Peer to Peer Loans for Bad Credit

Michael Collins
Jan 20, 2021

Peer to peer lending is a way to get access to money by lending from an individual instead of a company. Because of the nature of peer to peer lending networks, there is a chance you may have an easier time getting a loan with a bad credit rating than if you went to a traditional lender. 

Peer to Peer Loans

Have you ever needed an injection of money to make ends meet until that next payday? If yes, have you ever felt that you were worse off financially after you got a loan then before? Are you beginning to lose trust in lenders and feel like they don’t have your best interests in mind? If this applies to you, you are not alone. Small personal loans that you might get when you desperately need some money are part of an industry that is known for harming its customers. These loans often fall under the category of payday loans. Payday loan companies have often been found pushing their customers deeper into debt so they need to get another loan from the same lender to pay back their debt. Pretty horrible right? If you do not trust companies like this, we don’t blame you.

If you don’t want to get a small personal loan from a payday loan lender, can you still get a loan? If you have bad credit, is there anywhere to turn to for financial help that isn’t a payday lender? Thankfully, there is. Peer to peer loans or P2P loans are an alternative to payday loans that can allow you to have access to money, even if you have bad credit. 

A peer to peer loan is just what it sounds like. Instead of a company or some other type of lender lending you money, an individual loans you their own personal money instead. Because of the nature of P2P lending, there are hundreds or thousands of different peer lenders out there looking to make money by lending their money out. The abundance of lenders means that you may have a better chance of finding or negotiating a loan request that works better for you than a payday loan might. 

These loans are becoming increasingly popular as time goes on. But does that mean you should get one? Let’s take a look at how P2P loans work, their pros and cons, where you can get them, and some alternatives to these loans. 

How do Peer to Peer Loans Work? 

Like we mentioned, P2P lending consists of a large network of individual P2P lenders and borrowers that are looking to offer or get a loan. While the process works differently from one P2P loan platform or peer lending site to the next, they generally work like this: Borrowers post a loan application and once approved, can choose from a series of individual investors where they can get their personal loans from. Borrowers and lenders are then connected and the borrower begins using the lenders money while periodically paying it back, usually from monthly payments. 

On the lending side, lenders or “investors” put up their own capital for the loans. Lenders can choose the creditworthiness of borrowers they are looking for. For example, an investor could choose to only loan to individuals with great credit scores or to strictly offer loans to poorer credit scores. For the investor, the worse the credit score and credit history of the borrower, the higher interest rate the investor can charge and the more money they can make. However, the worse the credit score the higher the risk the borrower may default on the loan. On the flip side, the better the credit score of the borrower the safer the investment is but you will earn less money as a result. 

On the borrowing side, the process works a little different than it might with a traditional lender. For most P2P lending platforms, the borrower fills out a loan application with your personal information as well as the loan amount you are seeking. The platform then checks your credit and processes your creditworthiness. If approved, you can then shop between potential lenders to find the loan that is best for you. The better your credit score, the lower the interest rates you will get offered compared to if you have a bad credit score. The loans on these websites are often unsecured personal loans which means you will not have to put up any collateral. 

Let’s look at the pros and cons of these loans so you can decide if one is right for you. 


  • More cash than payday loans: Personal loans can vary anywhere from about $25 to $100,000. However, payday loans rarely tend to be more than $500. This can be extremely limiting and can prevent you from getting all the cash you need. P2P loans may fall around the same amount of payday loans, but many of these P2P loans can be for multiple thousands of dollars. Depending on your need for cash, a P2P loan can offer the perfect loan amount for you. 
  • Very accessible: There are an increasing number of peer lending platforms that allow for lending to operate very seamlessly and smoothly. This means there are many different choices for where you can get your P2P loan. Likewise, most of these applications are quick and easy and won’t take too much time to fill out. 
  • Low interest rates: Because there are so many lenders willing to offer loans to people, lenders are competing with each other to gain your business. To get more people to borrow their money, some lenders may lower their interest rates to attract customers. You the borrower will likely have many more options for lower interest rates with peer lenders than typical personal loan lenders. That being said, if you have a bad credit score you will not have as much access to low interest rate loans than someone with a good credit score will have. 
  • Can do everything online: While there is an increasing number of lenders that are allowing their borrowers to apply for loans online, there are still some financial  institutions or credit unions that require borrowers to come into their brick and mortar stores to get their loans. Because P2P lending platforms connect people all across the country to one another, all of these platforms are online. You can apply for a loan, select your lender, and get your money all from the comfort of your home. 
  • Can have bad credit: Payday loan lenders aren’t the only lenders that offer loans to borrowers with poor credit scores. Many lenders on P2P loan sites offer loans to people with low credit scores. Instead of having to revert to predatory payday lenders when you are in need of a loan, you can turn to P2P lenders knowing that you have a chance of finding a bad credit loan. 


  • No government protection; not very regulated: P2P lending is a relatively new development in the financial services sector. As such, there is not as much government regulation that is in place for many of these platforms. While that may sound like a great thing to you, it may surprise you that much of the legislation in place for loans is there to protect you, the borrower, as well as the lenders. For example, many lenders have their loans guaranteed by the governments should the borrower default on the loan. That is not the case for P2P lending. This and other lack of legislation can make getting and lending P2P loans slightly riskier. 
  • Potential fraud: Again, the P2P loan industry is fairly new. As such, there may be scammers and thieves that are pretending to be a lender offering a fair loan. Similarly, the concept of a peer to peer loan in itself allows for individuals to pose as fair and trustworthy lenders. While many lending institutions like banks and credit unions are very established and are known to be trustworthy, individual lenders are not necessarily. This means that there is a much higher risk of running into fraud when you are getting a P2P loan than if you were getting a bank at a normal lending institution. When getting a P2P loan, only use a very trustworthy website. Be careful!
  • Credit checks: If you have bad credit, it is likely something that has prevented you from getting certain loans and credit cards. However, there are some lenders that do not check your credit score (like Possible) and can give you a loan regardless of your credit score. These P2P lending platforms are no such thing. As we mentioned earlier, the way these platforms work is that the platform will do the credit checks on you so they can then match you with potential lenders based on your credit score and the lender’s risk tolerance. As you can see, your score essentially needs to be checked for the process to work. While there are still lenders on these sites willing to loan to you if you have a bad credit score, there is a chance your credit score is too poor to get a loan on the P2P site and you may be out of luck. 

Have bad credit and need a loan? Possible Finance can help.

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Where to get a Peer to Peer Loan?

As we mentioned before, P2P loans are a great vehicle to get a loan but are not as established and regulated as many other lending institutions. As such, you will want to be as careful as you can when picking a P2P lending platform. Here are some of our recommendations for best P2P loan websites. 

Lending Club

Lending club is one of the most established P2P platforms around. Even though it has only been around since 2007, it makes it the longest standing P2P lending platform. When borrowing through Lending Club, you can get a personal loan of up to $40,000. Unlike many other P2P lending services, Lending Club does not only offer personal loans. You can refinance your auto loan, get financing for medical bills, or even get a business loan of up to $500,000! Obtaining the money from your loan can take a week or so but possibly longer. IF you have bad credit, Lending Club can still connect you with lenders looking to take on the risk. 


Peerform is a P2P lending platform that has served thousands of investors and borrowers. Peerform offers installment loans that entail monthly or weekly loan repayments which makes them much easier to pay back than payday loans. Peerform also has no hidden fees and does not charge you for paying your loans back early. 

Despite these positives, Peerform has some major negatives. First, you need at least a 600 credit score to get a loan. If you are a bad credit borrower, you won’t be able to get a loan here. The loan amounts also range from $4,000 - $25,000 which may not work for you if you only need a few hundred or thousand dollars. Also, the site interface is very old and outdated. 


Upstart is a P2P loan platform that is fairly similar to Peerform, but is slightly better in our opinion. With Upstart, you can get loans of any amount from $1,000 - $50,000. Unlike Peerform, you can get much smaller loans and don’t need to borrow a minimum amount of $4,000. Further, there is a lower minimum credit score than Peerform, which can make it much more likely you can get a loan if you have bad credit. Upstart also touts that they have next day financing, which means you could get your funding much faster than both Lending Club and Peerform. 

P2P Lending Alternative: Possible Finance 

If you have bad credit but need some sort of financing, your options may be limited. While you may have a credit score that qualifies for P2P lending platforms, there is a chance you don’t. Where do you turn then? Do you turn to payday lenders known for their predatory practices? 

Here at Possible, we feel that we are a superior alternative to both payday loans as well as peer to peer lending platforms. We feel that our product combines the favorable aspects of both types of financing without the drawbacks. First, our loans do not check your credit. This means that despite whatever credit score you have, there is a chance you can successfully get one of our loans. Our loans are also installment loans, which means you pay back our loan with weekly payments over the course of a month, unlike payday loans that require you to pay back the loan in one week! If you are struggling with paying back our loan, you can extend your payment date up to 29 days right within our app! 

Our loans are as large as $500. If you need money but are not willing to take our loans of thousands of dollars like P2P lending platforms require, our loans can be the perfect size for you. We also offer instant deposits which means you can get your money up to a week faster with us than some P2P platforms. Likewise, we offer a competitive APR that makes our loans much cheaper than traditional payday loans. 

Lastly, our loans are credit builder loans. This means that as you successfully pay back our loans, you build credit history and in turn start to increase your credit score. Since we don’t do credit checks, our loans can be a great way to both have access to cash and build your credit at the same time. 

Convinced? Download our app today and get started!

Michael Collins

Michael has a passion for writing and brought that passion to Possible. He enjoys reading everything there is to know about film, sports, and finance. His studies in college have allowed him to be on the forefront of business knowledge so he can better inform his readers.

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