Upgrade is our choice as the overall best personal loan for fair credit because its credit score requirement is just 550. Plus, it offers unique rate discounts that set it apart from competitors. While its personal loans are available in all 50 states, they are not yet available in Washington, D.C. If you live there, you’ll need to continue to shop around.
All of the lenders on our list are good options for personal loans for fair credit. However, no two people have the same financial situation. As such, make sure to shop around so you can find the best personal loan for your individual needs.
Guide for Choosing the Best Personal Loans for Fair Credit
Should You Get a Fair Credit Personal Loan?
If you have fair credit and you’re thinking about getting a personal loan, there are a few things you should consider before making a decision. Some of the most important considerations are why you need the loan, how quickly you can repay it, what you can afford, and if you can qualify.
- Why you need the loan: A personal loan can be a good option if you have a one-time expense you want to pay off over time or if you want to consolidate debt into a lower fixed-rate payment. It’s a better option than a credit card for these purposes since you’ll pay the debt in full at the end of the repayment period and will usually get a lower rate.
- How quickly the loan can be repaid: If you think you can pay off the money you’re borrowing very quickly (e.g., in a matter of weeks or months), then you may be able to use a credit card to fund the expense. However, if you need more time to pay (e.g., two to seven years), a personal loan is a better choice.
- What you can afford: Before you get a loan, one of the most important things to do is make sure you can afford it. Qualifying for a loan and affording it are two separate things. Carefully evaluate your budget and make sure you can comfortably make the monthly payment before signing on the dotted line.
- If you can qualify for the loan: Qualifying for a loan with fair credit can be challenging, particularly if you have active delinquencies on your accounts. To improve the odds that you’ll get approved, bring all of your accounts current before applying for a loan. If you still can’t qualify on your own, consider applying with a co-signer.
Ultimately, the decision to get a personal loan depends on what’s important to you and your financial situation.
Comparing Personal Loan Lenders for Fair Credit
When comparing personal loans for fair credit, it’s important to consider the qualifications, APR, repayment terms, and funding speed.
- Qualifications: It’s harder for people with fair credit to get loans, so what it takes to qualify for a personal loan is important. Not only will most lenders evaluate your credit score, but they’ll also consider such things as your income, ability to repay the loan, and credit history. To improve your odds of qualifying, make sure you can afford the loan and you don’t have any actively delinquent accounts.
- Annual percentage rate (APR): When comparing loans, make sure you compare the APR rather than the interest rate. Unlike the interest rate, the APR also includes the fees you’ll be required to pay. For instance, many lenders charge origination fees, which are often reflected in the APR. By comparing APRs across different loans, the effect of these fees is taken into consideration.
- Repayment terms: Ensure that the lender you select offers the repayment term length you want. Many lenders offer limited repayment terms of 36 or 60 months. However, if you need more or less time to repay your loan, you may be able to find a lender that offers a shorter term of a year or less or a longer term of up to 180 months.
- Funding speed: If you need money quickly, look for a lender that can get you funded in a matter of days. Many of the best personal loan providers can get you funded as quickly as the next business day after your loan is approved.
How to Apply for Fair Credit Personal Loan
The basic steps you’ll need to take to apply for a fair credit personal loan are:
- Submit a preliminary application with basic information about yourself and the loan
- Review introductory offers from your lender and decide if you want to proceed
- Agree to a hard credit check and submit a full application
- Review and accept the terms offered by the lender
- Provide any additional information requested by the lender (e.g., pay stubs, tax returns)
- Receive funding as soon as the same day or up to several days after you apply
- Set up an online account with the lender to manage your loan
Provide Basic Information
If you’re ready to move forward with a personal loan, the first step is to submit an application. You’ll usually be required to share information about why you need the funds, the amount of money you want, and how long you’ll need to repay the loan. As part of the process, you’ll also need to share personally identifiable information (e.g., your Social Security number and birthdate) along with information about your income.
Review Preliminary Offers and Agree to a Hard Credit Check
Once your initial application is submitted, some lenders will run a soft credit check to pre-qualify you and let you know the rates and terms you can get. Only after you’ve had a chance to review loan options and choose the one you want will the lender proceed to the full application and hard credit check. Other lenders don’t offer pre-qualification and will require that you submit a full application and undergo a hard credit inquiry to see your loan options. Make sure you understand when and how your credit will be checked at the onset.
Accept the Terms and Provide Additional Information
After the lender has evaluated your credit, you may be asked to provide some other information so they can confirm your income and identity. For example, you may need to share your tax returns, pay stubs, and driver’s license. Keep in mind, the more completely you fill out your application, and the quicker you submit any required information, the quicker your loan can be approved and funded.
Receive Funding and Manage Your Account Online
When the lender is done evaluating your file, they’ll let you know if you’re approved and provide details about the terms of your loan—e.g., rates, fees, repayment terms, etc. After you accept the terms, then you’ll receive the funds in the way you identified in your application; usually, you can request that funds be disbursed into your bank account or sent directly to your existing creditors. Sometimes this can happen as soon as the day you apply. However, it can take up to a few days.
Then, all that’s left is to manage your loan and make your monthly payments. Most lenders allow you to manage your account online through a customer portal or an online app.
What Is Considered Fair Credit?
Most credit scores range from 300 to 850, with higher scores deemed better than lower scores. What is considered fair credit depends on the credit bureau. Fair FICO credit scores fall between 580 to 669, while fair VantageScore credit scores range from 600 to 660.
This is slightly higher than a bad credit score, which is typically anything 579 and below (FICO) or 499 and below (VantageScore).
Can I Get a Personal Loan If I Have Fair Credit?
Whether you can get a loan if you have fair credit largely depends on why your credit score is low. If it’s low because of past due accounts, getting caught up should improve your credit score. Also, making future payments on time may eventually result in an improved credit score.
If you have fair credit for a reason other than a current delinquency, then it might not be as big of an issue. For instance, all of your accounts are up-to-date but you have a history of medical collections or several outstanding credit card balances.
As long as you are able to demonstrate that you can afford your debt and the problem that created the low score is not recurring or could be fixed with the new loan (e.g., you’re consolidating your credit card debt), then the new lender may be willing to overlook your fair credit score.
What Steps Can I Take to Improve My Credit Score?
Improving your credit score can go a long way toward helping you qualify for a personal loan and get a better interest rate. If you’re not happy with your credit score, the good news is you can take steps to improve it. It often takes time to improve your credit score, but here are three strategies to help you get started:
Check Your Credit Reports
You’re entitled to get free copies of your credit reports from the three credit reporting agencies (Experian, TransUnion, and Equifax) once each year. You can get your free credit reports by visiting AnnualCreditReport.com. Even if you don’t have credit issues, it’s a good idea to check your credit report annually to ensure there aren’t mistakes and that you’re not a victim of identity theft.
If you discover fraud or mistakes on your credit reports, federal law lets you dispute those errors with the credit reporting agencies. When you send a dispute, the credit reporting agency that receives it typically has 30 days (up to 45 days) to investigate your claim. Any information that cannot be verified as accurate must be removed from your credit report. When negative errors come off your credit report, your score may improve.
Lower Your Credit Card Balances
The relationship between your credit card limits and balances, called your credit utilization ratio, matters a lot where your credit score is concerned. Your ratio increases the closer you come to maxing out your cards, and it acts as a drag on your score. Your credit score might increase if you lower your credit utilization ratio by paying down your card balances.
A good rule of thumb is to keep your credit utilization ratio below 30%. To calculate this ratio, add up the outstanding balances on your credit cards and divide the result by your total credit card limit on all accounts. So, if you have a $10,000 limit, your outstanding balance should be less than $3,000 to stay below the 30% ratio.
Pay Your Bills on Time
Even if you haven’t paid all of your bills on time in the past, it’s not too late to start doing so now. This is important because your payment history can contribute as much as 35% to your FICO credit score. Building a budget is a good place to start if you struggle with paying your bills on time. By doing so, you’ll know if you make enough money to cover your bills and can start figuring out what expenses to cut.
How We Chose Best Personal Loans for Fair Credit
Our team evaluated 38 lenders and collected 1,520 data points before selecting our top choices. We weighed more than 20 criteria and gave a higher weight to those with a more significant impact on potential borrowers.
The top picks were selected based on factors like membership requirements (weighted 15%), average fixed APR (weighted 15%), and average origination fees (weighted 10%).
We also took into account the flexibility of repayment terms, helpful features like prequalification, and whether a co-signer or joint applications are permitted to ensure borrowers get the best possible experience. For further information about our selection criteria and process, our complete methodology is available.