How to Get a Personal Loan With Fair Credit

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If your credit isn’t great because you owe too much money, taking out a personal loan to consolidate your debt could be a smart move. Not only can a personal loan help you consolidate several different bills into just one, but you can usually get a better interest rate. This is especially true when you need to consolidate credit card debt. Where the average credit card interest rate is well over 17% APR, some personal loans come with rates that are considerably lower.

The problem is, the best personal loans and rates go to those with excellent credit — which usually means anyone with a credit score of 720 or higher. If you have “okay” credit or fair credit, you may not be able to qualify for the best loans on the marketplace.

Money360’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. Our picks for the top lenders for fair credit include:

#1: Avant

Avant is a direct lender that offers personal loans that could fund as soon as the next business day after you’re approved. Loan amounts are offered between $2,000 and $35,000, and you can repay your loan for up to five years.

Like other personal loans for fair credit, you need to keep an eye on fees with Avant. Not only do they charge interest between 9.95% APR and 35.99% APR on your loan amount each month, but you’ll pay an upfront administrative fee of around 4.75%. Fortunately, Avant Personal Loans are available for consumers with credit scores as low as 580.

#2: LendingClub

LendingClub is a peer-to-peer lender that makes it easy for consumers to borrow money with fair credit. With peer-to-peer lending, you borrow money from individual investors instead of a traditional bank.

The minimum credit score to qualify is just 600, and loan amounts are available up to $40,000. You can repay your personal loan from LendingClub in three to five years, and interest rates fall between 6.95% and 35.89% based on your creditworthiness. Keep in mind that, with LendingClub, you’ll pay an upfront origination fee on your loan that typically falls between 1% to 6% of the loan amount.

#3: Upgrade

Upgrade is another lender that is perfect 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 up to $50,000 depending on your credit score, income, and other factors.

Loans can be repaid for up to five years, and you could get access to your money in as little as 24 hours. Note that you’ll need to pay an origination fee of up to 6% for these loans, and that APRs range between 7.99% and 35.89% based on your creditworthiness.

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.

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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 follow chart shows how each range of scores works and the 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 biggest 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 One: Fix What You Can

Before you go any further, pull your free credit report. Are there any items on your credit report 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 a personal loan — it also makes it more likely that you’ll get a lower interest rate.

Step Two: 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 little more than 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 terms.

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Step Three: 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, there’s almost always 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. You can also try browsing our top picks for personal loans and bad credit loan options. Many times, online personal loans wind up being the best option available.

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.

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