How to Get a Personal Loan With Fair Credit

A personal loan can help you pay off multiple expenses at once. If the interest rate of your loan is lower than the interest rate of your outstanding debts, a personal loan can provide a financial advantage. The best personal loan rates go to those with excellent credit, but if you have just “okay” or fair credit, you still have options.

The Simple Dollar’s best personal loans for fair credit

Fortunately, some lenders do offer personal loans for fair credit with competitive interest rates and terms that are easy to understand. We compared various personal loan lenders by looking at their loan amounts, APR ranges, eligibility requirements, terms, fees, and time to funding in search of those that offer the best value.

Avant

Avant is a direct lender that offers personal loans that can fund as soon as the business day after you’re approved. Loan amounts are offered from $2,000 to $35,000, and you can repay your loan over terms that range from 24 to 60 months. Like other personal loans for fair credit, you’ll need to keep an eye on the costs with Avant.

Not only does this lender charge an APR between 9.95% and 35.99%, but you’ll also pay an up-front administrative fee up to 4.75%. Fortunately, Avant Personal Loans are available for consumers with credit scores as low as 580. Furthermore, the upfront fee can be deducted from your loan so you don’t have to pay it out-of-pocket.

LendingClub

LendingClub is a peer-to-peer lender that makes it easy for consumers with fair credit to borrow money. With peer-to-peer lending, you borrow from individual investors instead of a traditional financial institution. The minimum credit score to qualify is just 600, and loan amounts ranging from $1,000 to $40,000 are on offer.

You can repay your personal loan over a three or five-year term, and your APR will fall between 6.95% and 35.89%, depending on your creditworthiness. Keep in mind that with LendingClub, you’ll pay an origination fee on your loan that typically falls between 1% to 6% of the loan amount. Additionally, upon approval, funds can be received in as little as four days.

Upgrade

Upgrade is another lender that is recommended for those with credit that needs some work. This direct lender offers loans to consumers with credit scores as low as 620, and you may be able to borrow anywhere from $1,000 up to $50,000 depending on your credit score, income, and other factors.

Loans can be repaid over terms that range from three to five years, and if you are approved, you will receive funds within four business days. Note that you’ll need to pay an origination fee of up to 6% for these loans and APRs range between 7.99% and 35.89%.

One Main Financial

One Main Financial is a direct lender that caters to applicants with poor-to-fair credit. It has over 1,600 branches, offers a variety of services online, and has no minimum credit score requirement. The personal loan offerings range from $1,500 to $20,000, although larger loan amounts require a first lien on a qualifying motor vehicle.

APRs start at 16.05% and go up to 35.99%, and the loans come with an origination fee which could be 1% to 5% of the loan amount or a flat fee ranging from $30 to $150, depending on your state laws. If your application is approved, you can receive your funds as soon as the same day.
While the loan amounts are smaller, One Main makes it easier to get approved than many other lenders, enabling applicants to borrow who have been denied elsewhere.

Prosper

Prosper is a peer-to-peer lender that looks beyond a borrower’s credit score. The company’s minimum requirements to borrow include a debt-to-income ratio below 50%, at least three open trades on the person’s credit report, less than five credit inquiries in the past six months, more than $0 income, and no bankruptcies on file.

Loan amounts range from $2,000 to $40,000, terms are for three or five years, and APRs range from 5.99% to 35.99%. Moreover, Prosper does charge a one-time origination fee which ranges from 2.4% to 5% which is included in your APR. If approved, the loan funds will be directly deposited into your account as soon as the same day.

Peerform

Peerform is a marketplace lender that matches borrowers with investors who fund personal loans that range from $4,000 to $25,000. Terms are available for three or five years and APRs start at 5.99% and go up to 29.99%. Like the other lenders, Peerform also charges an origination fee which ranges from 1% to 5% of the loan amount.

The better your credit the higher loan amount, lower APR and longer loan term you can get. However, you only need a 600 credit score to be eligible. If approved, funds can be directly deposited within a few days.

Upstart

Upstart, founded by ex-Google employees, is the first AI lending platform that aims to expand access to affordable credit while lowering losses for its banking partners. While a minimum of a 580 Vantage or FICO score is required in most states, Upstart will accept an applicant with credit histories that are insufficient to produce a credit score.

Upstart connects borrowers with personal loans ranging from $1,000 to $50,000, with three- and five-year terms, and APRs ranging from 6.14% to 35.99%. Additionally, an origination fee from 1% to 8% of the loan amount will be charged. The majority of applicants who get approved, get their money within one business day of their loan being accepted.

Check Your Personal Loan Rates

Answer a few questions to see which personal loans you pre-qualify for. The process is quick and easy, and it will not impact your credit score.

How does your credit stack up?

Do you have fair credit? Good credit? Bad credit? If you’re not entirely sure, your best bet is taking steps to find out your credit score. Doing so can help you determine where you stand, which will also dictate which personal loans you can qualify for.

Fortunately, each “level” of credit has a broad range of scores included. There are also plenty of ways to improve your credit score in a short amount of time if required. The following chart shows how each range of scores works and the estimated average APR you may qualify for with each:

Credit RatingCredit Score RangeAverage Personal Loan APR
Excellent720 - 8509.8%
Good690 - 71915.0%
Fair 630 - 68921.3%
Poor300 - 62928.2%

Steps to getting a personal loan with fair credit

You’ll be surprised to find out that even if you’ve qualified for a mortgage or a car loan, you might have trouble getting a personal loan. That’s because personal loans are unsecured debt.

When you buy a home or a car, the bank can always take back that collateral if you don’t make payments. However, if you don’t make payments on a personal loan, there’s nothing for the lender to repossess — so it’s inherently a riskier investment on their part.

Thus, your credit score will be the deciding factor when it comes to whether or not you’re going to qualify for a personal loan. That means that if you want to take out a personal loan, the first thing you need to do is find out if you have good credit or not.

Step 1: Fix what you can

Before you go any further, pull your free credit reports. Are there any items on your reports that shouldn’t be there? If so, dispute them and try to get them removed. Having incorrect information removed from your credit report can make a substantial difference in your credit score in just a few days.

Also, try to pay down some debt right away if you can. If you can reasonably get your debt utilization ratio under 30% — that’s the proportion of your available credit limit you’re currently using — that’s also going to cause your credit score to jump, and quickly.

Taking these steps will not only make it far more likely that you’ll get approved for a personal loan, but they’ll also make it more likely that you’ll get a lower interest rate.

Step 2: Shop around

There’s no shortage of lenders in the marketplace today. However, you need to be careful because there are also a lot of less-than-reputable ones out there. Companies that don’t pull your credit report before giving you a loan are often very similar to payday lenders. The APR on a payday loan can be steep, to say the least — as much as 300% or more.

Look for lenders with good reputations and low interest rates. See what their underwriters require as a minimum credit score, then apply to three different lenders that are 20 to 30 points below your current score. That’ll give you a bit of wiggle room, as well as some options so you can compare the best rates and terms.

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Step 3: Evaluate interest and fees

If you get approved for a personal loan with fair credit, you’re going to pay more in interest and fees. In fact, your interest rate might be as high as 36% if you have fair credit — worse than even most credit cards. What’s more, sometimes there’s a fee for early repayment, usually equivalent to what you would have paid in interest if you had paid the loan off according to the original terms.

Many online lenders are going to want you to set up automatic payments. If this is the case, make sure that you have money in your account, or you’ll be paying overdraft charges on top of whatever you’re paying for the loan.

While you can visit a traditional bank to apply for a personal loan, credit unions, in particular, are known for being more forgiving in terms of their lending policies. Many times, online personal loans wind up being the best option available.

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However, you should also remember that you have options to consider other than personal loans. There are secured loans, which are easier to qualify for but require some form of collateral, and there are also balance transfer credit cards that offer zero interest. Both are available for people with just fair credit, who have been used them time and again to pay down debt and get their finances back on track.

Check Your Personal Loan Rates

Answer a few questions to see which personal loans you pre-qualify for. The process is quick and easy, and it will not impact your credit score.

The bottom line

Many personal loan lenders now cater to borrowers with less-than-perfect credit which opens up doors that were not accessible in the past. While helpful, if you are looking to borrow with fair credit, it’s important to shop around and look for the best deal because fees, rates, and terms can vary greatly. Compare lenders by reviewing their loan amount, eligibility requirements, loan terms, APRs, time to funding, and fees. And remember, the fees aren’t always advertised front-and-center! Look for the one that will best meet your needs while providing the most value.

Jessica Walrack
Jessica Walrack
Contributor for The Simple Dollar

Jessica Walrack is a personal finance writer at SuperMoney, Interest.com, The Simple Dollar, and PersonalLoans.org. She specializes in taking personal finance topics like loans, credit cards, and budgeting, and making them accessible and somewhat fun.