A personal loan is one of the most popular loans available for American consumers. While credit card borrowing continues to grow, personal loans have experienced a growth of their own in recent years. Borrowers are beginning to recognize the real value that lies within personal loans. Interest rates are lower and access to this form of borrowing product has begun to increase.

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Introduction

Personal Loans for Fair Credit

While personal loans are used widely in the United States, they’re still misunderstood by many borrowers. If you find that you’re not quite sure how the personal loan process works, this guide will be a good start. If you have fair credit, you might be wondering what the best way to approach the process is. It can be difficult to have the confidence to apply for a personal loan if you don’t have a good credit score.

This page will help you understand how to get personal loans for fair credit. It will help you assess your situation and determine the best route to approaching the application process. Make sure to read all the information in this guide before proceeding to apply for a personal loan.

Personal Loans: Better for Your Credit

One of the primary reasons people with fair credit want to find personal loans is because it can improve their credit. It may sound silly that more borrowing can improve your credit, but it’s true. If you borrow the right way, and exhibit good lending behavior, your credit score will improve.

Personal loans are term loans, which means that they don’t appear the same way on your credit report as credit cards do. As long as you make your payments on time, your credit will improve. With credit cards, the amount of outstanding debt you owe on your credit card will greatly impact your score. If you’re using a large amount of your limit on your credit card, you’ll find that your credit score is negatively influenced.

It’s much easier to end up in a debt trap with a credit card. It’s too easy to continue spending with it once you’ve already paid it off. Credit cards allow you to exhibit bad credit behavior, whereas personal loans encourage you to make payments on time and relieve yourself of your debt. For this reason, if you know how much money you need to borrow, a personal loan is actually better for your credit.

Secured or Unsecured?

If you have fair credit, you need to ask yourself whether or not you should be applying for a secured or unsecured loan. Your chances of getting approved for one of these loans will depend on your credit score. We will explore both of these loan types in further detail below.

Secured

Secured loans are by far the easiest form of loan for someone to acquire if they have fair credit. Secured loans are loans that are secured against a personal asset of the person who is borrowing the money. For example, you might use your home or car to secure a loan. With this type of loan, you will end up having your property seized if you default on your loan. For this reason, this type of loan should only be used by people who are certain that they will be able to pay back their debts.

You don’t want to get a secured loan if your financial situation is already unstable. You will end up losing a lot if you default on the loan, it could put your entire family at risk if you don’t make your payments on time. We highly suggest you don’t use this type of loan unless you are 100% certain you will be able to meet your financial commitments. If you can do this, it is a great way to get personal loans for fair credit. Lenders will look much more favorably on you if you are able offer up collateral against your loan.

Unsecured Loans

Unsecured loans are much less risky for borrowers, but they’re also much harder to get for people with poor credit. This is because banks won’t be able recuperate any of the money if you decide to default on the loan. They are much riskier for lenders. You will have to make much more effort to receive this type of loan if you have fair credit.

You won’t have to put your home or other valuable assets at risk to receive this type of loan. For this reason, we suggest you get this type of loan if you are able to obtain one. The only major downside to this form of loan is that interest rates are much higher, the risk the lender takes on is compensated by the fact that they can charge you a higher interest rate for the money that you can borrow.

Co-Signers

Another solid option for those with fair credit is to get a co-signer. Co-signers are people who guarantee the loan for you. Many co-signers tend to be family or close friends. If you default on the loan, this person will then also be responsible for paying it – it could potentially leave them with a huge financial burden. For this reason, getting a co-signer should be done with extreme caution. You don’t want to end up damaging the credit score of a family member or close friend.

If you do decide to get a co-signer, you need to make sure that this person fully understands the potential ramifications of this action. You don’t want to ruin a relationship because the person thinks that you’ve ripped them off. Approach this with extreme care. It must be said that millions of Americans have used co-signers successfully, and that it does bring a real benefit to a lot of borrowers in the United States.

Take Your Application Seriously

If you want personal loans for fair credit, you’ll have to take your application extremely seriously. It’s much harder to get a loan if you have fair credit instead of excellent credit, so don’t be naïve about how much effort you should put into your application process. The most important component of your application will be your credit score. Your credit score is what lenders look at when they’re trying to decide if you’re a solid borrowing partner. But many people don’t take care of their credit score, nor do they know how to.

There’s actually a way to improve a fair credit score extremely quickly. You should make sure to try and do this before you apply for any loan. It might not work for everyone, but the majority of people will be able to improve their score a bit before they apply for a loan. Even just a few points will help you improve your chances of getting personal loans for fair credit. Follow the tips below if you want to have a higher chance of being approved for a personal loan.

Check Your Credit Report

While many people know their credit score, few people have a deep understanding of their credit report. Your credit report is much more detailed than your credit score, it contains all the items that dictate what your score is. If you don’t know what these items are, then you don’t understand why your credit score is the number it is.

What many people also don’t know is that there are often mistakes on people’s credit scores. These mistakes arise from a variety of problems associated with the reporting industry. If you check your credit report and it has mistakes on it, you can request that these mistakes be removed. This can have a drastic impact on your credit score. Each reporting body in the United States is legally required to give you one free credit report per year, so head online and request one – the sooner, the better.

Use a Credit Repair Company

If you don’t have any success with the first step in this credit improvement journey, you can contact a credit repair company to help you improve your score. There are plenty of reputable companies that will only charge you if they’re able to get you results. Many of these companies have had success at improving scores across the nation, they’re a great option if you have some money to invest in your credit score.

Reduce Your Current Credit Card Debt

The least complicated and most sure-fire way to improve your credit score is actually just to reduce your current credit card debt. One of the biggest components of any score is the amount of debt you are carrying your credit card. This is calculated as a percentage of your credit limit being used. Your balances are updated monthly with the credit reporting bodies, which means that you never have to worry about waiting too long to see an improvement.

If you can afford to pay some of your credit card balances down, this is a great way to make sure that you improve your fair credit score quickly. It will sometimes improve your score up to 90 points!

Online Lenders: Better for Personal Loans for Fair Credit

If you’re looking for personal loans for fair credit, online lenders tend to be a better option. Traditional banks are often much stricter when it comes to lending practices. They prefer to curate a pool of people with extremely high credit scores and extensive credit histories. If you apply through one of these types of lenders, you will have to go to great lengths to be approved.

First, you will often have to go into a branch and meet with a personal banker. This banker will then want income proof, credit histories, and range of other documents. It can then take days or weeks for the bank to review your submitted application. You might not have this time if you need access to capital fairly quickly. And even after this drawn out application process, there’s a high chance you will be rejected.

With online lenders, you apply in just a few moments. You submit all your information from the comfort of your own home. You can upload documents and input information automatically. You will receive a decision in just minutes, and  money can be transferred electronically into your account within just 24 hours. In addition, you have many more options than you do with traditional banks. There are hundreds of online lenders, many of whom will cater to people with fair credit ratings. This is definitely a good option for those who want personal loans for fair credit.

One Loan at a Time

If you want to get personal loans for fair credit, you need to make sure to only apply for one loan at a time. Each time you apply for a loan, it is recorded on your credit report, which results in your credit score being marginally reduced. The more you apply and get rejected, the more your chances of being rejected in the future increase. Make sure to decide on a lender and apply for one loan at a time. Applying for multiple loans a day will be a huge red-flag to lenders.

Verdict

Getting personal loans for fair credit is not nearly as hard as you might think. There are plenty of online lenders that cater to people with less than perfect credit scores. You shouldn’t let your credit score ruin your confidence when you apply for financing.

We’ve researched the top personal loan providers on the net, check out our homepage if you’d like to see which partners are best to work with. We provide non-biased suggestions based off our extensive knowledge of the industry.

Remember, take steps to improve your fair credit score and take the application process seriously. Decide which type of loan is best for you before you apply for any financing. If you follow the various steps that we’ve provided in this guide, you’ll be on the fast track to receive personal loans for fair credit. If you need your financing soon, make sure to get started today!

FAQ

If your credit score ranges from bad to good, your loan options and your rates will differ. That’s why for this FAQ, most of the questions were divided according to the credit rating range included in your most frequently asked questions.

Knowing Where You’re At

Getting your credit score up into a certain number is associated with better approval rates and APR. In this section, you’ll get a feel on how likely your application will be approved based on the questions below.

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What is a good credit score for a personal loan?

While there already are online lenders willing to accommodate people with bad credit, you’ll get more options with a score of at least 660.

What is a good length of credit history to get a personal loan?

For smaller loans, it won’t matter at all. However, for larger amounts, it’s good to have at least two years of credit history to get approved.

What is considered a good credit score to get personal loan of $10000?

It’s possible to get one even with bad credit. However, your rates will definitely be higher and you might be required to secure the loan with a collateral.

What is the average credit score to get a personal loan?

There is no average loan. With the competition in the loan industry today, many alternative lenders are competing for the largest chunk of the market by lowering credit score requirements, among other things.

Good Credit

If your credit score is between 690 and 719, this section is for you.

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What are the best personal loans available with good credit?

SoFi, LightSteam, Earnest, and Freedom Plus are all great options when you have a great score.

What would payments on a 1000 personal loan look like with good credit?

Assuming an 8% interest rate, it will still depend on the payment terms. For example, if it’s only for one year, it will be $90 per month.

What is a good rate for a personal loan with 700 credit score?

With a high credit score, it is highly likely for you to get a personal loan with at a 7.50% rate.

What is a good interest rate for a personal loan with good credit?

It will vary on where you are on the ‘good credit’ spectrum. However, your APR for a personal loan should be between 6 to 9%.

Where can I get a personal loan with good credit and no checking account?

Most alternative lenders such as LendingClub accept loan applications from people even if they have no checking account. What they do is send a check via mail instead.

How do I get a personal loan with no income but good credit?

The easiest way is to get a cosigner for the loan. But if that’s not an option, there are online lenders that do not have income requirements.

Where can I get a large personal loan with good credit?

Because of your good credit, it will be relatively easier for you to get a large loan. LightStream and Earnest, for example, can loan you a maximum of $100,000 and $75,000 respectively.

How do I apply for a personal loan with good credit?

Try it with your bank as they’re more likely to be flexible with the rates. However, no matter your credit rating, the best way still to get the lowest rate is go rate shopping.

How can I get a small personal loan with good credit?

Very easily. With your credit score, you wouldn’t have any problem getting approved for a small personal loan.

Who has the best interest rates for personal loans with a good credit score?

With LightStream, it is possible to get approved for a loan with an APR of 3.34%. However, you need to set up AutoPay with them.

Where can I apply for an unsecured personal loan with good credit?

Basically, anywhere you want to. Expect a few rejections from big banks that require excellent credit scores, but aside from that, you won’t have any problem with approval.

Fair and Average Credit

With a score between 620 and 689, you have a fair credit. Find out what you can do to get the best deal on a personal loan here.

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Who has the best interest rates for personal loans with a fair credit score?

Avant and PersonalLoans.com tie up for the first place, both allowing you to get a loan with just an interst rate of 5.99%.

Where can I get a personal loan for $30,000 with fair credit?

Both options mentioned above can grant you as much $35,000 and are both terrific options for people with your credit score.

How do I get a personal loan with fair credit?

Except for traditional banks, most minimum credit score requirements fall under either fair credit or bad credits. To up your chances, a stable and substantial income stream (a proof that you can pay back your loan) will help your case.

Where to get a personal loan with fair credit?

Credit unions and alternative lenders are both great choices for you. As you won’t just meet the minimum requirements, your odds of getting approved at a good rate are better.

Where can I get a large personal loan with fair credit?

Unfortunately, if you need anything more than $40,000, you may have to apply for two separate loans which would add up to your desired amount. Because their minimum credit requirement is just 600, LendingClub may be able to grant you a bigger loan than other lenders.

How do I get a personal loan with fair credit $13,000?

Aside from a good credit score, a spotless credit history and a stable income will help you land a $13,000 loan deal.

How can I get a small personal loan with average credit?

Getting a small personal loan won’t be a problem at all. Just apply for one where you meet the requirements and wait for approval.

Which banks offers personal loans with fair credit?

You’ll need a higher score for banks to think about doing business with you. Try going to credit unions instead.

How do I get a $20000 personal loan with average credit and little collateral?

With peer to peer lenders, you will not a collateral at all. But like other alternative lenders, they look at other criteria usually overlooked by traditional banks. Make sure you know what these other criteria are and shine at those.

Where is the best place to get a personal loan with fair credit?

PersonalLoans.com. Not only does it have a vast lender network, you can also get approved in minutes.

Where can I get a personal loan with average credit for 5000 dollars?

As you would meet at least the minimum requirements for most alternative lenders, getting $5,000 will be easy as it is still considered a small amount. Refer to the recommendations mentioned in the previous questions.

What companies provide personal loans to combine car payments with fair credit?

What you’re talking about is a debt consolidation loan. However, as lenders rarely place restrictions on how you can use the amount.

How is Wells Fargo with personal loans for people with average credit?

It’s not a good option at all. As a traditional bank, you would need a good credit to qualify for any of their loan products.

What are my chances of qualifying for a personal loan with fair credit?

Where are you applying in the first place? For most alternative and peer-to-peer lenders, your odds are great. But for traditional banks, you will get outright rejected or be approved for an absurdly high rate.

What is a good interest rate for a personal loan with fair credit?

Anything above 15% can be considered a good interest rate. Of course, the loan term as well as other factors such as employment history will also affect your rate.

What is current interest rate for personal loan with fair credit?

As your rate will vary from one type of lender to another, it’s hard to say. For example, with traditional lenders, your rate can be around 22%. However, for online lenders, you may get the same deal for a much lower interest rate.

How do I get a personal loan with fair credit but no income?

You can use a proof of alternative income, which may not be an income in the strictest sense of the word. This could be proof of pension payments, child support, the income of your spouse, or whatever else may apply.

Bad Credit

If your score is between 300 and 619, you have a bad credit. But don’t fret. It’s still possible for you to get a personal loan.

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What is a good interest rate for a personal loan with bad credit?

Considering the wide range of what’s considered bad credit, a 20% APR may be considered good. However, it will still depend on how low your credit score is.

How do I get a personal loan with below average credit?

Recognize that your options are highly limited and that your best resort are alternative lenders. Then, only apply for a loan with companies you meet the requirements for.

How do I get a personal loan from a credit union with bad to fair credit?

Credit unions are more lenient that traditional banks, but their requirements are still higher at the ‘fair credit’ range. If you’re willing to put up a collateral for your personal loan, they may consider you.

How do I get a personal loan from credit union with bad to fair credit non-member?

Most credit unions require you to be a member to be able to avail of their loan products. That being said, you may not be able to borrow money from them.

Other Questions

With everything from good to bad credit scores covered, the questions below will apply to people of all credit scores because they’re just inquiries.

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How good does your credit have to be to get a personal loan from Huntington Bank?

Like most traditional banks, they only accept applicants with good to excellent credit rating. Thus, you need at least 690 to have a good chance of getting approved.

What is the average credit union interest rate on a 3,000 dollar personal loan?

Interest rates for credit unions greatly differ from one to the other. For example, San Diego County Credit Union only charges a fixed 5% APR. However, for Consumers Credit Union, rates start at 12%.

What is a good credit score for a personal loan from Vystar Credit Union?

Even with a score as low as 550, Vystar Credit Union might still approve your loan but with higher rates. Just to be on the safe side, you need at least 650 to get the loan.

Robert is our in-house expert on personal loans and finance. He got an MBA, specializing in Finance, before joining the workforce. After working for multiple Fortune 500 companies in the past decade, he brings a wealth of knowledge and experience to the table.