A personal loan can help you be in control of your high-interest debts or in funding a big purchase and most of them have fixed monthly payments making it easier to budget your monthly payments and there is absolutely no need for you to pledge collateral in order to get approved.
This article has been made to put those with fair credit on how to go about getting a personal loan.
What is Fair Credit?
According to the FICO score scale range of 300 to 850, a fair credit score is defined as a score between the 580 and 669 range. And as we all know credit score is one of the vital considerations whenever you want to lend money.
If you have an excellent credit score, many loans with favorable and pleasant terms would be readily available to you.
However finding a good deal on a personal loan can be very challenging if you happen to have a fair credit score as some lenders might not work with you, other lenders may charge you with a higher rate than they would charge borrowers with more creditworthiness but that shouldn’t discourage you.
Borrowers with a fair credit score might not qualify for personal loans with the best rates but many lenders will still offer reasonable financing price offers.
The interest rates, loan amounts, fees, and other terms might vary widely from lender to lender, and finding the best one requires you to evaluate your options carefully before making a decision.
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Best Personal Loans for Fair Credit
#1. Upgrade
Upgrade offers a flexible repayment term of 2 to 7 years and borrowers with a credit score as low as 550 are eligible for a personal loan.
Plus they offer various discounts including using some of your loan funds to pay your credit directly which means you can use it for debt consolidation. Plus it can be used for credit cards, home improvement, and large purchases.
Once an upgrade loan is approved, it takes four working days for a borrower to receive the money and if the upgrade is paid directly to a creditor it can take up to two weeks for the funds to get cleared.
Pros
- Low minimum credit score requirements of 580
- Loan amount of $1,000 to $35,000
- Loans can be used to cover business expenses
- Offers direct payment to creditors for debt consolidation.
Cons
- High APR range of 5.94% to 35.97%
- Origination fees
- Late payment and insufficient funds
- Only two loan repayment offers are available.
#2. Avant
Avant is another lending platform that offers both secured and unsecured loans through a third-party bank. It focuses on low and middle-income earners with fair to good credit scores and only requires a minimum credit score of 580.
It also has flexible repayment terms which are within 24 to 60 months i.e 2 to 5 years and they also offer an autopay discount.
Just like many other lenders, Avant loans can be used for debt consolidations, moving expenses, home improvement, large purchases, vacation purposes,s and so on.
Plus once your application has been approved, you get funded on the next business day or in one working day.
Pros
- Offers secured and unsecured loan
- Requires a minimum credit score of 580
- Loan terms are up to 5 years (60 months)
- Loan amounts of $2,000 to $35,000
Cons
- Co-signers and co-applicants are not accepted
- High APR starts from 9.95% to 35.99%
- Upfront administrative fee.
#3. Rocket Loans
Rocket Loans also offers personal loans and it is one of the most accessible options and available lenders in most states due to its low minimum credit score requirements and fast funding.
However, borrowers will pay an origination fee and they have a repayment term of only 3 to five years (36 to 60 months).
Rocket loans also run a soft credit check which will not affect your credit score in any way. Cheaper loan options are usually available to borrowers with higher creditworthiness.
Plus when your loan application has been approved, you get funded in one business day and sometimes earlier.
Pros
- Offers same-day approval and sometimes funding.
- No prepayment penalties.
- Discount rates on autopay.
- The prequalification process only requires a soft credit check.
Cons
- Limited loan repayment term
- Does not permit a co-signer or co-applicant
- Does not offer direct payment to creditors to consolidate debts.
- Charges an origination and late payment fees.
#4. Discover
Discover is one of the top lending platforms that offer personal loans and it is known for its flexible terms and its wide range of repayment terms ranging from 36 to 84 months i.e 3 to 7 years which allows you to choose an option that best suits your budget and financial needs.
And you can also prequalify for a personal loan without affecting your credit score because Discover uses a soft inquiry which will be very helpful if you have fair credit.
Discover loans are available in all 50 states plus when your application has been approved you can expect to receive your loan in one working day and borrowers can lend within $2,000 to $35,000.
Pros
- Do not charge an origination fee.
- Pre-qualifications only require a soft credit check.
- Quick funding.
Cons
- A small amount of loans
- High APR of 5.99% to 24.99%
- Minimum credit requirements not disclosed.
Guide for Choosing the Best Personal Loans for Fair Credit.
If you happen to have fair credit and are probably wondering how to get a personal loan, these are a few of the things you should put into consideration before making that decision.
Below are some of the most important considerations to look out for.
Why you need the loan:
before taking a personal loan why you need the loan should be put into consideration.
Do you want to use it to consolidate your debt or do probably you need it to consolidate your debts into a much lower fixed-rate payment?
Then a personal loan is the best option for these purposes unlike credit cards since you will be paying at the end of the repayment period and also at a much lower rate.
- How quickly can you repay the loan: when thinking of taking a personal loan, you should also consider how you can repay the loan you are borrowing quickly. If you plan on paying in a few weeks or months’ time then you can use your credit card since it’s for a very short time but if you plan on taking much longer maybe in 2 to 7 years then a personal loan is the best option for you.
- What you can afford: another thing to consider is to make sure you are taking a loan you can afford to pay. Evaluate your budget carefully, and make sure the loan you are borrowing is something that will fit into your monthly budget in order to pay comfortably as qualifying and affording a loan is two different a thing.
- Do you qualify for the loan: with fair credit, it might be challenging to qualify for a loan especially when you have debts that are overdue for payment on your active accounts. To qualify make sure all your accounts have been brought to a current before applying and if after all these you still don’t qualify, you can opt for a co-signer.
Also, you can check this: Best Online Personal Loans Of 2022
Comparing Personal Loan Lenders for Fair Credit
There are also factors to put into consideration when you plan on taking or applying for a personal loan with fair credit. Some of these factors being referred to include:
- Qualifications: it is no news that with a fair credit it is hard to qualify for a personal loan (hard but not impossible) which makes qualifications a very important factor. Most lenders will evaluate your credit score but they will also consider your income, credit history, and your ability to repay the loan so you might want to improve your chances of getting that loan by making sure you can afford the loan and you don’t have any debt that is overdue for payments i.e delinquents.
- Annual percentage rates (APR): as you compare loans, also compare the APR rather than their interest rates because it comprises the fees you will get to pay, unlike the interest rates. So you should put it into consideration because that is where fees like the Origination fee reflects.
- Repayment terms: when choosing the lender, make sure they also offer the repayment term you need as many lenders offer short repayment periods of 3 to 5 years. Except you plan on paying for a short period of time otherwise make sure the repayment term is what you want.
- Funding speed: this factor is very important if you need the money urgently. You should look for a lender that funds you in a matter of days. Most top personal loan providers can guarantee you next-day funding.
How to Apply for Personal Loans With Fair Credit
The process of application may differ from lender to lender and can also depend on your score. Below is the general step to follow when taking a personal loan with a fair credit:
- Check your credit score: the first step is to check your credit score which can be done using your credit card or you can opt for a credit checking website before you set out to look for the best lender to take out a personal loan from.
- Improve your credit score: improving your credit score will give you a boost and increase your chances of getting a personal loan with a good interest rate because with a fair credit the interest rate is usually high and taking your time to improve your credit score will help increase that chance.
- Evaluate your budget: before going on the hunt for the right or best lenders, you also evaluate your budget and how much loan you can afford and how you intend to pay.
- Prequalifying with multiple lenders: it is no news that some lenders offer a pre-qualifying process that allows you to see the terms you are likely to receive once your loan has been approved without a hard check.
- Add a co-signer: this can be done if you need to boost your applications if you want more favorable terms. A co-signer is a second individual that agrees to pay back the loan if at all you are unable to pay more like a guarantor and this helps to reduce the risk you seem to the lender.
- Submit your application: after all, this is done and you have found the right lender that suits you, you can go ahead to submit your application whether online or physically. Prepare to provide personal information too like your address, income information, and the likes.
Frequently Asked Questions (FAQs)
There are several reasons why people obtain a loan. It could be for the purpose of:
- Venturing into a new business
- Moving expenses
- Deposit for a house or home improvement and so on.
This will depend on the amount you wish to borrow or your credit history and most times it doesn’t require you to secure a loan against your property and even if it does, it is advisable you think carefully before going ahead with the application.
Of course yes, the fact that you are doing it online is an advantage. You get to do it at the comfort of your house and you get funded quickly also with less paperwork and stress.
Yes, although some lenders don’t allow it and charge for prepayment. So it is necessary to check with your lender whether they permit it or not.
If you want a good and favorable interest rate then maintaining an excellent credit score is very important and with a credit worthiness of about 750 and above you are guaranteed the best terms.
References
- bankbazaar.com – personal loans
- investopedia.com – best personal loans for fair credit
- forbes.com – what is the best personal loan for fair credits
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