The problem is in the fake companies set up to scam people out of their money with scam loans and fraud. That’s why it’s so important to choose legitimate peer to peer lenders you know can be trusted.
They also use unique credit criteria to accept applications from borrowers that would get denied by other p2p sites
I’ve used several peer-to-peer lending sites and have researched dozens more for the blog. Finding the best website for your online loan is about knowing which specialize in the loan you need.
There are a few websites like PersonalLoans and BadCreditLoans that specialize in helping borrowers with low credit score. These websites partner with multiple lenders to shop your loan around and make sure you’re offered the lowest possible rate.
On the other side of this are the websites that focus on higher credit score borrowers like SoFi. These lenders are able to offer lower rates because they only accept borrowers with an excellent credit history and low defaults. While it might be harder to qualify on these sites, I still recommend applying because the lower rate is worth it.
Still another group of websites focuses on specific types of borrowers like college graduates. Upstart uses a special credit program that gives extra points to people with a bachelor’s degree or higher and paying off student loan debt. That means graduates can usually qualify with a lower FICO score than other borrowers.
Websites like Payoff specialize in borrowers with a specific type of debt, credit card debt in this case. Payoff only offers loans to consolidate and pay off credit card debt. With this model, it knows borrowers 
are paying down their debt instead of using the loan to buy more stuff.
Understanding which peer to peer lending website is best for your needs means a better chance at getting approved for a loan even with bad credit. You’ll get lower rates and monthly payments along with features that are designed specifically for you.
Credit Score for a Bad Credit Loan
Understanding which peer to peer loan sites specialize in bad credit loans will give you a better chance of getting approved…but it will only take you so far. Your credit score is the #1 factor in getting a peer loan and there is a cutoff point on scores.
We’ll look at that minimum credit score needed for a peer to peer loan but I don’t want you to think it will be impossible to get a loan if your score is below this point. If there is one thing I want you to get from this article, it’s that applying for a loan will not hurt your score and there’s no loss in trying.
If you apply for a loan on a few websites, the chances are really good that you’ll get an offer from at least one. Even if you get denied on all the websites, it won’t hurt your score and now you know you need to improve your credit score a little.
For most peer to peer sites, the minimum credit score is between 640 to 670 FICO. That is right around the cutoff for prime lending where banks will approve your application. Most p2p websites go a little below this score to help the people getting turned away by the banks and credit unions but they won’t go much lower.
Then there is another group of online lenders that will approve loan applications from borrowers with a 600 credit score or higher. These are usually the sites with specialized credit scoring programs that give certain borrowers extra points like graduates or veterans.
