The 5 Best Loans for the Unemployed with Bad Credit

Updated: June 23, 2020 

unemployment loans with no job verification

When you have bad credit and no job, getting approved for a personal loan can be an uphill battle. While you might have to look for an alternative source of funds, such as borrowing from a friend or family member, there are lenders out there willing to work with people who've hit a rough patch and need a loan to help them finance a big purchase or weather a financial crisis. 

Best Online Loans for People Who Are Unemployed

If you're unemployed and have bad credit, you'll most likely have to do some shopping around to find a loan. You should know in advance that you're probably not going to be offered the best terms or interest rates, as a bad credit score and lack of employment make you a greater risk to potential lenders. 

On the other hand, some lenders specialize in offering financing to people with less than perfect credit scores. Here are five to consider. 

1. Upstart

Upstart is an online lender that offers personal loans to people with fair credit or little to no credit history. The company also accepts a wide variety of income sources besides regular full-time employment. 

As long as you bring in at least $12,000 per year in income, you may be able to qualify for a personal loan from Upstart. This income can come from a range of sources, including spousal support payments, a trust, or disability payments. 

You can use an Upstart personal loan to pay for anything from college tuition or medical bills to home improvement and debt consolidation. Because Upstart works with individuals with little to no credit history, it's a good option for younger people who are new to the world of lending.

On the downside, Upstart requires a minimum 620 credit score, and it won't accept applicants with a recent bankruptcy or more than six inquiries on their credit report within the last six months. According to the company's website, however, it may accept borrowers who don't have enough credit history to generate a FICO score.   

In many cases, borrowers receive their funds as soon as the next day. If you're taking out a personal loan to consolidate debts or pay off your credit cards, Upstart will also pay the loan funds directly to your creditors. 

Upstart's fees vary depending on a borrower's creditworthiness. Loan origination fees can be as little as zero and as high as 8%.

Borrowers with bad credit can expect to pay more in interest. Interest rates start as low as 7% and go all the way up to 35.99%. 

Loan amounts and terms vary by state. In the majority of states, the minimum loan amount is $1,000, with loans capped at $50,000. 

2. MoneyMutual

MoneyMutual is a loan aggregator rather than a direct lender. Instead of financing loans itself, it allows borrowers to submit their information online and get matched with lenders that might be willing to offer a loan. 

This means that terms and interest rates will vary depending on the individual lender. However, there are some minimum requirements for all loans funded through the MoneyMutual system. 

For example, while you don't need to be employed to get a loan, you must have an income source that brings in at least $800 per month. Additionally, the maximum loan amount is $2,500, so MoneyMutual isn't a good option for someone who needs to finance a large purchase. 

Also, it's important to note that MoneyMutual is an online payday loan lender. These types of lenders are known for charging some of the highest interest rates in the industry, so it's crucial to read through all the fine print before signing up for a loan.  

3. BadCreditLoans

BadCreditLoans is another loan aggregator, which means it doesn't actually do any lending. Rather, it gives borrowers a way to fill out a single application and connect with several different lenders. 

While some applicants may be eligible to borrow up to $5,000, people with truly poor credit scores might be limited to a $1,000 loan. You don't need a job to apply, but you must have some source of regular income. 

The minimum loan amount for a loan through BadCreditLoans is $500, and loan repayment terms vary between three months and three years. The BadCreditLoans system is free to use, and you won't incur a hard inquiry on your credit report until you move forward with a loan application from a third party lender. 

4. CashUSA

Like other loan marketplaces or aggregators, CashUSA connects borrowers with third party lenders willing to work with people who are unemployed and have bad credit. Depending on their creditworthiness, borrowers can get a loan for up to $10,000.  

You don't need a job to apply for loans, but you must have a source of income that generates at least $1,000 per month. In addition, lenders in the CashUSA network typically don't require a certain credit score to qualify for a loan. 

As the CashUSA website states, there is no fee to apply for loans through the site. Terms vary depending on the individual lenders you match with, with interest rates ranging from 5.99% to 35.99% and repayment terms varying from 90 days to 72 months. 

CashUSA offers an example of what a typical loan from one of the lenders in its network might look like. For a $1,500 loan paid back over two years at a 7.9% interest rate, your monthly payment would be $67.77 for a total repayment amount of $1,626.54. 

5. PersonalLoans.com 

Through its online network of lenders, PersonalLoans.com offers loans ranging from $1,000 up to $35,000 depending on an applicant's eligibility. To qualify for a personal installment loan, borrowers must have a credit score of at least 580. 

There is no fee to get matched with lenders through PersonalLoans.com. Interest rates vary by lender and typically span anywhere from 5.99% to 35.99%. 

Repayment terms also vary, but borrowers can expect to repay their loan between 90 days and 72 months. Borrowers with a higher credit score will generally receive more flexible options and a more favorable interest rate. 

While you don't need to be employed to apply for loans, you must make at least $2,000 per month. This income can come from various sources, including Social Security or disability benefits. 

Personal Loan Alternatives for Unemployed People

In some cases, an individual with bad credit and no job might be unable to qualify for a personal loan through a bank or other lender. In other situations, the person can qualify but the loan terms are predatory or the interest rate is too high. 

If you're struggling to get approved for a loan through traditional means, it's a good idea to take a look at your other options. Here are some alternatives to keep in mind. 

  • Peer-to-peer lending - A relatively new idea in the lending marketplace, peer-to-peer lending got its start in 2005. With peer-to-peer lending, borrowers get a loan from a group of individuals or investors rather than a bank, credit union, or other traditional lender. Lending Club is one of the oldest and biggest names in the peer-to-peer lending world. Depending on their creditworthiness, borrowers can get personal loans for as much as $40,000, although people with low credit scores might encounter more restrictive terms and conditions.

  • Credit card cash advance -  In some cases, your credit card can be a way to get fast access to cash. If you don't have a credit card, you might be able to qualify for one that offers cash advances. However, it's important to check the fees and interest rates before you tap your card for a loan. If you can't pay back the advance within a reasonable amount of time, you can quickly rack up interest on your card.  

  • Loans from friends or family members - If you know someone who's financially comfortable, you might be able to arrange a no-interest or low-interest personal loan.If you go this route, however, be certain you can afford the loan. Avoid any strained relationships or hard feelings by keeping up with the payment schedule. 

  • Home equity loan - If you own a home, you may be able to tap into your equity. While these loans tend to come with lower interest rates, the downside is that your home serves as collateral, giving the lender the right to foreclose if you default. 

  • Car title loan - With a car title loan, you use your vehicle as collateral to secure the loan. However, these kinds of loans are notorious for charging high interest rates, and you risk losing your vehicle if you can't pay back the loan.  

  • Pawn shops - Pawn shops offer loans by holding your personal property as collateral and charging interest on the money you borrow.Because these loans tend to come with very high interest rates, however, they're generally not the best option. Worse, you risk losing your property if you can't pay back the loan.

  • Get someone to cosign - If you can't qualify for a personal loan on your own, you can try getting a cosigner. If you go this route, however, make sure your cosigner understands that they will be responsible for the balance if you default. 

When you're in a bind and need quick access to cash, it can be tempting to sign with the first lender willing to take you on. Before you commit to any form of personal lending, however, it's important to make sure you understand all the terms and conditions, including the interest rate and any penalties and fees. 

Can I Get a Personal Loan While Unemployed?

If you're unemployed, you may still qualify for a personal loan. On the other hand, even if a lender is willing to offer a loan to a borrower who's unemployed, almost all lenders require some sort of monthly income. 

Various lenders accept different forms of income. For example, if you receive disability benefits or spousal support, this might be enough to get your loan application approved. 

Likewise, some lenders accept borrowers who receive Social Security benefits, and some will approve applicants who get a certain amount of retirement benefits or pension money every month. 

If you have bad credit and you're unemployed, working with a loan aggregator can be an effective strategy for searching for personal loans. This is because you submit your financial information through a single application, so potential lenders can see exactly what kind of income and credit score you have before they extend a loan offer. 

In most cases, loan aggregator sites don't do a hard pull on your credit, which means you don't need to worry about accumulating several hard inquiries that can hurt your credit score.

If you choose to pursue a loan offer, however, the individual lender will most likely run a hard inquiry, which will post to your credit profile for several months. 

Can I Get a Loan Without Proof of Income?

Depending on the type of loan you want, you may be able to get approved without showing proof of income.

In some cases, you can get a secured loan without proof of income. With a secured loan, you offer some sort of collateral, such as a house or vehicle, to protect the lender in the event you default on the loan. 

With a car title loan, for example, your vehicle serves as the collateral that secures the loan. However, you risk losing possession of your car if you can't make your payments, which is why it's best to avoid these types of loans. 

These kinds of loans are also risky because they generally come with extremely high interest rates. In addition, you're limited in the amount you can borrow, as you can only borrow against the value of your collateral. 

If you're unemployed, you may still be able to get a loan without showing proof of income in the form of a pay stub or W2. Because some lenders accept other sources of income, you don't necessarily have to be employed to qualify. 

When you shop around for loans, look for lenders that accept other forms of income besides regular wages. For example, you might meet the approval requirements if you receive money from a pension, Social Security, disability, or spouse support (also known as alimony).  

Can I Get Approved for a Loan If I Just Started a New Job?

Being employed is generally helpful when it comes to qualifying for a loan. Even if you just started a new job, your employment could mean the difference between getting turned down and being approved. 

If you've only been at your job a short time, however, lenders may ask for verification of your income. To prove you have a regular source of money, you can show lenders copies of your pay stubs or a letter from your employer stating how much you're being paid. 

Being employed is especially helpful when you have bad credit. This is because lenders see you as less of a risk if they know you have a reliable cash flow. 

Unemployment Loans with No Job Verification FAQs

The following are some of the most commonly asked questions and answers regarding loans for the unemployed with bad credit. 

Can I Borrow Money If I Am Unemployed?

While being unemployed isn't necessarily a deal breaker when it comes to getting a loan, your chances of getting approved go up if you can show lenders that you're reliable in other areas. 

Specifically, you're more likely to get a loan while unemployed if you have a decent credit score and a steady income. 

This is because lenders want to know they can count on you to make your monthly payments. When they make lending decisions, they typically look at a variety of factors, including your employment history, your credit score, and any sources of income. 

If you're unemployed, lenders will want to know if you have access to other forms of income, such as spousal support or disability. If you're retired, you can also show proof of retirement funds, Social Security, or a pension. 

If you're experiencing a temporary loss of employment due to a layoff or unexpected termination, you might still qualify for a loan if you can make a strong showing in other areas. For example, if you have a solid credit score, this could boost your chances of getting a loan. 

Where Can I Get a Personal Loan with No Job Verification

If you're unemployed and want to get a loan that doesn't require job verification, you have a couple options. In addition to applying for a secured loan or pursuing a loan from a lender that accepts alternative forms of income, you can also try opening a credit card

In fact, a credit card is a better option than a payday loan or an auto title loan, as both of these types of loans come with high interest rates that can trap you in a cycle of debt

In many cases, credit card companies don't require job verification, and many credit card lenders will give cards to students, homemakers, and self-employed individuals.  

Once you're approved for a card, you can use it for a cash advance or a source of funds when you need it. A credit card can even help you improve your credit score as long as you pay your bill on time every month.

If your credit score could use some work, you might have a better shot at getting approved for a credit card than a personal loan. In fact, there are several "guaranteed approval" credit cards that can give you access to a line of credit while helping you improve your score.  

How Can I Get an Instant Loan Online?

If you need quick access to cash and want an instant decision, your best bet is a loan app. With a loan app, you can apply for a personal loan right from your smartphone.

In some cases, loan apps bill themselves as alternatives to payday loans because most loan apps don't charge the predatory interest rates common among payday lenders. 

For example, the MoneyLion app offers 0% APR cash advances up to $250, as well as personal loans between $1,000 and $3,000. To apply for a loan, borrowers must make at least $24,000 a year and live in one of the nine states MoneyLion services. 

In many cases, borrowers can receive their money instantly. MoneyLion loans also come with no prepayment penalty, so you can pay them off early to save on interest. 

There are also apps like Earnin and PayActiv that let people borrow against their upcoming paycheck. In most cases, these apps give borrowers access to funds within minutes. 

Conclusion

While having bad credit and being unemployed make it harder to get a loan, you might still be able to qualify as long as you can show proof of some sort of income. If you get approved, making your monthly payments on time can help boost your credit score, which will make it easier to find lenders willing to work with you the next time you need to borrow. 


About the Author


Mike Pearson

Mike is a recognized credit expert and founder of Credit Takeoff. His credit advice has been featured in CNBC, Investopedia, CreditCards.com, Bankrate, Huffpost, The Simple Dollar, Reader's Digest, LendingTree, and Quickbooks. Read more.

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