8 Best Emergency Loans for Bad Credit of July 2023

Final Verdict

Options for emergency cash loans to people with bad or poor credit are limited, but there are still plenty to choose from. Upgrade stands out as a particularly good lender. It's very accepting of bad credit, and it offers ways to lower your loan costs—and save money going forward with its other financial products.

Avant is a good choice if you need fast approval and disbursement; Rocket Loans is another good pick for fast loans, with clear instructions on how to get the money quickly. Another good place to start is your own bank or credit union, Many, such as U.S. Bank and First Tech FCU, highlighted here, offer emergency loans for bad credit. 

How to Choose the Best Emergency Loans for Bad Credit

Can You Qualify for an Emergency Loan If You Have Bad Credit? 

Having bad credit doesn’t mean you can’t qualify for an emergency loan. Rather, you’ll need to be able to show that you have income sufficient to repay the loan, usually measured by your debt-to-income ratio. Plus, your credit reports will need to show that whatever caused your bad credit score has been resolved (e.g., you’re not delinquent on any of your loans, and you’ve resolved any tax liens or other judgments).

Applying for an emergency loan with a co-applicant is an option if your credit issues haven’t been resolved or you don’t have enough income to repay the loan on your own. This is because you’ll be able to rely on your co-applicant’s good credit history rather than your own to get qualified. If you choose this option, make sure to repay the loan or you could damage your relationship with your co-applicant. Remember, delinquencies will affect their credit scores. 

FICO Credit Score Ranges

You won't find "Bad" credit as an official credit score rating, at least not in your FICO credit score. Instead, your bad credit may be "Fair" or "Poor" (or just "No Credit" if your credit history is thin). The table below shows how FICO scores and rates the items in your credit file.

How to Shop for an Emergency Loan for Bad Credit

When considering an emergency loan, some of the most important factors to consider include how much the loan will cost, the terms you can get (which with determine your monthly payment), and how quickly you can apply and get funded.

• How much the emergency loan will cost: The cost of an emergency loan is made up of the interest rate you’re charged and the fees you’ll pay to get the loan. A loan’s annual percentage rate (APR) represents the sum of these two costs as an annual percentage of the amount borrowed. For this reason, the APR is the most useful cost to evaluate when comparing lenders and loans.
• What terms you can get on the loan: Before choosing a lender, ensure it offers a repayment timeline that fits your budget. Shorter repayment terms will result in larger payments since you’ll pay off the loan more quickly. This means you’ll also end up paying less interest over time. Look for a lender that offers the shortest repayment term you can comfortably afford.
• How quickly you can apply and get funded: It’s also important to evaluate how easy it is to apply for the loan and how quickly you’ll get funded. These two factors are often related since lenders that offer an easy online application process may also offer fast funding. Many of the best lenders offer approval in minutes and funding in as few as one to three business days (sometimes even the same day).

How to Apply for an Emergency Loan If You Have Bad Credit

Before applying for an emergency loan, gather your personally identifiable information (e.g., Social Security number, date of birth, address), income information, and details about the funding you need (loan amount and purpose). This will make the application process easier, as lenders will require you to provide this information. 

• Often you'll submit a preliminary application with basic details to see if you qualify, which won’t affect your credit if the lender uses a soft credit check.
• The lender will tell you if you qualify and the rates and terms you might be able to receive.
• If the proposed rates and terms are acceptable to you, you can proceed with the full application. At this point, the lender will perform a hard credit inquiry, which will affect your credit scores. You may also be asked to provide additional documentation, like copies of pay stubs or bank statements.
• If you’re approved, review the final loan offer and decide if the terms are acceptable. The lender will send you the funds in the manner specified in your application—for instance, depositing the funds into your checking account or disbursing the funds directly to your other creditors.
• Finally, you’ll set up your account via an online portal or mobile app so you can manage your loan.

Alternatives to an Emergency Loan for Bad Credit

An unsecured personal loan is not your only option, but you should carefully evaluate all of the following alternatives before choosing one.

• Credit card cash advance: Most credit cards allow you to withdraw cash—a cash advance. These loans can be expensive, however, with APRs as high as the card's default rate (usually around 30%). You'll also be charged a withdrawal fee of a few percentage points of the amount advanced, and interest will begin accruing immediately.
• Payday loan: A payday loan is an advance on your next paycheck. These short-term loans come with high interest rates and fees, resulting in APRs of 400% and more. Because of their expense, they can make it hard to break the cycle of debt.
• Payday Alternative Loan (PAL): Many credit unions offer PALs, loans of up to six months for relatively modest amounts—$1,000 or less. While APRs can be steep, they are capped at 28% by federal regulation.
• Cash app: Apps and services like Dave, Earnin, and the like offer short-term cash advances of small amounts ($20 to $500), for a fee. Most of these services charge a subscription and may have other requirements, like opening a checking account, on top of the fees associated with the loan.
• Title loan: A title loan is a secured loan option, backed by an asset you own, usually a car. Loan amounts are tied to the market value of the car, and often capped at 50% of that value. Terms are short—30 to 180 days—and APRs are as high as 400%.
• Home equity loan: If you need a significant amount of money, and your emergency can wait, you can tap into the equity you have in your home, if any. The process of getting a home equity loan or line of credit can take 30 to 60 days, or more, so this isn't the solution if you are in a hurry. Rates and fees will be considerably cheaper than other alternatives here, assuming you can qualify.
• 401(k) loan: If you have a 401(k) through your employer, you may be able to borrow from it. Loans are capped at half the account's value or $50,000, whichever is lower. Fund access is fast, 7-10 days. You'll have to repay the loan, with interest, in five years. The interest is paid into your account, and in effect it is like recouping some of earnings loss you experienced due to the withdrawal of funds.

Methodology

Investopedia is dedicated to providing consumers with unbiased, comprehensive reviews of personal loan lenders. To rate providers, we collected hundreds of data points across more than 40 lenders, including interest rates, fees, loan amounts, and repayment terms, to ensure that our reviews help users make informed decisions for their borrowing needs.