If you are seeking peer-to-peer lending for bad credit you may or may not be happy with the information I'm going to share with you. Why?
Because, it really depends on what you view as bad credit. What a bank sees as bad credit may not be what a peer-to-peer loan company considers to be poor credit.
On the other hand, some people have horrible credit and don't think it's that bad, while almost every financial institution would strongly disagree. So let's look into this matter a bit more in detail and see what your chances are of getting a p2p loan with less-than-stellar credit.
Peer-to-Peer Lending Bad Credit Options Do Exist. But...
Getting unsecured personal loans through the banks requires very good credit, and yes, peer-to-peer loans are available to more potential borrowers with lower credit scores. It's one of the great things about this new alternative lending option. Many people who once had to resort to taking loans through the unscrupulous payday loan companies no longer have to do so.
Even if you don't have enough credit history to get approved for a bank loan or have a lower credit score than the high 600s, you may be able to take out social lending loans from a p2p lender. So when we consider what credit scores are "bad" in the eyes of the banks, we'll quickly find out that peer-to-peer lending companies will service loans to people with "bad" credit. But that doesn't mean that the major p2p lending sites are just handing out person to person bad credit loans to anybody who applies . If your FICO score is lower than 640 you will have a hard time finding a major p2p lender like Prosper or Lending Club providing peer-to-peer lending for bad credit applicants.
If your credit score is lower than 640 for Prosper or lower than 660 for Lending Club you are out of luck, the best thing you can do is work to raise your FICO score. There really is not much else we can say regarding that. The major peer-to-peer lenders are more willingly to work with people with lower credit scores but they aren't without standards, and in the end of it all, your credit score shows your past history of paying back and paying off debt. It isn't something that most lenders will take lightly. Peer-to-peer lenders are also in the business of servicing their p2p investors, normal folks like you and I, they have to keep certain credit standards in order to protect loans by people who invest through their platforms and make sure the retail investors have quality social lending loans to invest in and earn from. So even though peer to peer lending for bad credit is available, you'll have to look past the largest peer-to-peer lending sites.
Peerform Loans To Borrowers With Lower Credit Scores
Even though the major p2p lending sites may not give loans for bad credit borrowers, other people with lower credit scores are getting loans from p2p lenders and that's a good thing if your credit is too low to get a bank loan but not TRULY bad. In fact, there is a peer-to-peer lender that offers loans for people with credit as low as 600!
Peerform is a p2p lender with loans available to borrowers with bad credit. Peer-to-peer lending for bad credit may be risky but Peerform is trying to help those who have had a rough time dig their way out of the hole.
Peerform has far more lenient credit standards than the two major p2p lending companies, Prosper and Lending Club. Peerform services loans up to $25,000 for bad credit loans as low as 600. They give you clearly detailed information about their interest rates and fees and you can be funded for your loan in as little as 2 weeks. The problem you may deal with is that many p2p investors (normal people) may choose not to fund your loan once Peerform approves you to ask for a loan.
This is why it's extremely important to fully explain why your credit score is so low, if you have understandable reasons for having a bad credit score you will have a better shot at people taking a chance on you. That's one of the major advantages of peer-to-peer lending for bad credit applicants, there are real people waiting to loan to real people, if your situation is understandable to other normal people with money to lend and they believe you will pay them back they will loan to you through the online p2p lending platform even if some consider you as a bad credit risk.
If your loan is funded you will be charged an origination fee of up to 5% of your loan, and unfortunately Peerform p2p loans are only available in 23 states right now.
Pros of Peerform online peer to peer lending for bad credit
- Low advertised APRs (7.12% to 28.09%) for borrowers with mid-tier credit.
- High borrowing limit of $25,000.
- Website is very clear about potential APRs, loan amounts, and fees.
Cons of Peerform online peer to peer lending for bad credit
- Requires better credit score than some other lenders (600+).
- Does not offer secured loans.
- This is a newer company, and is not yet accredited by the BBB.
- Only available in 23 states.
- Loans not immediately funded.
- Several fees may apply, including an origination fee up to 5%.
Reasons to Go Ahead and Apply For Peer-to-Peer Borrowing With "Bad" Credit
Unlike with bank loans, you get more accurate assessments of credit-worthiness through p2p lending sites.
Let's be honest, the major banks often deny credit-worthy borrowers loans because they don't see the big picture. They have partial information and they close your case according to that. They will often tell you that you are rejected because you have bad credit and never consider the fact that they are missing tons of information about your financial situation that would may otherwise make you eligible for a loan. Peer-to-peer lending companies are different, they have a remarkable ability to more accurately assess whether you are deserving of a loan or not.
Because of the financial technology that they use, they are able to pull your information electronically from a wide array of 3rd-party sources in order to fully understand your financial situation and your likeliness to pay back the loan.
They also match your data up against similar data from thousands of their past loans, this gives them the ability to loan to you even if you are considered by the banks to have "bad credit".
You Won't Be Gouged With Peer-to-Peer Lending for Bad Credit
Most bad credit borrowers that are rejected by the banks have few options left in order to get a bit of financial assistance, and lenders know it. That's why so many horrible payday loan services have sprang up and taken advantage of the situation. Thankfully, many states are making these types of predatory loans against the law but they still do exist in many areas and you'd be wise to avoid them. The interest rate they charge is criminal, literally. In contrast, p2p lenders like Prosper Marketplace issue loans to people with lower than bank-acceptable credit at far lower interest rates, even as low as 6.8%.
An Online Lender That Funds Bad Credit Borrowers In 24 Hours
There's an online lender trying to build up it's relatively new business that focuses on giving loans to people with normally "rejectable" FICO scores of as low as 580. They are called Avant and unlike so many other online lending startup companies, Avant is not a p2p lending site and they don't depend on individual loans from people to fund their borrowers, Avant funds your low credit loans directly and often within 24 hours.
That is also one of the reasons they can fund your loan so quickly, they don't have to wait for people to chip in on your loan. They quickly make their decision on your loan application and if you are approved — you may even have your loan paid to your bank account the same day you apply. For a lender that pays out loans to poor credit borrowers, they have a high borrowing limit of $35,000. This is honestly a bit surprising, but great news for bad credit borrowers who are accustomed to getting low-balled when trying to get a loan.
However, if your credit score is in the 500s, you likely won't be able to get a loan with Avant, your best move would be to work on getting your credit score up into the 600s. The major banks may not touch scores in the low to mid 600s, but peer-to-peer lending for bad credit will become a more realistic financing option for you.
If You Are Interested In P2P Investing or Borrowing:
If you would like to apply for a peer-to-peer loan from one of the top 2 U.S. peer-to-peer lending companies you can do that here. Peer-to-peer lending for bad credit is available and is an exciting new option for borrowers and investors, to receive a loan quote from Lending Club or Prosper does not affect your credit. Choose from the options below.
- Check rates for a personal loan up to $35,000
- Check rates for a business loan up to $300,000 from Lending Club
- Invest In P2P Loans Through Lending Club
Your financial opportunities have never been greater with the growth of peer-to-peer lenders in the U.S., see how you can take advantage of it today.