Loans for Fair Credit: Explore the Best Options

Your credit score is one of the factors lenders use to determine your personal loan eligibility. A good FICO rating demonstrates your financial reliability and improves your chances of getting approved for a loan. But borrowers with fair and bad credit may face difficulties, especially if they apply for unsecured options.

However, options still exist. Many online lenders can give you emergency funds even with a less-than-perfect FICO rating. Review your options for personal loans for fair credit and choose an offer with the best terms and rates.

Where to Get The Best Personal Loans for Fair Credit

Editor’s Thoughts: Loans from SoFi may suit borrowers with good to fair credit who want to cover major needs. The minimum amount you can borrow is $5,000, but interest rates are quite competitive. Plus, there are no origination, prepayment, or late fees. However, the requirements for a fair credit loan may be strict.

Editor’s Thoughts: Upgrade is an online company that offers loans at APRs from 8.49% to 35.99%. The service has no minimum credit score requirement, so borrowers with fair credit can qualify. There are also discounts for autopay or direct payments to creditors. However, an origination fee of up to 9.99% can be charged. 

Editor’s Thoughts: Rocket Loans offers a wide range of loan amounts, interest rate discounts, and same-day funding under certain conditions. All these benefits are available to fair credit borrowers. Interest rates are between 9.116% and 29.99%, but origination fees can be as high as 8.5%.

Editor’s Thoughts: Happy Money might be a perfect fit for fair credit borrowers who want to consolidate their high interest debts. This financial wellness company offers low starting APRs and various money-management tools. However, money funding can take up to 5 days after verification.

Editor’s Thoughts: OneMain Financial prioritizes your ability to repay the loan over your credit score. The service accepts borrowers with fair credit and offers convenient loan amounts for both minor and major financial challenges. Joint and secured loans are also available. However, interest rates and fees can be higher compared to competitors.

Editor’s Thoughts: Upstart is focused on assisting borrowers who are new to credit or have a less-than-perfect score. You can borrow from $1,000 to $50,000 within just one business day. However, Upstart lacks repayment flexibility and may charge an origination fee. It also has no joint or co-signed options.

Editor’s Thoughts: Discover Personal Loans offers competitive rates and charges no origination fees. The service offers multiple perks, such as repayment flexibility and a free Credit Scorecard. The minimum credit score accepted is 660. However, you can only borrow from $5,000 and may be charged late fees.

How to Choose The Best Loans for Fair Credit?

There are several features that are inherent in the best loans for fair credit. Here are the key ones:

• APRs. An annual percentage rate (APR) consists of an interest rate and other fees a lender may charge. It determines the overall loan cost within its life and directly affects the amount you will have to pay back;
• The repayment terms. Make sure a lender offers repayment option flexibility so you can choose a suitable period that will align with your budget;
• Monthly payment. Use a loan calculator to see whether the amount suits you. Only borrow money when you’re sure you’ll be able to make your monthly payments on schedule;
• Eligibility requirements. Review the lender’s criteria thoroughly and compare them with your situation. This way, you avoid applying for loans with requirements you can’t initially meet;
• Customer reviews. Don’t neglect the experience of other borrowers. Visit reliable customer review platforms, such as Trustpilot or BBB, to know what people think about working with the lender. This will help you pick a legit and reliable one.

What Is Considered Fair Credit?

According to the FICO scoring model, fair credit is a score between 580 and 669. VantageScore says a rating from 601 to 660 falls into the “fair” category. However, it also depends on the credit bureau. Each of them may set different ranges for fair credit. Below is the table.

Credit Score	Experian	Equifax	TransUnion
Very Poor	–	–	300-600
Poor	300-579	300-579	601-660
Fair	580-669	580-669	671-720
Good	670-739	670-739	721-780
Very Good	740-799	740-799	–
Exceptional/Excellent	800-850	800-850	781-850

Thus, it makes sense to specify which credit bureau’s information a lender uses when determining your loan eligibility.

Where Can You Get Personal Loans with Fair Credit?

Consider the following options if you’re going to apply for personal loans with fair credit.

Online Lenders. Online lenders are more flexible and bad credit friendly than traditional ones. They usually don’t use borrowers’ credit scores as a determining factor. Instead, they review a detailed picture of their financial behavior, prioritizing such factors as income, payment history, and debt-to-income ratio. Thus, fair credit borrowers have a higher approval chance when it comes to online loans. They only need to demonstrate a responsible attitude toward money and the ability to repay the loan.

Credit Unions. Credit unions are member-owned, non-profit organizations created to support the communities they serve. Their loans are usually less expensive and often have more relaxed eligibility criteria. However, you need to meet certain requirements to become a credit union member. They may include living in a particular area or working for a specific company.

Local Banks. While most banks are more interested in borrowers with excellent and good credit histories, exceptions exist. Some local institutions may approve you for a loan with fair credit scores if you’re in good standing and have a strong relationship with your bank. Just get ready for a higher interest rate.

How Much Does a Personal Loan for a Fair Credit Score Cost

There’s no single value set. Your exact FICO rating, income, debt-to-income ratio, credit utilization, location, and other variables are among factors that can affect the cost of your personal loan for a fair credit score. According to the Federal Reserve data, the average personal loan interest rate was 12.17% as of Q3 2023. APRs for borrowers with fair credit are usually higher, ranging from 19.95% to 29.5%.

How to Get Personal Loans for Fair Credit?

The process of getting personal loans for fair credit varies based on which lender you work with. While online loan providers let you complete the entire process from the comfort of your home, traditional ones typically require you to visit a branch in person. Below are common application steps that you need to take:

1. Review your credit report details. By knowing your credit score, you can weed out offers with the minimum credit score requirements you can’t meet. You can request free credit reports from each of the three major credit bureaus once a year.
2. Shop around. Review multiple offers and pay attention to loan costs, available amounts, repayment flexibility, and eligibility requirements. Then, choose several lenders with the most suitable terms.
3. Pre-qualify. This process allows you to get more personalized loan offers without affecting your credit score. Although the preliminary terms may differ from the final ones, pre-qualifying is a good tool for comparison.
4. Apply for a loan. Choose a lender with the best terms and submit a final application. You may be asked to provide supporting documentation to verify your personal and financial details.
5. Receive the funds. The loan approval process may take from several minutes to several weeks, depending on the lender. If approved, the loan provider will transfer funds to your bank account within one to several business days.

Ways to Increase Your Chances of Qualifying for Fair Credit Loans

Explore some options that will help you qualify for fair credit loans or negotiate better loan terms.

Apply for secured loans. A secured loan is a smart way to get lower interest rates with fair credit by providing your valuable asset as collateral. A repayment guarantee for the lender means more control over the situation. If you default, the loan provider will be able to legally repossess your property and use it to cover your unpaid debt.

Add a co-applicant. A co-applicant is an individual who shares the responsibility of repaying the loan with you. There are two types of co-applicants: co-borrowers and co-signers. While a co-borrower has access to the funds and loan information and must repay the loan along with you, a co-signer provides a repayment guarantee if you fail to manage your debt over time.

Pay off your current debts. The less debt you have, the lower your debt-to-income ratio and credit utilization. Both these parameters are considered at the decision-making stage, so decreasing them can be a good idea. If it’s not possible at the moment, at least avoid applying for new credit along with your personal loan application.

Why Is My Credit Score Important?

Your credit score is not pulling out of thin air. It reflects your past and present financial behavior and shows how risky it is to lend money to you. Lenders assess your credit score as they want to know how likely you are to repay the money on time. Your credit score includes payment history, credit utilization, length of credit history, credit mix, and new credit. This combination provides a detailed picture of how you manage your finances.

However, many alternative lenders believe that credit scores are not the main factors used when making decisions. They also pay attention to other parameters to evaluate your solvency and find out whether there’s a positive dynamic in your financial behavior.

Tips on Improving Your Credit Score

If you don’t need a loan urgently, the best idea is to improve your credit score. This will open the door to more offers with better loan terms. Here are a few tips:

• Don’t miss your loan and bill payments. As your payment history makes up 35% of your credit score, it’s crucial to track due dates thoroughly. Setting up auto payment can help;
• Get a credit-builder loan. This loan option requires you to make monthly payments upfront. Then, you can access cash only when the repayment period ends. On-time payments make your credit score go up. Here’s everything you need to know about the credit-builder loan.
• Consider a secured credit card. Such a credit card comes with a security deposit that also serves as your credit limit. If you use it responsibly, you can upgrade it to a regular credit card over some time;
• Pay off your debt. Consider reducing the amount you owe by paying down your expensive credit card balances. Just keep the accounts open after they’re repaid. Otherwise, it can negatively affect your credit mis or length of credit history.

Alternatives to Fair Credit Personal Loans

If a fair credit personal loan can’t meet your needs, here are a few alternatives you can think about:

• Credit cards. Those with 0% APRs during the promotional period can help you save money on interest;
• Cash advance apps. With their help, you can get an interest-free loan of up to $250 to cover small emergencies. 
• Buy now, pay later. These options are available via retail stores and allow you to split the cost of your purchase into several installments, often without charging interest.
• Family loans. Borrow money from your loved ones if you don’t want to deal with lenders.

Methodology

Through its assessment process, BadCredify reviews personal loan offerings from over 40 lenders and financial organizations. We gather information from every lender and cross-check the details on their websites and customer reviews.

Our experts go through the pre-qualification procedure and contact the company representatives to understand how the process works from the inside. Next, they evaluate the terms offered, paying special attention to interest rates and fees, repayment terms, safety and convenience, funding times, and eligibility criteria.

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