Best Personal Loans For Fair Credit: Angela Moore is a distinguished fnancial planner, educator, lending expert, and founder of Modern Money Education. With a passion for helping people achieve their financial goals, he is dedicated to promoting financial education through…
According to FICO’s definition, fair credit is a credit score between 580 and 669. While you will be able to get a loan with a score below 670, you shouldn’t expect the most favorable terms. High loan limits and low interest rates are typically reserved for those with the highest credit scores.
But don’t be discouraged. Lenders are still willing to offer you financing, even if you have a score between 580 and 669.
The 8 Best Personal Loans For Fair Credit and Long-term
01. Upgrade Personal Loans
Rating: 5.0
Editor’s opinion: With affordable credit score requirements, Upgrade is the best option for personal loans with fair credit and long loan terms.
Because we like it?
Upgrade accepts credit scores of at least 580, offers loan terms of two to seven years, and has several interest rate discount opportunities.
What we don’t like?
Upgrade personal loans can be expensive due to a maximum annual percentage rate (APR) of 35.99% and origination fees between 1.85% and 9.99% of the loan amount.
Who is it best for?
Enhanced personal loans are best for borrowers with bad to fair credit who are looking for long loan terms and have difficulty qualifying for larger loans elsewhere.
Pros and cons:
- Flexible Eligibility Requirements
- You can pay creditors directly
- High loan amounts available
- High APR Range
- Late payment and insufficient funds fees
- Charge origination fees from 1.85% to 9.99%
Eligibility:
- Minimum credit score: 580
- Minimum income. None
- Co-applicants. Allowed
Upgrade personal loans have a unique feature: mandatory automatic payments. While this is an effective measure to prevent defaults, it may not be suitable for everyone, especially those with irregular income streams.
Also Read: The Best Loan Company
02. LendingClub Personal Loan
Best Personal Loan with Fair Credit for Joint Loans
Rating: 4.7
Editor’s opinion: LendingClub offers loans and banking services. Their loans range from $1,000 to $40,000, with repayment terms between two and five years.
Because we like it
LendingClub sets low minimum credit requirements and accepts personal loan applicants with cosigners, which can improve your chances of approval.
What we don’t like
LendingClub charges origination fees of 3% to 8% of your loan amount.
Who is it best for?
LendingClub personal loans are best for borrowers looking to borrow with a co-borrower and may qualify for the lowest rates the lender offers.
Pros cons:
- Pay creditors directly with debt consolidation loans
- Offers loans from $1,000 to $40,000
- There are no minimum credit or income requirements
- Charge origination fees
- Terms are available from two to five years.
Eligibility:
- Minimum credit score. None
- Minimum annual income. None
- Co-borrowers. Allowed
The LendingClub application process is easy and relatively quick. The ability to pay creditors directly is especially useful for those who have accumulated credit card debt from multiple issuers. This is important as many people who have accumulated debt may be tempted to use a large deposit for something other than repaying their current lenders.
Also Read: The Best Loan Company
03. Upstart Personal Loan
The best personal loan with fair credit to obtain fast financing
Rating: 4.5
Editor’s opinion: Upstart uses an AI underwriting model that considers alternative factors, such as education and employment, when evaluating loan applications, allowing it to be more flexible with credit requirements.
Because we like it
Upstart has a minimum credit score requirement of 300, but will also consider borrowers who do not have enough credit history to have a credit score. While Upstart has other qualification requirements, that is one of the most affordable credit requirements of any lender.
What we don’t like
Upstart’s origination fees can be up to 12% of the loan amount, which is higher than most competitors. Additionally, Upstart only offers repayment terms of between three and five years.
Who is it best for?
Upstart personal loans are best for those who don’t have an established credit history or who can’t qualify for a less expensive loan elsewhere.
Pros cons:
- Accessible to borrowers without a credit history
- Prequalification with soft credit check
- Ability to choose a custom payment date
- Charges an origination fee of up to 12% of the loan amount.
- No co-signer option
- It only offers terms of three to five years.
Eligibility:
- Minimum credit score: 300
- Minimum income. There is no minimum but you must have a source of income.
- Co-firmers. Not allowed
- Co-borrowers. Not allowed
Upstart has no minimum credit score to apply for a loan, making it a popular option for borrowers of all categories. Those with lower credit scores or spotty credit history may receive offers with high APRs. Loan amounts range from $1,000 to $50,000 and available loan terms are three to five years.
Upstart offers flexibility with payment dates and financing can be completed in as little as one business day. However, some requirements include having a job, a stable income, a personal bank account, an email address, and a Social Security number. Some fees may apply, including an origination fee, late payment fees, or statement fees.
04. OneMain Finanzas Personal Loan
Best Fair Credit Personal Loan for Small Businesses
Rating: 4.5
OneMain Financial does not disclose this information
Editor’s opinion: OneMain Financial offers small personal loans from $1,500 to $20,000.
Because we like it
OneMain Financial’s small personal loans can be funded in one hour when disbursed to a debit card or in one to two banking days via direct deposit.
What we don’t like
If you apply for a personal loan from OneMain Financial, you will pay an origination fee that is 1% to 10% of your loan amount or a flat fee of $25 to $500.
Who is it best for?
OneMain Financial is best for borrowers looking for small loan amounts with fast funding times.
Pros cons:
- Financing times in one hour
- Repayment terms of two to five years
- Offers secured and unsecured personal loans.
- Origination fees and late payment fees
- Maximum annual interest rate of 35.99%
Eligibility:
- Minimum credit score. There is no minimum credit score required.
- Minimum income. Does not reveal
- Co-applicants. Allowed
05. LendingPoint Personal Loan
The best personal loan with fair credit for flexible requirements
Rating: 4.4
Editor’s opinion: LendingPoint is a personal loan lender that offers a wide range of loan amounts and terms to borrowers with fair credit.
Because we like it
LendingPoint offers borrowers multiple loan options with amounts ranging from $1,000 to $36,500 and repayment terms from 24 to 72 months, or two to six years.
What we don’t like
LendingPoint charges origination fees of up to 10% of your loan amount.
Who is it best for?
LendingPoint is best for borrowers with fair credit looking to get a personal loan between $1,000 and $36,500.
Pros cons:
- Quick Financing
- Low credit score requirements
- No early payment penalty
- Origination fee up to 10%
- No co-signers or joint loans allowed
- Not available in Nevada and West Virgini
Eligibility:
- Minimum credit score: 600
- Minimum annual income. $35,000
- Co-firmers. Not allowed
LendingPoint may be a good option for those who do not have a high credit score. They focus more on the potential borrower’s work history and income when determining loan eligibility and rates.
Also Read: The Best Loan Company
06. Avant Personal Loan
The best personal loan with fair credit according to customer experience
Rating: 4.4
Editor’s opinion: Avant offers personal loans to borrowers with fair credit along with affordable customer service options.
Because we like it
Avant sets a minimum credit requirement of 580 and offers borrowers robust customer service options, including seven-day-a-week availability, a mobile app, and an online application. The lender also has high ratings on Trustpilot.
What we don’t like
Avant personal loans charge an administration fee of up to 9.99%, as well as late payment fees of $25.
Who is it best for?
Avant is the best option for borrowers with fair credit looking for a personal loan of $2,000 to $35,000 from a lender with a high customer satisfaction rating.
Pros cons:
- Accepts fair credit starting at 580
- High customer satisfaction rating on Trustpilot
- Offers access to online and mobile accounts.
- Administration fees up to 9.99%
- $25 late payment fee
Eligibility:
- Minimum credit score: 580
- Minimum income. $1,200 monthly net income
- Co-applicants. Not allowed
07. SoFi® Personal Loan
The best personal loan with fair credit for large amounts
Rating: 4.3
Editor’s opinion: In addition to a full range of banking and other lending services, SoFi offers personal loans from $5,000 to $100,000.
Because we like it
SoFi offers large loan amounts and long repayment terms, from 24 to 84 months. In addition, it does not charge commissions for loans. However, you can pay an optional origination fee in exchange for a lower interest rate.
What we don’t like
SoFi’s credit score requirement of 650 is quite high, making its loans out of reach for some borrowers.
Who is it best for?
SoFi personal loans are best if you can meet the lender’s minimum credit requirement and need large loan amounts.
Pros cons:
- Prequalification without rigorous investigation
- Same-day approval is possible
- You can pay external creditors directly
- High credit score requirement
- No co-signers allowed
Eligibility:
- Minimum credit score required: 650
- Minimum annual income. $45,000
- Co-borrowers. Allowed
- Co-firmers. Not allowed
What impresses me about SoFi is its innovative approach to lending, with a focus on providing borrowers with personalized loan options tailored to their unique financial situations.
As a small business owner, I benefited from SoFi’s competitive rates and borrower-friendly terms, including no origination fees or prepayment penalties. Additionally, SoFi member benefits such as career guidance and financial planning resources add value beyond the loan itself, making it an attractive option for entrepreneurs looking to grow their businesses and, at the same time, manage their finances responsibly.
08. LightStream Personal Loan
The best personal loan with fair credit and low rates
Rating: 4.0
Editor’s opinion: Lightstream offers a variety of loans, including personal loans with competitive interest rates and fast financing paybacks.
Because we like it
Lightstream advertises low interest rates between 6.99% and 25.49%, which are lower minimum and maximum rates compared to most other lenders. You can also fund loans the same day the application is submitted.
What we don’t like
Although LightStream accepts borrowers with credit scores as low as 660, borrowers with fair credit may have trouble qualifying for personal loans from this lender.
Who is it best for?
Lightstream personal loans are best for borrowers with fair to good credit who may qualify for a low-interest rate loan from Lightstream.
Pros cons:
- Long loan terms available
- Low interest rates
- Fast approval and financing
- No prequalification option
- High minimum loan amount
- Low average customer rating on Trustpilot
Eligibility:
- Minimum credit score: 660
- Minimum income. Does not reveal
- Co-borrowers. Allowed
Lightstream, a division of Trust Bank, is known for its variety of loan options and competitive rates. The downside may be its strict eligibility criteria, making it difficult for those with poorer-than-expected credit to get approved.
Tips for Comparing Personal Loans for People with Fair Credit
Keep these tips in mind when comparing personal loans for fair credit:
Compare maximum interest rates.
Since interest rates depend largely on your credit score, you’ll likely get a rate at the high end of the range with acceptable credit. Therefore, when comparing personal loans for people with bad credit, be sure to compare the maximum rate.
If possible, prequalify with a provider.
Several providers offer the opportunity to prequalify you for a personal loan. This means you can submit details such as information about your income, desired loan usage, living situation, and other information to learn about potential loan limits, rates, and repayment options. Prequalification also requires only a soft credit check, which doesn’t affect your credit score, so you can confidently find the best rates.
Ask about additional rates.
Some personal lenders do not charge loan origination, late payment, or early payment fees. However, some may charge all or some of these fees. Other possible fees to consider include application fees, non-sufficient funds fees, and annual fees. When comparing personal loans, be sure to look at the fee structure beyond the potential interest rate you may receive.
Evaluate the lender’s customer service options.
If you have already found a lender, there is one more thing you should keep in mind before signing the loan agreement. While customer service may not seem like a big deal, it can make a big difference if you are having trouble with payments or facing financial difficulties during the payment period.
Review the lender’s customer service resources, such as availability of business hours, different contact methods, and response times. Also, read reviews and check for patterns of complaints to make sure it’s a good choice. Finally, check to see if the lender offers hardship assistance programs or flexible payment options.
Most personal loans do not have a prepayment fee, which is a fee that may be charged when you pay off a loan early. However, it’s a good idea to review the terms of each loan agreement to check that you won’t be charged a prepayment fee if you make prepayments or if you can pay off the loan early.
Having a decent credit history can make it difficult to get the lowest interest rates for personal loans. Prequalifying with different lenders can help you find the lowest-cost option and save you money once you start paying.
– Colin Beresford, Associate Editor, Personal and Business Loans
What is a fair credit score?
Based on the FICO credit score range of 300 to 850, a score between 669 and 580 is considered an acceptable credit score. Borrowers with acceptable credit are considered higher risk and may have a more difficult time qualifying for personal loans in addition to other credit accounts such as credit cards or mortgages. It is in your best interest to improve your score before applying for a loan to increase your chances of receiving more favorable terms.
Fair credit scores are typically the result of poor payment history, high credit utilization, and/or too many credit applications or hard credit inquiries. If you want to improve your fair credit score, it is best to focus on these areas of your credit profile.
How does a personal loan affect credit score?
A personal loan can help you access the necessary financing while building your credit if you use it responsibly. Here’s how the life cycle of a personal loan can affect your credit score.
- Compare personal loans. Comparing personal loans typically has no impact on your credit score. Most lenders that offer a prequalification process use a soft credit check, which does not damage your credit. However, be sure to confirm that a lender uses a soft credit check rather than a hard credit check to protect your score.
- Application for a personal loan. When you apply for a loan, your lender will run a hard credit check, which can temporarily lower your score by one to five points. Hard credit checks typically affect your score for one year, but stay on your credit report for two years. If you need to compare rates, multiple hard inquiries for the same type of credit in a short period (usually 14 to 45 days) are typically treated as a single inquiry by credit scoring models, reducing their impact on your score. Be sure to keep personal loan applications to a minimum to reduce hard inquiries on your report.
- Pay your loan. Your payment history is one of the most important factors that make up your credit score—it accounts for 35% of your FICO score. By making all your payments on time, you can improve your credit score. But if you fall behind on payments, your score will likely start to struggle. Therefore, prioritizing on-time payments is essential to maintaining and improving your credit health.
Average personal loan interest rates by credit score
Personal loan interest rates vary depending on credit score. Below you’ll find average rates based on VantageScore risk levels, according to Credible. Please note that interest rates are determined and set by lenders.
How to Improve Your Credit Score Before Applying
If your score is lower than desired and you want to increase your chances of receiving better loan terms, take the time to improve your score before applying for a loan. Use these strategies to improve your credit quickly:
- Pay all your bills on time. Timely payment history is one of the most important factors when building credit. Make sure you pay all your bills on time before applying for a personal loan.
- Become an authorized user. An authorized user is someone who is added to an existing credit card account. When you become an authorized user, your card history will appear on your credit report. If the primary account holder has a history of on-time payments, your credit score may see an increase.
- Pay off your existing debts. Your debt levels affect your credit utilization ratio (the percentage you use of your total available credit). The higher your ratio, the harder it will be to qualify for a personal loan. Paying off your existing debts before applying for a loan can help improve your score by lowering your credit utilization ratio.
- Request a credit limit increase. Paying off existing debt is not the only way to reduce your credit utilization ratio. Since credit utilization is based on the amount of available credit you use, increasing your credit limit can achieve the same goal. To request a credit limit increase, contact your card provider. This may require a strict credit check that temporarily lowers your score.
- Review your credit report for errors. Periodically review your credit reports for inaccuracies or errors that could negatively impact your score. Discuss any incorrect information with the credit bureaus so they can correct it.
Where to get a personal loan with good credit
Several lenders offer loans to borrowers with fair credit, so compare all your options before accepting financing, including:
- Credit cooperatives. Credit unions typically work with borrowers with a decent credit history, especially if you already have a relationship with the lender. Typically, you will need to be a member to apply for a personal loan at a credit union.
- Online lenders. Online personal loan lenders typically have flexible qualification requirements, and some offer loans to borrowers with credit scores as low as 580.
- Family and friends. Borrowing money from a family member or friend can be a good option. Before accepting money, writing a promissory note can set expectations about how and when the loan will be repaid.
- Cash Loan Apps. If you have a stable source of income, a cash loan app is a loan option you should consider. These lenders provide quick access to small amounts, but interest and fees can make this an expensive option.
- Peer-to-peer (P2P) lending platforms. Peer-to-peer lending platforms connect borrowers with individual investors willing to fund loans. These platforms typically have more flexible credit requirements and competitive interest rates.
- Local banks. Some local banks offer personal loans to borrowers with acceptable credit history, especially if they have an established relationship with the bank.
- Guaranteed personal loans. You may qualify for a secured personal loan if you have assets such as a savings account, a car, or other property. These loans are less risky for lenders and may be easier to obtain if you have an acceptable credit history.
How to apply for personal loans for people with good credit history
While the process may vary depending on your specific score and the lender, here are the general steps you can take to get a fair credit personal loan:
- Check your credit score. Start by checking your credit score through your credit card provider or another website that provides credit before shopping for the best lender. This will let you know which lenders you may or may not qualify for. Personal loans for people with fair credit generally require minimum scores between 580 and 660.
- Improve your score. If you have a decent credit score, you generally won’t receive the most favorable terms, such as low interest rates. Take the time before applying to improve your score as much as possible and receive the best possible terms for your situation. Some quick ways to improve your credit include paying off outstanding debts and reducing your credit usage.
- Evaluate your budget. Before searching for the right lender, evaluate your budget and understand how much loan you can afford. Make sure you only borrow what you need because you will owe interest on the entire balance. Use a personal loan calculator to estimate your possible monthly payments.
- Prequalify with multiple lenders. Some lenders offer a pre-qualification process, which allows you to see what terms you can receive once approved without a strict credit check.
- If necessary, add a cosigner. If you need to improve your application to receive better terms, consider adding a cosigner. A cosigner is a secondary person who agrees to pay back the loan if you don’t, reducing the risk you pose to the lender.
- Submit your request. Once you’ve found the best lender for your situation, apply online or in person. Be prepared to provide your personal information, such as your Social Security number (SSN), address, and income information.
Alternatives to personal loans for people with good credit history
Personal loans are not your only option for obtaining financing. Other options include:
- 401(k) Loan: A 401(k) loan allows you to borrow from your retirement savings at lower interest rates than traditional loans. If you don’t make payments, your loan will be classified as a withdrawal and could result in a 10% penalty.
- Credit card: For borrowers with acceptable credit history, credit cards may be an option for obtaining financing. Before racking up debt, have a payment plan because credit card APRs can make carrying a balance expensive.
- Guaranteed personal loan: Valuable items, such as your car, can be used to qualify for a secured loan if your credit history is poor. However, you run the risk of losing your collateral with a secured loan if you stop making loan payments.
- Buy Now Pay Later Loan (BNPL). BNPL loans allow you to purchase items and pay for them over a set period, often with no down payment and no credit check. Although interest rates can be as low as 0%, non-payment or default can result in costly fees.
- Financing with mortgage guarantee: Home equity loans or home equity lines of credit (HELOCs) allow homeowners to tap into the equity they have built up in their homes. While you may qualify for these financing options with an acceptable credit history, defaulting on these loans may result in your lender taking possession of your home.
- Community help: Lenders and financial institutions are not your only options for finding financing. Community help is available in many areas by calling 211 or visiting 211. org.
- Family and friends: Borrowing money from family or friends can be a viable option. Make sure you have a clear agreement to avoid potential conflicts and misunderstandings.
Summary: The best personal loans for people with good credit history
- Update: the best personal loan with fair credit and long terms
- Lending Club: best personal loan with fair credit for joint loans
- Upstart: the best personal loan with fair credit to obtain fast financing
- OneMain Financial: the best personal loan with fair credit for small amounts
- LendingPoint: the best personal loan with fair credit and flexible requirements
- Before: the best personal loan with fair credit by customer experience
- SoFi: the best personal loan with fair credit for large amounts
- LightStream: the best personal loan with fair credit and low rates
Frequently Asked Questions (FAQ)
Can I get a loan with a credit score of 640?
Yes, most applicants can get a loan with a credit score of 640. Fair credit personal lenders offer loans to applicants with scores as low as 580. However, with a lower score, it can be difficult to receive the most favorable conditions, such as low interest rates and high loan limits. Additionally, there may be additional requirements and verifications necessary to qualify for the loan.
Can I get a personal loan with a credit score of 600?
While the most favorable terms are reserved for borrowers with scores generally above 670, many lenders allow lower credit scores, such as 600. If you have a credit score of 600, fortunately, you can get financing; However, you may qualify for a lower limit and interest rates close to the maximum rate the lender offers.
Can a personal loan improve fair credit?
There are two immediate ways a personal loan can improve fair credit.
When you apply for a personal loan, you have the opportunity to work on or establish your payment history, which accounts for 35% of your credit score. As long as you pay on time and never miss a payment, you should improve your credit score. Set up autopay to ensure a perfect payment history.
Additionally, your credit mix (the different types of accounts that appear on your credit reports, such as personal loans and credit cards) makes up 10% of your credit score. If you apply for your first personal loan, a new type of credit account will be added to your report, which can improve your score.
However, when you apply for a new personal loan for the first time, this can negatively affect your credit score. That’s because a new loan increases your total debt, adds a hard inquiry to your credit report, and reduces the average age of your credit accounts, all of which can temporarily lower your score. As you make consistent and on-time payments, your credit score can recover and even improve over time.
How much do fair credit personal loans cost?
Personal loans are granted with fair credit and come with a variety of fees, including:
- Annual interest rates (APR). Personal loans charge APRs of between 3% and 35%. However, the lowest rates are reserved for highly qualified borrowers. Applicants with acceptable credit should expect to receive higher rates.
- Opening fees. Some personal loan lenders charge an origination fee of between 1% and 8% of the total loan amount. If you want to reduce the overall cost of your loan, look for lenders that don’t charge origination fees.
- Late payment charges. If you don’t make payments on time, most lenders will charge you a late payment fee. This charge is usually a percentage of your minimum payment or a flat fee, depending on the lender.
- Penalties for early payment. Some lenders penalize borrowers for paying off the entire loan amount before the end of the term. Fees typically start around 2% of the outstanding principal balance and drop to zero during the first few years of the loan. If you want the flexibility to pay off your loan at any time during the term, choose a lender that doesn’t have prepayment penalties.
Coming soon to personal loans
The information provided in the Guide is for educational purposes only. Your financial situation is unique and the products and services we discuss may not be right for your circumstances. We do not provide financial advice, advisory, or brokerage services, nor do we recommend or advise persons to buy or sell particular stocks or securities. Performance information may have changed since the time of publication. Past performance is not indicative of future results.
The guide adheres to strict standards of editorial integrity. To the best of our knowledge, all content is accurate as of the date of publication, although offers contained herein may no longer be available. The opinions expressed are solely those of the author and have not been provided, approved, or endorsed in any way by our partners.
