To qualify for a personal loan, you should have good to exceptional credit. If you have fair credit, which is commonly defined as a credit score between 640 and 699, you may have a more difficult time getting approved. However, there are various lenders who provide personal loans for people with fair credit.
Remember that the best personal loans for fair credit score offer affordable interest rates, a diverse range of loan terms, and fair qualifying conditions.
What is Fair Credit?
A fair credit score ranges from 630 to 689. Depending on the credit score company, lenders may employ different definitions of fair credit. Most lenders use either FICO, which defines fair credit as 580 to 669 or VantageScore, which defines fair credit as 601 to 660.
If you have fair credit, do everything you can to raise it to good credit, because people with good credit have access to a wider selection of personal loan options and often earn lower interest rates.
Each of the loans featured below allows you to apply for prequalification so you can browse and compare potential arrangements without affecting your credit scores — and none of them will charge a prepayment penalty if you pay off your loan early.
Keep in mind that certain lenders may not be available in all states, so check to see whether they are available where you reside.
Personal Loans for People With Fair Credit Score
- Best for multiple repayment terms: Avant
- Best for a secured loan: OneMain Financial
- Best for small loans: Upstart
- Best for fast funding: LendingPoint
- Best online loans: Get Funds Quickly
- What you should know about personal loans with fair credit
Best for Different Payback Terms: Avant
Avant’s loan payback durations range from 12 to 60 months, giving you greater flexibility in how long you have to pay back your loan. Just keep in mind that while your monthly payments may be lower with a longer repayment term, you will almost certainly pay considerably more in interest over that extended period.
- Fees – Avant may charge you an administration fee (also known as an origination fee) of up to 4.75% of the loan funds. Avant may also levy late and dishonored payment fees.
- Loan amounts – Avant provides unsecured personal loans ranging from $2,000 to $35,000, however, loan amounts vary depending on state regulations.
It’s good to know that the majority of Avant’s borrowers have credit scores ranging from 600 to 700, or from the middle to upper end of the fair credit category.
Best Option for a Secured Loan: OneMain Financial
OneMain offers term lengths ranging from 24 to 60 months. It also provides a secured personal loan option, which may help you qualify for the finances you require. Secured loans necessitate the use of collateral, such as an automobile. If you default on a secured loan, OneMain may be entitled to repossess your home.
- Fees – OneMain charges an origination fee, which varies depending on where you live. It will be a flat price (varying from $25 to $500) in some states. The origination charge in other states ranges from 1% to 10%. OneMain also charges late fees and fines for insufficient cash.
- Loan amounts – Depending on your state’s laws, OneMain’s personal loan levels range from $1,500 to $20,000.
OneMain may also allow you to apply with a co-signer, which can assist you to get accepted or better loan conditions.
Best Option for Modest Loans – Upstart
If you simply need a small loan, Upstart offers personal loans starting at $1,000 in most states. If you don’t want to borrow more than you need, this can be useful.
- Fees: Upstart may charge an origination fee of up to 10% if you are approved. The cost is collected from your loan amounts up in advance. Late payment and a returned payment fee are also charged by the company.
- Loan quantities – In addition to smaller loans, Upstart has the greatest loan amounts of all of our recommendations, with up to $50,000 available to individuals who qualify. If you believe you will be tempted to overborrow, prepare to refuse.
It’s worth noting that the lender says it considers characteristics including occupation and education, in addition to credit reports and income, when considering your application. Furthermore, Upstart only provides two loan terms: 36 or 60 months.
Best Option for Quick Funding – LendingPoint
Why LendingPoint distinguishes out: LendingPoint claims that once all loan application forms and documentation are received, the loan approval procedure can be completed “in only seconds.” This is LendingPoint’s most noticeable feature, although it’s worth noting that all of our other best fair credit loans claim to give “next business day” funding, subject to certain restrictions.
- Fees – If you are approved, LendingPoint may charge you an origination fee ranging from 0% to 7%. You can finance the origination charge or have it deducted from the loan proceeds. While the lender’s website states that there is no prepayment penalty, it provides no information on other possible costs, such as late or dishonored payments.
- Loan quantities: LendingPoint provides personal loans ranging from $2,000 to $36,500.
It’s worth noting that LendingPoint requires a minimum income of $35,000. When reviewing your application, the lender claims to evaluate factors such as job history and credit conduct. The loan periods range from 24 to 72 months.
Best online loans: Get Funds Quickly
Can I Acquire a Personal Loan With My Fair Credit?
Because customers with fair credit pose a higher risk to lenders, not all lenders will make loans to them. Many lenders, however, would examine credit scores in the low 600s, but they will most likely charge higher interest rates.
Before you apply, look for lenders who advertise fair credit scores. Also, look at lenders who provide prequalification. Prequalification allows you to exchange certain information with the lender without triggering a hard credit check, which would temporarily lower your credit score. It also determines if you are eligible for a loan from a specific lender.
How to Compare Personal Loans for Fair Credit Score
Here are the most crucial aspects to consider when comparing personal fair-credit loans.
#1. Annual Percentage Rate
The APR is the loan’s interest rate plus any costs charged by the lender. Use this figure to compare the costs of one personal loan to another, as well as other financing choices such as credit cards.
#2. Monthly Payments
Before you sign a loan agreement, a lender should disclose the monthly installments – normally during pre-qualification or once you’ve been authorized. The monthly payment on most personal loans is set, so it will not alter over the life of the loan.
#3. Repayment period
Repayment durations for fair-credit loans normally range from one to seven years. A longer-term reduces your monthly payments while increasing your total interest cost. Choose a repayment period that maintains payments cheap and allows you to pay off the loan within the term, if not sooner.
#4. Fees
Although prepayment penalties are uncommon with personal loans, some fair-credit lenders do charge origination fees. This is normally 1% to 10% of the loan amount, and the fee is usually collected before the money is deposited into your bank account.
Other characteristics
Compare the following aspects while deciding between two low-cost offers:
- Time to fund: Personal loans are often funded in less than a week, although some lenders can fund a loan the same business day you apply. Consider lenders who provide fast funding if you require finances soon.
- Credit-building resources: Ideally, you’ll be able to repay this loan with higher credit than when you took it out. Most lenders record payments to all three major credit agencies, but be sure yours does before signing the loan agreement if you want to receive credit for on-time payments. Some lenders may monitor your credit score so you can observe how it changes as you repay the loan.
- Payment Flexibility: Some lenders ask that you maintain your initial payment date throughout the duration of the loan. If you believe you will require additional flexibility, look for a lender who allows you to adjust the payment date.
How to Get Personal Loans When You Have Fair Credit Score
#1. Examine the lender’s requirements.
The above-mentioned lenders accept applicants with fair credit, however, some prefer clients with a lower debt-to-income ratio. Others may take into account a variety of characteristics, such as where you went to college or where you live. To learn what each lender asks on a loan application, compare qualification criteria.
#2. Be pre-qualified
Pre-qualifying can show you how likely you are to get approved for a personal loan and allow you to see prospective interest rates and loan amounts. The procedure includes a soft credit check, which has no effect on your credit score.
#3. Fill out an application
It’s time to apply once you’ve identified a lender. Many large lenders have online applications that can be completed in a matter of minutes, while smaller banks and credit unions may require an in-person visit. A quick-fix suggestion: Before you apply, gather all necessary documents, such as W-2s, pay stubs, and government-issued identification.
Tips to enhance your chances of applying for a personal fair-credit loans
- Think about a credit union: A credit union may consider your membership history in addition to your credit score, so members in good standing may have a better chance of qualifying for a personal loan.
- Secure the loan: While the majority of personal loans are unsecured, some lenders do provide secured personal loans that demand collateral. Giving the bank something to take if you are unable to repay reduces the bank’s risk of the loan. Banks often allow you to secure the loan with a savings or investment account, whereas online lenders demand a vehicle.
- Add a co-signer: Including a co-signer with good credit and a greater income on your loan may help you qualify for a reduced interest rate. A co-signer is someone who agrees to pay the loan if you are unable to but does not have access to the funds. Consider a joint personal loan, which is similar to a co-signed loan but allows your co-applicant to access the cash. If you fail to repay the loan, your co-applicant is accountable for repayment — and both of your credit scores suffer as a result.
How to Get Personal Loans with Fair Credit Score
Try the following actions before applying for a personal loan with fair credit score to increase your chances:
- Use a co-signer: While a co-signer assumes some responsibility for your loan — and hence some risk — they may also help you qualify. Choosing a co-signer with good credit will boost your total creditworthiness.
- Prequalify: If you’re not sure if you’ll be able to get a loan from a particular lender, ask if it offers prequalification. You’ll avoid further hurting your credit score by doing so before applying.
- Pay down debt: In addition to your credit score, many lenders assess your debt-to-income ratio. You’ll look better to potential lenders if you pay off credit card debt before applying for a loan.
- Use a local bank or credit union: Your current bank or credit union may be more tolerant of your credit score, especially if you have a history of timely account payments.
How to Improve Your Fair Credit Score
While you may still be able to obtain a personal loans with weak or fair credit score, these loans often have higher interest rates than loans with strong credit.
However, there are a few things you can do to potentially raise your credit score and qualify for better rates in the future, such as:
- Pay all of your bills on time: Your payment history accounts for the majority of your FICO credit score. Paying all of your bills on time can help you establish a good payment history and possibly increase your credit score.
- Reduce credit card balances: The next most important factor in your credit score is your credit usage, which is the amount you owe on your credit lines in comparison to your credit limits. If you can reduce your credit use by paying more than the minimum on your bills, you may be able to help grow your credit.
- Debt consolidation: Another approach to potentially reduce your credit usage is to combine credit cards and other debt with a personal loan. Personal loans typically have cheaper interest rates than credit cards, so taking out a debt consolidation loan may also save you money on interest charges.
- Get credit for other expenses: Using a service like Experian Boost, you can have payments for utilities, phones, subscriptions, and other items recorded to credit bureaus. This can significantly improve your credit score.
Alternative Loans for those with Fair Credit
If you are unable to obtain a personal loan due to your fair credit, you should consider alternative choices.
#1. Credit union:
While you must normally join a credit union before applying for a personal loan, they are more forgiving to people with fair credit. Discuss your eligibility requirements with your local credit union.
#2. Credit card balance transfer with 0% APR:
If you want to pay off credit card debt, try getting a credit card with a 0% APR introductory offer. That way, you can transfer your money without preventing interest from accruing. Keep in mind that you may not be able to transfer the entire debt, so you may end up paying off your new card while continuing to make payments on your old one.
#3. Home equity loan or line of credit:
If you own a house, you may be able to use it as collateral for a home equity loan or line of credit (HELOC). Remember that your home is used to secure the loan, so if you miss payments, the house may be repossessed.
Best online loans: Get Funds Quickly
What Is the Minimum Credit Score for a Personal Loan?
There are certain types of personal loans, such as loans for people with bad credit, that will accept credit scores as low as 580. However, you won’t be able to take advantage of low-interest rates or high loan limits with a score of this level. If you want to qualify for the best possible loan terms, you’ll probably need a credit score that’s higher than 670. Check your credit score first before submitting an application, and look for ways to improve it. This will help you secure a loan with better terms and conditions.
Can I Get a Personal Loan With a 640 Credit Score?
Personal loans are available to those with credit scores as low as 640, which falls within the range of fair credit. With a credit score of 640, your best options for obtaining a personal loan are Prosper, LendingClub, and Best Egg. This is due to the fact that these lenders provide the most competitive APRs and fees.
Is It Better to Get a Personal Loan From a Bank or Credit Union?
In general, credit unions provide their members with lower fees, higher savings rates, and a more individualized approach to customer service than traditional financial institutions do. In addition to this, loans made through credit unions might have lower interest rates. It is possible that obtaining a loan from a credit union, as opposed to a larger bank, will be less difficult.
What Is the Best Personal Loan for Fair Credit?
The best personal loan is the one that has an annual percentage rate (APR) that is low enough to keep your monthly payments manageable while not charging an excessive amount of interest overall. Find a lender that will report your payments to all three of the major credit bureaus so that you can raise your credit score by making your payments on time.
Is It Hard to Get a Personal Loan From a Bank?
Personal loans are typically easy to acquire and can be obtained from financial institutions such as credit unions, banks, and even online lenders. Depending on the amount of money you need to borrow, you can choose from a variety of different kinds of personal loans to meet your needs.
What Is the Easiest Way to Get a Personal Loan?
One of the best ways to obtain a personal loan that has interest rates that are lower than average and credit requirements that are less stringent for members is to join a credit union, which is now more widely available. Due to the fact that credit unions are nonprofit organizations that are owned by their members, they are typically able to offer more lenient terms in terms of both their interest rates and their membership fees.
How to Get a Loan When No One Will Give You One?
If you are unable to obtain cash through a personal loan, you may want to consider using a credit card, obtaining a payday alternative loan from a credit union, or borrowing money from family or friends. All of these are viable alternatives. These choices aren’t without their flaws: The interest rates on credit cards can be quite high, and borrowing money from friends or family can be fraught with potential complications.
Personal Loans For Fair Credit FAQs
What is the minimum credit score for a personal loan?
610 through 640
Borrowers typically need a credit score of 610 to 640 to even qualify for a personal loan. Borrowers normally require a credit score of at least 690 to qualify for a lender’s lowest interest rate.
What are the easiest loans to get approved for?
Payday loans, automobile title loans, pawnshop loans, and personal installment loans are probably the easiest to obtain and accepted. These are all short-term cash solutions for needy individuals with weak credit. Many of these solutions are intended to assist debtors in need of quick cash.
Which bank gives fastest personal loan?
Customers can get pre-approved loans from HDFC Bank in as little as 10 seconds*. Loans can be obtained in 4 hours for non-HDFC Bank customers.
Related Articles
- DEBT CONSOLIDATION Explained!!! Definition Best Practices (+ Quick Tools)
- HOW TO DO BUSINESS LOANS WORK: What It Is and How It Works
- REQUIREMENTS TO BUY A HOUSE: A Step-By-Step Guide
- BUSINESS LOANS BAD CREDIT: Definition and How to Get It
- FAIR VALUE ACCOUNTING: Definition & Benefits of Fair Value Accounting
References
