Fair credit is often a consequence of life events such as unexpected expenses, job loss, or marriage. While having fair credit doesn’t mean you can’t get the financing you need, it does make getting approved for loans more challenging.
If you have fair credit, you probably won’t qualify for the same personal loan terms as someone with excellent credit. Getting declined for a loan with cosigner because of your credit isn’t something to be embarrassed about – it happens to many people at some point in their lives.
Many people struggle with fair credit because they’re new to adulthood, haven’t yet established themselves financially, or have gone through something difficult. This article will explore the best personal loans for fair credit and how to compare the best personal loans on the market.
Personal Loans for Fair Credit: Best Offers
If you have poor or fair credit and need to borrow money from a lender, the good news is that there are many options available to you. There are alternative lenders who target people in this demographic and provide personal loans that consider your unique circumstances.
A personal loan is a type of financing that you take to meet personal expenses like education, wedding, home renovation, or medical bills. It is a borrowing arrangement that helps you meet your short-term cash needs by providing you with a fixed amount of money.
A lender will look at factors such as your credit score, monthly income, and debt load before deciding whether to approve your funding request and how much you can borrow. To better qualify for the best personal loans for fair credit, let’s compare the ins and outs of this type of financing.
Best Egg
This is a good option for people who need help consolidating debt or refinancing credit cards. Best Egg’s financing options are offered at fixed rates and without a monthly payment fee. The downside is that the loan origination fee is higher than most other lenders. Best Egg has also been more stringent in its approvals of late.
If you’re looking to consolidate debt, refinance a credit card for fair credit, or cover large expenses, then a Best Egg personal loan could be the solution you’re seeking. The borrowing application process is relatively easy, and you can pre-qualify with a soft credit check.
Lenders offer a wide range of loan amounts, and secured and unsecured options exist. You might be wondering what the downside is. The main one is that they recently raised their origination fees, so try another lender if you’re looking for a more competitive rate.
- Estimated APR: 7.99-35.99%
- Minimum loan amount: $2,000
- Maximum loan amount: $50,000
- Terms: 3, 4, or 5 years
- Pros: Option to pre-qualify with a soft credit check; easy and fast process; wide range of borrowing amounts; and direct payments to creditors with unsecured, secured, and debt consolidation loans
- Cons: Origination fees are higher than most other lenders
Avant
Avant loans are a great option for fair- and bad-credit borrowers looking for fast funding, with the average credit score fitting a wide variety of customers (550 minimum). You can use Avant financing for various purposes, including debt consolidation for credit cards, home improvements, emergency expenses, and more.
In addition to helping you understand how the payments fit into your monthly budget, pre-qualifying involves a soft credit check that does not impact your credit score. Your credit score may temporarily drop a few points if you move forward with a borrowing application.
- Estimated APR: 9.95-35.95%
- Minimum loan amount: $2,000
- Maximum loan amount: $35,000
- Terms: 2 to 5 years
- Pros: Next-day payments; a wide range of borrowing amounts; unsecured and secured borrowing options; you can change your payment date
- Cons: Origination fees; they don’t offer direct payment to creditors or co-signer option
Upstart
Upstart is an artificial intelligence-based lending company that offers personal loans to borrowers with unfavorable credit. Upstart may be a good option if you’re new to credit or have struggled to maintain a healthy credit score because of missed payments, high balances, or insufficient income.
Upstart financing offers fast funding and low-interest rates. They also provide free financial education programs and the option to pre-qualify with a soft credit check to preserve your credit score.
- Estimated APR: 5.42-35.99%
- Minimum loan amount: $1,000
- Maximum loan amount: $50,000
- Terms: 3 to 5 years
- Pros: Next-day payments; no minimum credit score; unsecured and secured borrowing options
- Cons: Limited repayment term options; no mobile app
Discover
With its excellent reputation for customer satisfaction, Discover is a great option for those with fair credit and a viable solution for those with bad credit. Lender Discover accepts applications for personal financing online or by phone.
Discover also has a partnership with Apple Pay, which means borrowers can easily manage their payments through their phones. In addition, if your application is approved, you can expect to receive your money within a day or two.
In addition to its strong customer service and online experience, Discover has many borrower perks that make it one of the top lenders for those with fair and excellent credit ratings.
- Estimated APR: 5.99-24.99%
- Minimum loan amount: $2,500
- Maximum loan amount: $35,000
- Terms: 3 to 7 years
- Pros: Fast payments; no origination fee; unsecured and secured borrowing options
- Cons: No co-signing or co-borrowing option; may charge a late fee
LendingClub
It is important to note that LendingClub offers financing with limited duration periods. However, if you qualify, you can add a co-borrower to help you get a better interest rate.
While their borrowing options aren’t the cheapest on the market, they are a great option for borrowers with good or fair credit scores looking to consolidate debt, finance large purchases, or for balance transfer options. Using debt consolidation loans, the lender provides direct payment to creditors, flexible payments, and a transparent pricing model.
Additionally, they have a healthy rate of return on their investments, with over half of LendingClub’s borrowers returning for another deal within a year of their first loan.
- Estimated APR: 6.34-35.89%
- Minimum loan amount: $1,000
- Maximum loan amount: $40,000
- Terms: 3 to 5 years
- Pros: Fast payments; Option to change the payment date; unsecured and secured borrowing options
- Cons: Charges an origination fee; two repayment term options only
Prosper
Prosper provides personal loans to individuals with variable credit scores through its peer-to-peer lending platform. Factors such as debt-to-income ratios and credit history are considered to calculate the borrower’s Prosper score. Investors use this measure to determine whether they want to fund your proposal or not.
When you use Prosper, you can change your payment date at any time, which is perfect if your income fluctuates monthly. A minimum credit score of 640 is required for consumers to qualify for an unsecured personal loan or a home equity line of credit.
Prosper’s online platform has matched over one million borrowers and investors to facilitate over $20 billion in lending. Those who need to combine high-interest debt can use this lender, which offers joint financing.
- Estimated APR: 7.95-35.99%
- Minimum loan amount: $2,000
- Maximum loan amount: $40,000
- Terms: 3 to 5 years
- Pros: Wide range of borrowing amounts; Option to change the payment date; unsecured and secured borrowing options
- Cons: Charges an origination and late fee; funding can take a few days
FreedomPlus
Good- or fair-credit borrowers who qualify for one of FreedomPlus’ rate discounts can use FreedomPlus financing for personal expenses or debt consolidation. In spite of the high starting rates, you can reduce them if you qualify for one of the lender’s rate discounts.
You can apply for FreedomPlus borrowing online, but unlike other online lenders, the application process is handled by a dedicated FreedomPlus lender consultant, who will guide you through the entire process.
- Estimated APR: 7.99-29.99%
- Minimum loan amount: $7,500
- Maximum loan amount: $50,000
- Terms: 2 to 5 years
- Pros: Multiple rate discounts; pre-qualify with a soft credit check; unsecured and secured borrowing options
- Cons: Not available in all states, origination fee; no mobile app to manage your money
PenFed
With the lowest interest rates on this list, PenFed is a great option for consumers with fair credit looking for financing for small personal loans, debt consolidation, home improvement, and medical bills.
There is an option to pre-qualify for financial assistance offered by this lender, but it is not clear about the qualification requirements for borrowers who want to use this service. However, their competitive borrowing terms and interest rates make them an attractive option, especially since they serve military members whose savings accounts must be funded with at least $5.
- Estimated APR: 4.99-17.99%
- Minimum loan amount: $600
- Maximum loan amount: $50,000
- Terms: 3 to 5 years
- Pros: Offers mobile app to manage your money; pre-qualify with a soft credit check; no origination fees
- Cons: No option to choose or change your payment date, no direct payment to creditors
What Is a Fair Credit Score?
Suppose you are looking for the best personal loans for fair credit or applying for financial assistance, a mortgage, or any other type of credit. In that case, the lender will look at your credit score to determine if you are a risky applicant. While there are many different versions of what qualifies as a good or bad credit score, the general rule is that the higher your score, the better.
Reporting agencies (Experian, Equifax, TransUnion) provide scores from 0-999 using different scoring systems. These will depend on who you choose to check your score with.
Typically, agencies use either VantageScore or FICO (Fair, Isaac, and Company). When calculating credit scores based on information collected by credit reporting agencies, a fair credit score falls between 580 and 669 (FICO®) and 601 and 660 (VantageScore®).
What Should Be Considered Before Choosing a Personal Loan with Fair Credit?
For your own understanding and to be able to present it to potential lenders if you are considering applying for your first personal loan, you should know certain information, especially if you want to compare and qualify for the best personal loans for fair credit.
Some of these things you may know off the top of your head, like your credit score and affordability, but there are others you’ll want to look into before applying for financial assistance, such as interest rates and loan terms. To qualify for financing, you’ll need proof of income. So consider if you have access to the following:
- As an employee, you will need bank statements
- As a self-employed person, you will need bank statements plus two years of tax returns
In addition, personal loans may have additional fees. It is vital to consider the terms and conditions of the contract before borrowing money. This will prevent unforeseen expenses in the future.
How to Get a Personal Loan with Fair Credit?
Personal loans are a great way to deal with unforeseen costs, pay for a major purchase, or make home improvements. But the best personal finance products for fair credit tend to have stricter standards and criteria than other borrowing products. If you have fair credit, it might be more difficult to qualify. Thankfully, there are ways to increase your chances of being approved for a personal loan credit score 550.
1. Compare lender requirements.
Assess the most important aspect first. These include interest rates, repayment terms, and amounts. You can find the most suitable lenders for your needs by comparing and contrasting each criterion. Or, try Go Compare or Money Saving Expert, which can check your criteria with a few simple steps.
2. Pre-qualify.
Being pre-qualified means meeting the financial criteria necessary to qualify for the financing amount you’ve requested. Lenders may ask that you provide supporting documentation, such as your latest bank statements. Try to resist applying for multiple loans at once. Performing several hard checks on your report can negatively affect your credit rating.
3. Submit an application.
You can complete an online application using your basic information with most lenders. They will then conduct a soft search to determine your eligibility. Be honest with them as much as possible because if they pre-approve you, they will ask for more information before performing a hard search.