Peer to peer lending platforms make it easy for you to borrow money from other persons as well as companies. In fact, millions of peer to peer investors are available to lend out their money. Some of these platforms are also available for borrowers with a bad credit history or poor credit.
Here is everything you need to know about peer to peer lending for bad credit and find out more about bad credit peer to peer loans.
The most popular person to person or peer to peer lending companies are Lending Club, Prosper, and Upstart. Of these it is Upstart that is available for you if you are looking for p2p loans for bad credit. Their credit check works very different.
|P2P Loan Platform||Minimum Credit Score||Credit History|
|Lending Club||600||3 years|
Peer to peer lending credit score 500
Check out all personal loans for bad credit options available to you. Options such as PersonalLoans.com have loans available for bad credit scores as low as 500. Other online options include LendYou and VivaLoan which also offer the more expensive and risky payday loans for bad credit which are also good options if you’re looking for p2p loans no credit check.
Peer to Peer Lending Bad Credit
The peer to peer lending industry is online based, via websites and apps. This means you don’t meet the investors face to face. All loans are also examples of unsecured loans. This means that there is no collateral that is required.
Therefore, the platform where you can find these p2p loans usually prefer people with a high credit score. For Lending Club, the minimum FICO score is usually 600, which is considered as being average. For Prosper, the minimum credit score is 640. Upstart however does it differently and is the way to go for p2p loans with bad credit.
Platforms for Bad Credit Peer to Peer Loans
Upstart is a relatively new peer to peer lending company. It is different than other platforms. It looks at more than just the credit score in determining if you can borrow money or not. The company has developed quality artificial intelligence and machine learning tools that analyze you based on a number of factors. These include: age, education level, gender, and work. After looking at all these factors, the platform will then accept you, even if your score is not that high.
Peer to peer loans for bad credit is one relatively easy way to get a loan with bad credit rating. Also known as P2P, this peer to peer lending provides loans to borrowers with bad credit score. Borrowers post a listing on lenders websites indicating the amount they want and the purpose of the loan. The lenders then analyze and decide the borrower to give a loan. It is possible to receive peer to peer loans with bad credit through some of these p2p platforms. Most notably, Upstart especially targets persons with low credit ratings.
Check your rates in 5 minutes through this form at Upstart. It won’t affect your credit ratings. Or see the video below for a guide on how this works.
Good to know about Upstart
- Upstart is a relatively new company that aims to disrupt the finance industry of lending. The company, which operates through a peer-to-peer model, has developed sophisticated artificial intelligence and machine learning tools. It uses these algorithms to assess your likelihood to pay.
- As such Upstart looks at things like your job, education level, marital status, and phone usage to determine whether to lend you money or not. In addition to Upstart, you could also consider other online lending platforms like SoFi, Lending Club, and Prosper.
- Check all minimum requirements that Upstart uses.
Peerform is a peer-to-peer lending company that was established in 2010. Since then, the company has raised more than $5.3 million in venture funding. With the company, you can borrow as much as $25,000 without the need of a collateral. The credit comes with fixed rates that range between 5.99% and 29.99%.
To apply, all you need to do is to visit the Peerform website, answer a few questions about yourself, select the type of loan you want, and then the loan is listed on the marketplace where likely lenders will fund you. To apply for a loan at Peerform, you need to have a minimum FICO score of 600. Also, you need to have a debt-to-equity ratio of under 40%.
Lending Club is the biggest peer-to-peer lending company. It has a valuation of more than $1.2 billion and annual revenues of more than $60 million. Over the years, the company has helped give out loans worth more than $40 billion. The company allows people with a minimum FICO score of 600 to apply. People in this category are usually rated as being fair. To apply for a Lending Club loan, you need to meet a few criteria.
First, you must be from one of the 48 states that accepts the peer-to-peer lending companies. Iowa and West Virginia don’t allow Lending Club. Second, you need to meet the criteria that has been set in your state. For example, if you are borrowing money from California, you need to have a minimum net worth of $85,000 and a minimum gross pay of $85,000. Alternatively, you must have a net worth of more than $200k.
If you meet these qualifications, you need to create an account with Lending Club, tell the company the amount you want to borrow, select the offer, and receive your money. The maximum amount you can borrow from Lending Club is $40,000.
Watch this video on Lending Club
Prosper is the second-biggest peer-to-peer lending marketplace in the world. Launched in 2008, the company has distributed more than $8 billion in loans. The company offers loans between $2,000 and $40,000 mostly to people with good credit. The minimum credit score is 640, which is rated as average. You also need to have a debt-to-income ratio of 50% and below. You should also not have bankruptcies in the previous 12 months.
As with Lending Club, anyone in all the 48 states that allow peer-to-peer lending can borrow funds using Prosper. All you need to do is visit the website, enter your personal details, wait for verification, and then wait for loan offers.
The company charges an origination fee of between 2.4% and 5% based on your creditworthiness. In addition, you will be charged $15 if you don’t have enough money to cover the payments. You will be charged 5% for late payments.
Kiva is one of the oldest peer-to-peer lending marketplaces. However, unlike the other platforms, Kiva uses a non-profit model. To date, Kiva has more than 3.3 million users from around the world. More than $1.9 billion of loans have been distributed in the platform and the repayment rate is more than 96%. In addition, the company does not have a minimum credit score.
To apply for the loan, all you need to do is visit the website, describe the purpose for the loan, the loan goes through the process of underwriting and approval, and then it is disbursed. This process is summarized below.
The maximum amount one can apply for is $10,000 and you can only apply if you have business purposes for your loan
Personal Loans With Bad Credit
Other than bad credit peer to peer lenders, you have more options of getting a loan if you have a bad credit score. Other options you should use are credit unions, which are financial institutions organized as non-profits. They are established to serve their members.
Second, you can use any financial institution such as a bank and take a secured loan. This is a loan that has a collateral such as a car or a home. Finally, you could consider a co-signer. This is a person who acts as a guarantor for your loan.
Check out all personal loans for bad credit options available to you. Options such as PersonalLoans.com have loans available for bad credit scores as low as 500
How Peer to Peer Lending Works
- A common question is how banks make money. How can companies that we give our money generate all that profit? In its most simplified form it goes like this: When you make a deposit, the bank in turn lends that money to other customers, who pay with an interest. As a result, the bank generates a profit from your money by lending it to other people and companies. In reality, banks these days invest their money in multiple forms. Besides, in order to lend money they don’t even need to get it first. They create it.
- Peer to peer lending, also known as P2P lending uses a purer approach than banks these days. A company or a different organization develops a platform in which borrowers can borrow money that other persons, the investors, make available. The loans are relatively easy and fast to get and can cost less than conventional methods of borrowing. The p2p lending platform enables investors to create an account and to select the loans to lend money too. The peer-to-peer lending companies make money by taking a cut on the transactions.
What a Bad Credit Means
- A credit score is a three digit number that rates your credit worthiness. This number is generated as follows. Whenever you make a financial transaction such as a credit card or a bank loan, the bank will submit the transaction to the credit bureaus.
- The most popular bureaus in the US are Transunion, Experian, and Equifax. The same happens when you pay back the loans. These credit bureaus then tranfer this information to the credit scoring companies. The two most popular scoring companies are FICO and Vantage Points.
- The higher your credit score is increases your likelihood of getting a loan. When your credit score is low, it means that you will have difficulties getting financing. If you do get a loan, you will need to pay a higher interest rates. Indeed, payday loan companies, which target people with a bad score have a history of charging up to 400% interest rates.
Credit Score improvements
As you go through the process of having a bad credit score, your goal should be to improve your credit score. To do this, please follow our guide to improve your credit score. For one, you need to ensure that you have paid your bills on time. You also need to fix all the errors that are in your credit reports. Finally, you should take advantage of credit-boosting programs. Check out more details.
Crispus is a finance professional with more than a decade experience in the industry. Over the years, Crispus has written in-depth articles on leading platforms like CCN, Marketwatch, and Seeking Alpha. He also runs a Forex education and managed account company called WestEndFx.