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Bad Credit Personal Signature Loans

Tamsen Butler
Some lenders will approve applicants who are low on the credit score scale.
Some lenders will approve applicants who are low on the credit score scale.

Bad credit personal signature loans may be accompanied by high interest rates, costly fees and prepayment penalties that can wind up costing the borrowers quite a bit of money. Borrowers need to make sure that they apply for loans with the best terms in order to avoid paying too much.

Bad Credit Explained

Whether you fall into the realm of bad credit depends largely on the lender. While there are some instances that are universally considered bad credit by most lenders -such as recent bankruptcy, accounts that are currently delinquent, and a very low credit score - there are a wide variety of lenders who cater to various applicant situations. While a prime lender may consider an applicant with a credit score of 620 to be bordering on bad credit, a subprime lender catering to people with bad credit may consider this credit score as good.

On average, a credit score under 500 falls into the "bad credit" category. The lower your credit score, the higher the interest rates and fees you will encounter when obtaining a personal loan.

Personal Signature Loans

Bad credit personal signature loans are loans that are not backed by any collateral. Instead, the unsecured loan is guaranteed only by the signature of the borrower. While personal signature loans are quite common among people with good credit, lenders are generally apprehensive to offer these loans to people with bad credit. Without collateral securing the loan, the risk of default increases exponentially.

Consumers who cannot get approved for bad credit personal signature loans may consider applying for a loan that is secured with some form of collateral, whether it's a car title, a savings account, or the equity within a home.

Apply for Bad Credit Personal Signature Loans

Not every lender offers this product to applicants. Some lenders have a definite cut-off credit score that limits the borrowers who will get approved for a personal signature loan. If you have credit that is damaged by delinquent payments, charge-offs and judgments, consider applying with a lender who specializes in dealing with applicants who have bad credit. Look for lenders who advertise "Bad Credit, No Problem" or "Second Chance Financing."

Keep in mind that these lenders almost always charge very high interest rates. Only obtain a signature loan with bad credit if you absolutely need the funds or if you are attempting to build your credit rating back up by obtaining an installment loan that you will pay back promptly.


It is a good idea to start your search for a personal loan with the financial institution that houses your checking or savings account. They may be more lenient with the credit regulations if you have a good history as an accountholder. If your financial institution is unable to approve you for a signature loan, search out a loan elsewhere.

Here is a brief list of some of the lenders who offer personal signature loans to people with bad credit:

Lenders like those listed above should not be your first choice, but instead should be used if you have explored other options and have not been able to obtain a loan approval. Remember that lenders who cater to people with bad credit usually charge very high fees and interest rates that are much higher than the average personal loan interest rate paid by people with good credit.

P2P Lending

Consider exploring the option of Person-to-Person lending (P2P) through websites like Prosper. This may be the best option if you need the loan and cannot find a reasonable interest rate anywhere else.

Bad Credit Personal Signature Loans