Good news! There are companies that provide personal loans for fair credit. That means you have a greater chance of borrowing money regardless of how less-attractive your credit standing is.
While there are a lot of lending companies that cater particularly to borrowers with good or excellent credit scores, there are also some that cater to those with fair credit. Thus, giving hope to those who have less-attractive credit standing.
Personal loans are one of the easiest, needless to say, most accessible types of loans. Unlike auto loans or home loans, which have a very specific use, personal loans can be used for almost anything and everything. You can use it to purchase home appliances, for home renovations, travel expenses, debt consolidation, and more.
That said, it is not surprising that a lot of people apply for a personal loan. In fact, in a report published by the Chamber of Commerce, the United States has a total outstanding personal debt amounting to $143 billion.
Furthermore, there are 21.1 million outstanding personal loans. For these personal loans, the average interest rates vary from 10% to 28% depending on the borrower’s credit score. Of course, the ones with higher credit are able to enjoy lower interest rates as compared to those with fair credit.
Yes, while there are lending companies offering personal loans for fair credit, it is also important to manage your expectations. As a general rule, people with a high credit score get lower interest rates, while those with fair or poor credit scores get higher interest rates.
But, do not lose hope just yet as there are lending companies that offer some of the lowest interest rates and the best loan terms for borrowers with fair credit. It’s just about finding them – thus, the need to shop around and compare deals from different lenders.
Having said that, as the title implies, we are going to share with you some of the companies that offer personal loans for fair credit. Needless to say, these are the ones with the best rates and terms possible.
But before we head to our list, allow us to share with you first a couple of very important information — particularly answering the following commonly asked questions:
- How does a credit stack up?
- How to get a personal loan with fair credit?
- How much will it cost?
- How to qualify for fair credit loans?
HOW DOES A CREDIT STACK UP?
First and foremost, let’s talk about how does your credit stack up.
While there are people who know about their credit score or credit standing, there are some who don’t. If you are one of them, the best thing to do is to take steps to find out your credit score. By doing so, you get to determine where you exactly stand — poor, fair, good, or excellent. Knowing where you stand will make your life easier as you can easily filter your search for personal loan lenders.
Each level of credit has a broad range of scores in it. For your reference, see below table of credit rating with the corresponding score range and average APR:
|Credit Rating||Credit Score Range||Average Personal Loan APR|
|Poor||300 – 629||28.2%|
|Fair||630 – 689||21.3%|
|Good||690 – 719||15.0%|
|Excellent||720 – 850||9.8%|
If you have no credit score yet or you belong under the poor or fair category and you want to take advantage of the perks enjoyed by those with good or excellent credit scores, the good news is, there are plenty of ways to help improve your credit score in a short time.
One of the best examples we can think of how you can build good credit is by paying loans in a timely manner. As mentioned, there are a few more ways, and it’s just about knowing which ones are accessible or doable for you.
HOW TO GET A PERSONAL LOAN WITH FAIR CREDIT?
Having a fair credit is quite challenging when applying for a personal loan as compared to those with good or excellent credit. Most likely, people with fair credit will have trouble getting a personal loan because personal loans are usually unsecured, which means no collateral required. Thus, the risk is greater.
So, to compensate for the risk involved, lenders charge a high-interest rate just in case the borrower does default.
So, with the challenges involved, how does one with fair credit get a personal loan?
Here are some tips to help you out —
Fix whatever you can.
First and foremost, pull your free credit reports. Check the reports thoroughly and make sure all transactions or items indicated are legit. Should there be suspicious items on the reports, make sure to immediately settle them.
Dispute the items and try to get them removed. By removing incorrect information from your credit reports can make a big difference to your credit score in just a matter of days.
In addition, if you have existing debts, make sure to pay them right away — if possible. Also, as much as you can, get your debt utilization ration below 30%. These actions will surely increase your credit score quickly.
Shop around and compare deals.
As we have said, there are a lot of lenders that offer personal loans for fair credit and in any credit for that matter. Shopping around before settling for a single lender is key to get the best rates and terms possible.
While it is sometimes tempting to just give in to payday loans, keep in mind that it might, in the end, put you into trouble if you get into something just to be able to get funds but only realizing in the end that you cannot afford to repay the loan/
At least, compare rates and terms of three different lenders.
If you want to learn more about how you can borrow money having bad or fair credit, check the video below by Money.Co.UK:
Check the interest rates and fees.
Interest rates and fees vary depending on the lender. Some may charge interest rates that are as high as 36%, while others may be lower.
Meanwhile, while some do not charge certain fees like origination or prepayment, others do.
So, when applying for a loan or when looking around for a lender, make sure to take these into consideration to help determine if you can afford all the fees and charges involving the loan.
HOW MUCH WILL IT COST?
In relation to the last thing tip we gave, it is important that as a borrower, you know how much the loan will cost you.
Again, knowing the fees, rates, and other charges involved will help you make an informed decision, which basically means, choosing the most ideal personal loan option for you.
Generally speaking, companies that offer personal loans to borrowers with fair credit charges a high interest rate. Depending on the lender, it could be around 20%.
Also, another factor that may affect your total payable amount is the term length. The longer your term is the higher your payment will be as compared to shorter loan terms, and the more likely you are to save money. Although of course, when you opt for a shorter-term that means paying a higher monthly payment.
HOW TO QUALIFY FOR FAIR CREDIT LOANS?
Now, let us talk about the things you need to qualify for personal loans for fair credit.
- Credit Score – Although some lenders look at other factors to determine your qualification for a loan, most lenders consider a borrower’s credit score as a key consideration for approval of a personal loan or any type of loan for that matter. So, make sure to work on building your credit. Remember, having good credit allows you to take advantage of lower interest rates.
- Co-Signer or Joint Applicant – Again, depending on the lender, some allow co-signers or joint applicant. Keep in mind, though, that when the option to have a co-signer or a joint application, that person has to have a good credit score to be able to avail better rates and terms.
- Prequalification – Going through a prequalification process helps determine if you will qualify for a personal loan or not prior to the application proper. Going through this, you also get to see rates and terms you are likely to receive. This, for us, is ideal to help save time and effort.
COMPANIES THAT OFFER PERSONAL LOANS FOR FAIR CREDIT
As we have said earlier, there are many choices around. In fact, too many that in can get a little overwhelming to choose for some borrowers. So, to help you trim down your options, we are going to provide you with some of the companies that offer the best personal loans for fair credit. Our list includes the following:
- Lending Club
- One Main Financial
|BANK||APR RANGE||LOAN AMOUNTS|
|Avant||9.95% – 35.99%||$2,000 – $35,000|
|Lending Club||10.68% – 35.89%||$1,000 – $40,000|
|One Main Financial||18% – 35.99%||$1,500 – $20,000|
|Prosper||7.99% – 35.99%||$2,000 – $40,000|
|Upstart||8.13% – 35.99%.||$1,000 – $50,000|
When it comes to lending platforms, Avant has definitely one of the best in the industry. It offers access to loans such as personal loans to borrowers with poor to fair credit — basically, the ones that banks usually turn down.
With Avant, there are no minimum credit or income required — which makes it ideal for anyone especially those with less-attractive credit scores.
To apply for a personal loan, all you have to do is visit the company website. Once your loan application is approved, the company disburses your funds in as soon as the next business day.
Avant offers personal loans that range between $2,000 and $35,000. Repayment terms vary from 24 up to 60 months.
Although there are a lot of good things to like about Avant, they do have downsides as well, which includes fees and charges. Its annual percentage rate, for example, ranges from 9.95% to 35.99%. The lending company also charges an upfront administrative fee of up to 4.75%. The fee may be deducted from your loan to avoid paying it out of the pocket.
There are a lot of peer-to-peer lenders out there, but Lending Club is one of the best in the industry. Peer-to-peer lending refers to the process of borrowing money from individual investors instead of a financial institution.
Lending Club offers a variety of personal loans, auto refinancing, business loans, and lines of credit, as well as patient solutions, which is ideal for paying off pricey medical as well as dental procedures.
To qualify for a personal loan from Lending Club, you must have at least 600 credit score. Although based on records, most of its borrowers have credit scores closer to 700.
Unlike Avant, Lending Club may not be the best option if you need funds immediately. That is because you will have to wait until your loan is funded by the company’s network of peer lenders. The whole process may take up to two weeks.
With Lending Club, loan amounts range between $1,000 and $40,000 depending, of course, on your qualifications.
Repayment of the loan may be done over a three or five-year term. Meanwhile, the APR ranges from 10.68% to 35.89% depending also on your creditworthiness.
In addition, Lending Club charges an origination fee that falls between 1% and 6% of your loan amount.
Once approved, and funds are available, it may be received in as soon as four days.
ONE MAIN FINANCIAL
OneMain Financial is an ideal choice if you need a quick source of cash especially if you have a poor or fair credit score.
OneMain offers personal loans that can be used for various reasons like home improvements, travel, wedding costs, debt consolidation, as well as other personal expenses.
While a lot of OneMain Financial’s customers opt to apply online, those who prefer a face-to-face or traditional loan application process may do so by visiting one of the company’s brick-and-mortar branches (there are over 1,600 of them) located nationwide.
OneMain Financial does not have a minimum credit requirement, thus, making it one of the best choices if you have not-so-pleasing credit.
The company offers personal loans amounting from $1,500 up to $20,000. However, it is important to note that larger loan amounts require a first lien of a qualified motor vehicle.
When it comes to interest rates, OneMain charges rates that could go as low as 18% and as high as 35.99%. Like the previous companies on our list, OneMain Financial also charges origination fee that ranges from 1% up to 10% of the loan amount or a flat fee ranging from $25 to $400. This depends on your state laws.
Prosper is a peer-to-peer company that is ideal for those who cannot get a personal loan from traditional banks, at the same time, do not want to deal with high-interest rates, which are usually offered by payday loans and credit cards.
What’s nice about Prosper is that they look beyond what your credit score is. To qualify for a personal loan, you must, instead, make sure to meet certain requirements like having a debt-to-income ratio that is below 50%, must have at least five credit inquiries over the past six months, must have at least three open trades on your credit report, and lastly, you should have no bankruptcies on file.
Prosper provides personal loans that range from $2,000 up to $40,000. Meanwhile, when it comes to loan terms, they offer three or five years.
Prosper charges APR ranging from 7.99% up to 35.99%. Like the rest, Prosper also charges a one-time origination fee that ranges from 2.41% up to 5%. The fee, though, is already included in your APR.
Once your personal loan application is approved, funds are disbursed in as soon as the same day you apply, or within one business day.
Upstart is an online lender that was founded in 2012 by former Google executives. It is tagged as the first lending platform that uses artificial intelligence to automate the whole lending process.
Since it was launched in the market, Upstart boasts originating $3.2 billion worth in loans, and that 60% of which have been automated.
Unlike most lenders that use FICO score when approving personal loan applications, Upstart uses an advanced technology that does not only rely on a borrower’s credit score to quantify risk.
Although it uses such technology, Upstart still requires at least 580 Vantage or FICO credit scores in most states.
Upstart offers loan amounts that range from $1,000 up to $50,000. Meanwhile, they offer loan terms of either three or five years.
With regard to APRs, it ranges from 8.13% to 35.99%. In addition, Upstart also charges an origination fee ranging from 1% up to 8% of the loan amount.
Once approved, your money is disbursed within one business day.
FINAL THOUGHTS ON PERSONAL LOANS FOR FAIR CREDIT
Let’s face it, having poor to fair credit poses a lot of challenges among borrowers. More often than not, banks will decline personal loan approvals.
Good thing though as there are other options available – that includes online lending companies or marketplaces. More and more lending companies now are opening their doors to borrowers with a less-pleasing credit score.
But of course, as we have mentioned early on, borrowers must manage their expectations. With fair credit, you must expect that lending companies will charge you with higher interest rates as compared to those with good or excellent credit scores.