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Having a strong credit score makes getting any kind of loan — including a mortgage, an auto loan and personal loans — much easier. But what about borrowers with fair credit?
Because paying off a loan in monthly installments without missing a payment is one of the best ways to raise your credit score, it’s important for people struggling with credit to be able to get personal loans. Not all lenders are willing to lend money to borrowers with fair credit, however, leaving fewer options for those struggling to raise their scores.
But if you have a medical emergency, need to make repairs to your home or car or just want to consolidate debt from multiple high-interest credit cards, you’re not out of options. Many personal loan lenders are willing to grant personal loans to borrowers with fair credit.
The catch? Loan terms are likely to be less flexible, origination fees will be higher and you’ll pay more in interest due to higher annual percentage rates (APRs).
Below, we’ve rounded up the best personal loans for borrowers with fair credit. These options are great for debt consolidation loans, home renovation loans and funding emergency expenses.
Best Loans for Fair Credit of 2022
|
Upstart |
5.22% to 35.99% |
$1,000 to $50,000 |
300 (insufficient credit history accepted) |
SEE DETAILS | |
|
Upgrade |
5.94% to 35.97% |
$1,000 to $50,000 |
560 |
SEE DETAILS | |
|
Rocket Loans |
5.97% to 29.99% |
$2,000 to $45,000 |
640 |
SEE DETAILS | |
|
Discover |
5.99% to 24.99% |
$2,500 to $25,000 |
Not disclosed |
SEE DETAILS | |
|
LendingClub |
7.04% to 35.89% |
$1,000 to $40,000 |
600 |
SEE DETAILS | |
|
Best Egg |
5.99% to 35.99% |
$20,000 to $50,000 |
600 |
SEE DETAILS | |
|
Navy Federal Credit Union |
7.49% to 18.00% |
$250 to $50,000 |
Not disclosed |
SEE DETAILS | |
|
Avant |
9.95% to 35.99% |
$2,000 to $35,000 |
580 |
SEE DETAILS | |
|
LendingPoint |
9.99% to 35.99% |
$2,000 to $36,500 |
580 |
SEE DETAILS |
Upstart
If you have no credit history but need a personal loan (perhaps for a car repair or to cover a medical emergency), Upstart is likely your best option — and offers flexible loan amounts and next-day funding to boot. If you are on the higher end of the fair credit score range, however, you can likely find a better deal with more flexible loan terms and a lower APR. Upstart is truly the best of the fair credit personal loans, but not advisable for those with good or excellent credit.
Pros and Cons of Upstart Personal Loans
Pros
Cons
Upgrade
If you are at the start of your journey to repair your credit score, Upgrade is a good option. You can take out a small personal loan (as little as $1,000) for debt consolidation or to cover an emergency, even with a score as low as 560. In fact, making monthly payments on this loan could be the incremental step you need to boost your credit score. The small loan amounts available, next-day funding and lack of prepayment penalty are also nice, but we do wish there were more flexible loan terms.
Pros and Cons of Upgrade Personal Loans
Pros
Cons
Rocket Loans
Rocket Loans is ideal for borrowers who are working on turning around their credit through debt consolidation. While fair credit borrowers can qualify, they need to be verging on good credit (640+). But that higher credit score threshold means a lower interest rate and lightning-fast funding. There are still downsides to Rocket Loans to consider, like rather stiff repayment terms and origination fees that can reach 6%. Loan amounts start at $2,000, twice as high as some of the other top contenders on our list.
Pros and Cons of Rocket Personal Loans
Pros
Cons
Discover
Getting a personal loan with fair credit through Discover is more challenging than through other lenders on this list. But if you are able to qualify, you can enjoy a lack of fees, lower interest rates and quick funding. We do wish loan amounts were more flexible; at a $2,500 minimum amount, Discover is on the higher end of our list.
Pros and Cons of Discover Personal Loans
Pros
Cons
LendingClub
LendingClub is a run-of-the-mill option for a personal loan with fair credit. There’s nothing that jumps off the page, but terms are mostly fair. The lowest APR available (7.04%) is steep, but borrowers with fair credit are likely to land on the higher end of the range (35.89%) anyway. (And the higher end of the range is also quite steep.) That said, LendingClub accepts borrowers starting at a 600 credit score; even better, loan amounts are as small as $1,000. If we could change anything, it would be the repayment terms: At 3 or 5 years, they’re among the most rigid on our list.
Pros and Cons of LendingClub Personal Loans
Pros
Cons
Best Egg
Dealing with lenders over the phone or online can be stressful, especially when you’re trying to resolve an issue with your personal finances. Knowing that Best Egg is highly rated for customer service should give borrowers some comfort in taking on debt with the company. That said, borrowers with fair credit can likely find a lower APR with more flexible repayment terms (and maybe even a lower origination fee and lower monthly payments) at another lender. It’s worth getting pre-qualified at Best Egg as a point of comparison, but you’ll likely get a better rate elsewhere.
Pros and Cons of Best Egg Personal Loans
Pros
Cons
Navy Federal Credit Union
There’s so much to love about using Navy Federal Credit Union for fair credit personal loans: Interest rates top out at just 18.00% (the lowest max APR on our list); Navy Federal offers flexible loan repayment terms (up to 15 years) and loan amounts (as little as $250) based on loan type (personal, home improvement, debt consolidation) and even offers secured loan options; and NFCU, though they don’t disclose a credit score requirement, looks at the bigger picture, including income and debt-to-income ratio. Where Navy Federal falls short, however, is its membership requirement — not to mention it is the only entry on our list that doesn’t let you pre-qualify. (You’ll have to let them do a hard credit inquiry.)
Pros and Cons of Navy Federal Personal Loans
Pros
Cons
Avant
Avant is great for borrowers who are near the lower end of the fair credit range. Origination fees are predictable from the start, which makes budgeting a little easier; competitors express these fees as a range, which makes it more difficult to calculate what you’ll need to have saved up before taking out the loan. You can get a loan as small as $2,000, but be prepared for a high APR (up to 35.99%). What saves Avant for digital-first borrowers is the highly rated mobile app, particularly on the Apple App Store.
Pros and Cons of Avant Personal Loans
Pros
Cons
LendingPoint
LendingPoint is a perfectly acceptable lender for securing a personal loan. You can pre-qualify without a hard credit inquiry, so it’s worth checking out. However, you are likely to find a lower interest rate at one or more of the other lending companies on our list. If you can qualify for one of those, you’re better off.
Pros and Cons of LendingPoint Personal Loans
Pros
Cons
Is a Personal Loan Right for Me?
A personal loan may be right for you if you find yourself plagued with medical debt, unable to pay for a car repair or juggling too many credit card bills. Even if you have bad credit, try to find a personal loan before settling for a high-interest credit card or a payday loan.
You can take out a personal loan for almost anything, though the most common personal loans are debt consolidation loans and home renovation loans.
In general, we recommend only taking out a personal loan to consolidate debt, cover an emergency expense or invest in something (typically your home) that will yield a payoff equal to or greater than the loan amount plus interest.
How to Compare Fair Credit Personal Loans
So you’ve decided that a personal loan is right for your situation. Great! But what’s next?
A good place to start is a list of the best personal loans available, especially for a borrower with bad credit. There are plenty of great resources available online, but we’re pretty fond of the one you’re reading now.
When comparing the best personal loans for fair credit, here are a few factors to consider:
APR
All but one of the loan options on our list allow you to pre-qualify, meaning you will be able to see your proposed interest rate without affecting your credit score. Because APRs range from roughly 5% to 36%, it’s important to compile multiple options and go with the most affordable one.
Loan Amount
If you are looking for a small loan ($1,000), your list of options will be narrower. Likewise, not all lenders will loan out the same maximum amount of cash, especially if you have bad credit. (The better your credit, the more lenders are willing to lend you.)
Do some calculations to find out how much money you actually need to borrow, then narrow down your list to personal loan lenders that have your amount in their range.
Repayment Terms
In general, the longer the loan term, the more you will pay in interest. Rates tend to be more favorable if you choose a shorter repayment term.
For many borrowers struggling with credit, however, loan term options aren’t very flexible. At several lenders, you might be stuck choosing between either 3 or 5 years. See what options are available to you and choose the one you are most comfortable committing to — without dragging the loan out too long.
Fees
Some — though not many — lenders may offer you a loan without an origination fee. But if you’re struggling with your credit score, it will be more challenging to qualify with such lenders.
Compare fees and make sure you have enough saved up to cover them; an origination fee must be paid before the loan is funded. Lenders often charge late fees, but if you’re working toward rebuilding your credit score, making monthly payments on time is table stakes.
Note: All nine options on our list of the best personal loans for bad credit allow you to pay off the loan early without a prepayment penalty.
Minimum Required Credit Score
Not all fair credit loans are created equal. Because fair credit is expressed as a range, you may qualify for some fair credit loans but not all. Narrow your list down to personal loan options that you actually have a chance to qualify for.
Even then, if you just barely make the cut with a specific lender, you might consider a different option. If you will just barely qualify for a loan, that lender will likely assign you the highest possible interest rates and fees.
Funding Time
Some lenders are able to approve you the same day and fund you the next. Some strive for same-day funding. Most take a couple of business days.
If you are in immediate need of cash, choose a lender that can get you funds the fastest. If you only have a couple of hours, a personal loan is likely not the right strategy for you.
Other Factors
Interest rates, fees, and loan amounts are all important factors, but there is more to consider, like customer service, ease of application, mobile app ratings and any special perks.
For example, Discover won’t charge you a cent in interest if you pay back the loan in 30 days. Perks like that are worth considering.
How to Apply for a Personal Loan
Ready to get a personal loan? Here are five easy steps to take you from application to loan approval to actual funding:
1. Research Personal Loans
If your credit score is a work in progress, narrow down your list to practical loans within your reach using the tips above.
2. Get Pre-Qualified
Almost all the personal loans we listed allow you to get pre-qualified without a hard credit pull. See which loans you’re eligible for and compare the results to determine the best option for you.
3. Supply the Proper Documentation
Once you’ve chosen your preferred lender, begin the actual application process. You may need to submit documentation, like proof of income and proof of address.
4. Review the Loan Agreement Carefully
Before signing, thoroughly read through the loan agreement to make sure all the terms and conditions are what you were expecting. If you’re happy with it, sign the agreement.
5. Set Up Auto Pay
Once your loan has been funded, set yourself up for success right away by enrolling in automatic payments. Many lenders offer a discount on your APR for setting up auto pay, and doing so can ensure you never miss any monthly payments.
Frequently Asked Questions (FAQs) About Personal Loans
Still have questions about getting a personal loan with fair credit. We’ve rounded up answers to the most commonly asked questions about personal loans.
A 640 credit score is at the higher end of fair credit. A customer with a 640 credit score shoulds not have trouble getting a personal loan.
If you have no credit history, you will have more difficulty getting approved for a personal loan. However, even borrowers with a poor or fair credit score can get personal loans pretty easily. All of the lenders on our list of the best personal loans have a history of approving loans for such borrowers.
In general, personal loans are easier to get approved for than a home loan or car loan. Credit cards and payday loans are easier to get than personal loans. If you can avoid taking out a payday loan, do it.
Yes, you can get a personal loan approval with fair credit at any of the personal loan lenders on our list above. Just be prepared for higher interest rates and less favorable terms for the loan agreement.
There are multiple lenders that approve loans for borrowers with a score of 600 (and even lower)). These loans typically top out between $35,000 and $50,000.
FICO defines a fair credit score as 580 to 669. VantageScore is a little narrower, targeting credit scores in the low to mid 600s. FICO scores are more widely used by lenders.
While you can use a personal loan to pay for a wide range of things (from appliances to vacations to weddings), we recommend applying only for debt consolidation loans, home renovation loans or loans to cover an emergency expense.
Contributor Timothy Moore is a writer and editor in Cincinnati, Ohio. He focuses on banks, loans and insurance for The Penny Hoarder. His work has been featured on Debt.com, The Ladders, Glassdoor, WDW Magazine, Angi and The News Wheel.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.