Best Personal Loans for Fair Credit

Best Personal Loans for Fair Credit

If you have fair credit (FICO scores of 630 to 689), you may have problems getting a personal loan. However, there are several lenders who will work with you when taking out a loan with fair credit. We’ll look at lenders for fair credit, for thin credit, and for consolidation loans. We’ll also discuss how to get a personal loan for those with no income.

Best for General Loans for Fair Credit

LendingClub and Prosper are good for people with fair or average credit. As you look through the table, you’ll see that both companies have similar loan terms and rates. Prosper requires higher minimum credit scores but will approve the funds more quickly. The better your credit score, the lower your APR will be.

LendingClubProsper
APR6.95% – 35.89%6.95% – 35.99%
Loan amount$1,000 – $40,000$2,000 – $40,000
Loan terms3 or 5 years3 or 5 years
Minimum credit score600; borrowers average 699640; borrowers average 710
Time to fundingUsually 7 days1 to 3 days after approval
Origination fees1% – 6% of loan2.4% – 5% of loan
Feeslate paymentunsuccessful paymentpersonal check uselate paymentunsuccessful payment

Best for Debt Consolidation

If you want to pay off your debt and have only one loan at a lower interest rate, there are three lenders who are options. Make certain that the origination fee and interest rates are in your favor. Origination fees can eat up your savings through debt consolidation.  

AvantFreedom PlusUpgrade
APR9.95% – 35.99%5.99% – 29.99%7.99% – 35.89%
Loan amount$2,000 – $35,000$10,000 – $40,000$1,000 – $50,000
Loan terms2 to 5 years2 to 5 years3 or 5 years
Minimum credit score580620, but generally 700+620
Time to fundingAs soon as the next business day3 days24 hours
Origination fee4.75% of loan amount0% to 5% of loan amount1.5% – 6% of loan amount
Feeslate paymentunsuccessful paymentlate paymentunsuccessful paymentpersonal check use

Best for ‘Thin’ Credit

If you don’t have much credit history, you can still get a loan, especially if you have a co-signer. Backed and Upstart are two good lenders for people just starting to build their credit rating.

BackedUpstart
APR2.9% – 15.99%8.89% – 35.99%
Loan amount$3,000 – $25,000$1,000 – $50,000
Loan terms1 to 3 years3 to 5 years
Minimum credit scoreNo minimum without co-signer720 for co-signer620
Time to funding2 to 4 business daysNext business day
Origination fee0.8% to 2.0% of loan amount0% – 8% of loan amount
Feeslate paymentunsuccessful paymentpersonal check uselate paymentunsuccessful payment

No Income Loans

If you have no income, it is a lot harder to get a loan. It is possible to get no income loans, but be very careful of predatory lenders. Lenders will consider no income loans if you have the following:

  • Alternate income such as Social Security, disability, or unemployment benefits, a pension or retirement account distributions, child support, or employment offers may count in your favor.
  • Lenders may request automatic bank account payments to ensure full- and on-time payments.
  • Collateral like paid-off cars, property, assets or a secured personal loan increase your chances of a no income loan.
  • Co-signers are also an option.

No income loans have drawbacks like shorter repayment terms and high interest rates.

Improving Your Credit Score

Improving your credit score takes time but a little effort on your part will lower your interest rates and improve your chances of getting loans.

  • Request copies of your credit report from TransUnion, Experian, and Equifax. You are entitled to one free copy a year. Examine it carefully for errors. If you find one, write the company a letter detailing what is wrong and asking to have it removed. It can be a lengthy, frustrating problem. Stick with it!
  • Make all your payments on time. Those late or missed payments ding your credit score a bit at a time. They add up quickly.
  • Pay off smaller balances to improve your score.
  • Ask to have older, closed accounts removed from your report. You will need a few to give your report some “age” but you don’t want too many.
  • Have credit inquiries removed. “Hard pull” credit reports ding your credit score. Removing them helps. Also, don’t apply for any loans or credit cards while you improve your credit score.
  • Resolve any collections issues.
  • Ask for lower interest rates or increased credit limit on your credit cards. DON’T use the extra credit. It is for show, not for use!
  • Use secured credit cards to control spending.
  • Pay off revolving balances.

Other Ways to Improve Your Chances

If you have a co-signer, you may be able to improve your chances to qualify for a loan. Co-signing is risky for both of you, so do it carefully.

If you are a credit union member, you may have greater success in getting a loan with fair credit. Their interest rates are usually far better than other lenders.

Pre-qualify with lenders. Pre-qualification involves a soft pull on your credit report. It won’t hurt your credit score. You can compare rates, terms, and fees in order to get the best deal for you.

Conclusion

While you are pre-qualifying online for different loans, work on improving your credit score. It takes time, but it is worth it in the long run. Always read the fine print and understand your loan terms, rates and fees. Payday loans and predatory lenders are not worth the financial risks you will be taking. If you’ve used any of these lenders, let us know about your experiences!