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Second Chance Loans: Best Loan Companies for Problem Credit


Second chance loans offer people with problem credit an opportunity get back on track while getting the money they need fast.

Whether it’s extra cash to consolidate debt, pay for repairs or handle an emergency, second chance loans can help out in a pinch.

Borrowers with good credit scores may have their pick of lenders but when borrowers have problem credit, the options are limited. There are several factors to consider with second chance loans including high interest rates along with loan origination fee and repayment terms.

If you’re in the market for a personal loan, make sure you only borrow what you need and have the ability to repay any money you borrow.

Best Second Chance Loan Companies

Upstart – 600 or higher credit score

Upstart offers unsecured personal loans for a variety of purposes with competitive interest rates that range from 3.22% up to 35.99% APR. The lower interest rates are reserved for people with higher credit scores but for people who have struggled with credit in the past, Upstart will factor in other pieces of information for a better shot at approval.

Upstart Personal Loan Details

  • Minimum credit score requirement at 600.
  • Loan amounts range from $1,000 to $50,000.
  • Interest rates range from 4.37% to 35.99% APR.
  • Upstart has two options for repayment, with term lengths of 36 or 60 months.
  • Get your rate in 5 minutes without affecting your credit score.
  • Loan origination fee can range from 0% to 8% of the loan amount. This is a one-time fee that’s deducted from the loan proceeds before they are delivered to the borrower.
  • No prepayment penalties. Upstart does not charge prepayment penalties for borrowers who wish to pay off their loan early.

Universal Credit – Good for bad credit personal loans

Universal Credit has a simple application for consumers to apply for a loan online for up to $50,000. All loans have a fixed interest rate with a fixed monthly payment. Borrowers are not required to have a particular credit score.

You can use your online loan for debt consolidation loan, a wedding loan, an unexpected medical expense loan, a fix-my-car loan, an I-need-a-vacation loan, a kitchen remodel loan, or for whatever legal purpose you want.

Universal Credit details:

  • Loan amounts range from $1,000 – $50,000.
  • Repay monthly, over 3 to 5 years.
  • Estimated APR: 8.93% to 35.43%.
  • Loan origination fee of 4.25% to 8% of the loan amount which is deducted directly from your loan funds.
  • Universal Credit reports loan payments to all three major credit bureaus.
  • No prepayment fee.
  • Offers a 0.5 percentage point rate discount for setting up autopay.
  • Universal Credit borrowers have free access to their credit score, credit monitoring and a credit score simulator tool.


Upgrade offers online loans from $1,000 to $50,000. As of this writing, interest rates range from 6.99% up to 35.97% APR. Second chance loans are available with terms from 36 months to 60 months. All loans have a fixed interest rate with a fixed monthly payment. Borrowers should have at least a 620 credit score, but all credit scores are considered.

Upgrade is on our list because of its no prepayment fee plus a few special features:

  • Simple one-page application.
  • Get a decision in seconds – with no negative impact to your credit score.
  • Fast funding, you can get money to your bank account within a day of clearing necessary verifications.

Upgrade charges a loan origination fee of 1% to 6% of the loan amount which is deducted directly from your loan funds. Get a personal loan for any reason. The turnaround time is fast. Funds are deposited directly to your checking account as soon as the next business day. That means if you are applying during a week day, you could have funds in your account, after approval, within 24 hours.

With an Upgrade loan, you’ll also get access to your free credit score and tools to help you understand credit health and ways you can improve it so you can unlock your full credit potential.

Use second chance loans to get back on track

Personal loan options will have higher interest rates given your credit score but take the opportunity to use a second chance loan to improve your credit scores. Just like second chance bank accounts, a second chance loan lets you prove how well you can manage finances.

Here are four ways you can use a personal loan to help rebuild your credit history:

  1. Monthly on-time payments. Make payments on time every month. You need to consistently pay on time. Set up automatic debits to ensure that you’re making those payments on time every month, and that behavior will count favorably toward your credit score.
  2. Consolidate debts. You can use a personal loan to consolidate credit card debt. If you use a personal loan to pay off credit card balances, that can help your credit utilization rate. Credit utilization rate is essentially amount owed. Credit utilization ratio on revolving accounts (credit cards) is essentially the percentage of your available credit you’re using. Using a high percentage of your available credit means you’re close to maxing out your credit cards, which can have a negative impact on your FICO Scores.
  3. Lower your interest rate. Depending on your credit scores, personal loan rates are generally lower than those associated with credit cards, so shifting debt from cards to a personal loan can lower your interest rate. This can make it easier for you to pay off your debt and improve your credit score as a result.
  4. Diversify your credit mix. The types of credit you have is one of the five factors that goes into determining credit score. Ideally, you’ll have experience with both revolving credit (credit cards) and installment loans (personal loans). If you don’t already have installment debt such as a mortgage or a car loan, using a personal loan to manage some of your debt would diversify your credit mix.

Best way to manage a second chance loan

The best loan deal, whether you have good credit or problem credit, is a loan with no prepayment penalty. Because second chance loans may have higher interest rates, plan to pay off the loan early if you can afford to do so. Paying off a loan early will save you money over the life of the loan.

Building and improving credit is an ongoing process so while a higher rate interest loan is not the optimum strategy to rebuild credit, it might be your only choice.


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