Are you wondering if there are personal loans for fair credit out there?
If you are, then the answer is a resounding “Yes.” There are, indeed, personal loans for fair credit available to you.
If you have fair credit, expect your credit history to be under the microscope by lenders when applying for a personal loan. But that shouldn’t stop you from getting a personal loan.
So, how do you get a personal loan when you have a fair or average credit?
While you may have fewer options, the best way to know for sure what’s available to you is to shop around and compare.
In other words, there are lenders that are willing to get you a personal loan even if your credit is simply average. You just have to know where to look.
A simple internet search of “personal loans for fair credit” can return thousands of results. That can be overwhelming to go through everything.
But don’t worry.
This guide will provide you a selection of the best personal loans for fair credit. It will also show you ways to fix a fair credit score to a good or excellent credit score.
What is a fair credit score for purposes of getting a personal loan?
Before we offer you a list of personal loans for fair credit, you need to know what a fair credit score is.
A fair credit score, according to Credit Sesame, is a credit score within the range of 640 and 680. It sits “between bad and good credit.”
With an average credit score in the mid 600’s, you more likely to get a personal loan than those who have a poor or bad credit score (which usually ranges between 300 to 600).
But you will not enjoy the same interest rate that someone with an excellent credit score would.
Great interest rates are reserved for people with excellent credit score.
What is a personal loan and what can it be used for?
A personal loan is a lump sum of money you borrow from an institution, and then repay that amount (with interest) over a set period of time.
There are two types of personal loans: secured and unsecured. For example, if you’re taking a personal loan to pay off credit card debts or to go on a vacation, that loan is an unsecured debt.
On the other hand, if you’re taking a personal loan to finance a car, you’ve taken a secured loan that is guaranteed by collateral, which is the car your purchase.
Unsecured loans have more risks for lenders, because there is no collateral. So, they have to rely solely on your credit history and other aspects of your financial life. That’s why it may be harder to get qualified for an unsecured personal loan with bad or fair credit.
Can I get a personal loan with a fair credit?
The answer is “yes.”
While there are plenty of personal loans for fair credit out there, it’s not always the best idea to apply. One reason is that you’ll often be charged a higher interest rate than someone with a good or excellent credit score.
In that case, it could be worth raising your credit score first before applying for a personal loan.
So while there are lenders who are willing to offer personal loans to people with fair credit if you’re struggling to get approved for a personal loan with a fair credit, you may want to consider improving your credit score first.
5 Best Personal Loans for Fair Credit
The better your credit score, generally the higher your chance is for getting approved for a personal loan.
If you’ve got an average credit, you may still get a loan but you will get a high interest rate.
Check out the list below to see some personal loans you may be eligible for.
Part of your search for the best personal loans for fair credit should start with LendingTree.
That is because LendingTree is not a direct lender of personal loans, but instead it’s an online marketplace that matches borrowers to lenders based on your individual qualifications.
It saves you time. Instead of applying to several lenders, with LendingTree you can shop around and compare the best personal loans on one website. It’s an all-in-one platform.
It just connects you with multiple lenders, you can get a personal loan with even a 600 credit score.
Avant targets people with bad and fair credit. So, that means even if you have a credit score as low as 580, you may still get qualified for a personal loan. The loan amount ranges from $2,000 to $35,000.
Plus, Avant provides quick funding for personal loans.
Just like Lendingtree.com, BadCreditLoans.com is another online lending network that connects you to a huge selection of lenders.
These lenders specialize in lending personal loans to people with bad or fair credit. You can get a personal loan from up to $5,000.
Payoff provides loans to borrowers who have a tons of credit card debts. If you have high interest credit card debts, a Payoff loan can help you consolidate them.
While you can get a Payoff personal loan with fair credit, the minimum credit score is around 640, which is on the higher end of a fair credit score.
So if you have a less-than-stellar credit, you may postpone your personal loan application.
Another peer-to-peer lender to get a personal loan with fair credit is Prosper. With Prosper, not only can you get loan approval the same day, you can also get funding the same day.
But the main downside is that Prosper requires a minimum credit score of 640, which is on the higher end of a fair credit score range.
Other ways to find personal loans for fair credit
When you’re applying for a personal loan, don’t underestimate banks. The options above are online lenders. But banks and credit unions do provide personal loans to people with an average credit.
This includes all the major banks, such as Chase, Wells Fargo, Citibank, Bank of America, plus other small banks.
The main benefit of visiting a bank when applying for a personal loan, especially with a fair credit, is that you get to speak with a human being and has the opportunity to explain your financial situation.
For example, you might be able to explain that the reason for an average credit score is due to an unexpected medical bill.
That is not possible with online lenders where it is an automated system that’s reviewing your finances.
It’s even better to get approved for a personal loan even with a fair credit if you have an account with that bank. They can see your transaction history.
The disadvantage, however, is that a bank may not offer the most competitive personal loan rate, especially with a fair credit.
Part of your search for a personal loan with fair credit should also include credit unions.
Credit unions are not for profit organizations and are more willing to approve you.
But to get access to the best rate, you’ll have to become a member.
Peer-to-peer (P2P) Lenders
Another alternative to banks and credit unions, P2P lenders can provide you with a personal loan even if your credit is average.
For example, LendingClub, a popular P2P, can get you a personal loan with a credit score as low as 600 — which is considered fair credit.
However, your rate may not be as competitive.
Tips to fix a fair credit if you can’t get a personal loan
Holding off applying for a personal loan to improve your fair credit to an excellent one is a good idea.
Not only will you get qualified, but you’ll also get a better interest rate.
Follow these tips to improve your credit score.
1. Get a copy of your credit report
The first step is to obtain a copy of your credit report.
The three main ones to get it from are Transunion, Equifax, and Experian.
By law, you can request a credit report once every 12 months.
But if you want to do so more frequently, you can request it from free credit monitoring services such as Credit Sesame or Credit Karma.
2. Make sure there aren’t any mistakes
Once you get a free copy of your report, make sure there aren’t any inaccurate information or listings.
If you find something that you’re not familiar with, dispute it immediately.
Sometimes it can be a harmless mistake such as a misspelling or an issue that has already been resolved. Some other times, it can be something more serious such as a credit card or a loan taking out in your name.
So it’s important to always check so you’re not a victim of identity fraud.
3. Pay off any credit card debts
Some debts like student loans (as long as you’re not in default) may not have an impact on your credit score.
But if you have outstanding credit card debts, make it a priority to pay them off.
Or at the very least, pay them down until your balance is at or below 30%. That’s called “credit utilization rate,” which is a big factor in calculating your credit score.
4. Pay your bills on time
Nothing will tarnish your credit score like late payments. That is because payment history accounts for 35% of your total credit score.
Before a lender can provide you with a personal loan, (whether you have fair credit or not) they look at your entire credit history.
A late payment history does not look good. It tells them that you’re not responsible with your money.
So make an effort to pay your bill on time, even if you can only make the minimum payment.
5. Don’t apply for new credit
When you’re improving a fair credit to good credit in order to get a personal loan, the last thing you want to do is to apply for new credit.
That’s because each time you do, you rack up what’s called a “hard inquiry.” Each hard inquiry is recorded on your report. And hard inquiry accounts for 30% of your credit score.
One hard inquiry is nothing to worry about. But when you make several within a short amount of time, you’ll hurt your credit score. It also tells lenders that you are desperate for credit.
Consider a co-signer
While it makes sense to raise your credit score before applying for a personal loan, sometimes you just need the money right away.
If that’s the case and can’t get approved on your own, then you will need to use a co-signer with good credit.
With a fair credit, using a co-signer should be able to get you qualified for a personal loan.
But, bear in mind that this is a big financial burden you’re putting on them. By accepting to co-sign a loan, they are also responsible to pay off the loan if you cannot. So don’t take it personal if they say “no.”
Can I get a personal loan with fair credit? The answer is “yes.” Personal loans for fair credit are available. And the list above have the best personal loans if you have fair credit.While there are several personal loans for fair credit, it’s not always the best idea as you will often charged a higher interest rate and fees. In this case, it makes sense to improve your credit score first before applying.
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