let you compare customized quotes from multiple poor credit lenders at once.

• Auto title lenders – Using your paid-off car as collateral can yield better terms from title loan companies like LoanMart and TFC Title Loans.

Cast a wide net and submit applications with a few top choices. This lets you compare real offers side by side and select the ideal lender.

What to Do After Getting Approved

Once approved for a signature loan, take these steps:

• Review loan terms – Read the loan contract and truth-in-lending disclosures carefully before signing. Verify you understand all policies, rates, and fees.

• Complete loan documents – Provide all required information and documentation to the lender to finalize the loan. Double check that everything is accurate.

• Receive loan funds – The lender will deposit the loan amount directly into your bank account in most cases.

• Set up auto payments – Enroll in automated payments from your bank account to avoid missed payment fees.

• Start repayment – Your first payment will be due one month after finalizing the loan. Create reminders to pay on time each month.

• Pay extra when possible – Making additional principal payments reduces your total interest costs and pays off the balance quicker.

Follow all loan requirements and make every payment on time. With responsible borrowing, a signature loan can rebuild and improve your credit.

Is a Signature Loan Right for You?

A signature loan provides an accessible funding option when you need money but have less-than-perfect credit. Compare multiple lenders to find the most affordable interest rates and fees for your situation.

Make sure to borrow only what you can realistically budget to repay each month. With a thoughtful approach, a signature loan can put you on the path to better credit while covering your financing needs.

Frequency of Entities:

signature: 28
loans: 27
credit: 26
loan: 25
lenders: 10
approved: 8
borrowers: 8
bad: 7
terms: 6
amounts: 4
interest: 4
payments: 4
rates: 4
repay: 4
scores: 4
co-signer: 3
fees: 3
payment: 3
requirements: 3
amount: 2
application: 2
fixed: 2
monthly: 2
unsecured: 2