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Personal Loans for Fair Credit
Getting personal loans with fair credit can be tough. Your options are definitely more limited than with good or excellent credit and the deals might not be as clear-cut. To make the process of finding the right personal loan for fair credit easier, we outline some of the important things you need to take into account and also give you 6 of the best personal loans for fair credit below.
What’s Considered “Fair Credit”?
Each lender will have their own criteria as to what they regard as good, fair or bad credit.
Generally, the different FICO (Fair Isaac Corporation) ratings are set out as follows:
- 720 and above – Excellent credit
- 690 to 719 – Good credit
- 630 to 689 – Fair credit
- 629 and below – Poor credit
Fair credit, therefore, falls between good credit and poor credit. Most lenders will regard a score in the 600s as fair credit.
How Does Fair Credit Affect Personal Loan Qualifications?
If you have fair credit (sometimes referred to as average credit) you might not meet the qualification criteria of some lenders. Some lenders will only lend you money if you have a good or excellent credit score.
Fortunately, having a fair credit score does not mean that you won’t qualify for any loans. You might not qualify for the loan you ideally want, but if you do a little research you will probably find a personal loan for average credit that works for you.
If you have fair credit, you can expect your interest rate to be a little higher than loans for people with excellent credit and therefore that your loan will cost more.
Warning: Fair Credit Personal Loans Cost More
You might be able to get a personal loan with fair credit, but unfortunately, fair credit personal loans will have a higher interest rate than loans for good or excellent credit. The best interest rates are only given to those who have excellent credit.
The reason your interest rate will probably be higher with a fair credit loan is that you are seen as a slightly bigger risk than someone who has good or excellent credit. To compensate for this extra risk, the lender will charge a little more.
So how much can you expect to be charged for a personal loan for fair credit? Interest rates vary from lender to lender and are based on each lender’s own criteria (such as income, education etc.). According to the Federal Reserve Bank, the average personal loan rate is 10.13%. If you have fair credit and you are applying for a personal loan, you can probably expect your rate to be around this figure or slightly higher.
Unsecured Loans for Fair Credit
You would like to build a better credit score, but your current score just doesn’t allow you the chance to get credit so you can improve your score. You also maybe don’t have something of value to offer so you can at least get a secured loan. What do you do now?
Have you heard of unsecured loans for fair credit? This is essentially a personal loan for you to use in whatever way you want. Plus you don’t have to offer something of value as security.
Here are three unsecured loans for fair credit you can consider.
Stilt offers unsecured loans for fair credit according to the following loan details:
- Loan amount – $1,000 to $35,000
- Interest rates – Starting at 7.99%
- Terms – Up to 3 years
- Funding time – 2-3 days or sooner
LendingClub is a peer-to-peer lending platform. It offers unsecured loans for fair credit at the following rates:
- Loan amount – $1,000 to $40,000
- Interest rates – 6.95% to 35.89%
- Terms – 3 to 5 years
- Funding time – 6 days or sooner
Upgrade offers unsecured loans for fair credit according to the following loan details:
- Loan amount – $1,000 to $50,000
- Interest rates – 7.99% to 35.89%
- Terms – 3 to 5 years
- Funding time – between 1 and 4 business days
Upstart also offers unsecured loans for fair credit. Their loans look as follows:
- Loan amount – $1,000 to $50,000
- Interest rates – 7.46% to 35.89%
- Terms – 3 to 5 years
- Funding time – at least 1 day but it may take much longer
6 Best Personal Loans for Fair Credit
If you are considering getting a personal loan for fair credit, take a look below at our 6 best personal loans for fair credit.
Stilt (No FICO minimum)
With Stilt, there is no FICO requirement. This is because Stilt takes other factors into account in deciding whether or not to grant a personal loan. Stilt’s focus is to make loans available for immigrants who generally do not have the opportunity to build up a good credit score but that may still be financially strong.
- APR between 7.99% and 15.99%
- Loan amounts between $1,000 and $25,000
- Maximum loan term is 2 years
Avant (580 FICO minimum)
Avant offers personal loans to borrowers with a minimum FICO of 580. Average Avant borrowers, however, have a FICO score between 600 and 700. You also don’t need a minimum income to qualify for an Avant fair credit personal loan. but borrowers on average have about an income of $40,000 per year.
- APR between 9.95% and 35.99%
- Loan amounts between $2,000 and $35,000
- Loan terms between 2 and 5 years
- Charges up to 4.75% administration/origination fees
- Additional charges for late or unsuccessful payments
Lending Club (600 FICO minimum)
Lending Club is a peer-to-peer lending platform that offers personal loans to borrowers with a minimum FICO of 600 (although the average borrower has a FICO of 699). You don’t need a minimum income to qualify, but you do need three years’ credit history and you have to verify your income and employment. On top of that, you must have a debt-to-income ratio of less than 40%.
- APR between 6.16% and 35.89%
- Loan amounts between $1,000 and $40,000
- Loan terms between 3 and 5 years
- Lending Club charges origination fees of between 1% – 6% of the loan amount
- Additional fees are charged for late payments
Upstart (620 FICO minimum)
Upstart provides loans for borrowers who have a FICO of 620 and above. You also have to have a minimum annual income of $12,000. Other factors Upstart will take into account for approval is academic and job history.
- APR between 7.43% and 29.99%
- Loan amounts between $1,000 and $50,000
- Loan terms between 3 and 5 years
- Origination fees of 0% to 8% is charged for Upstart loans.
Best Egg (660 FICO minimum)
Best Egg offers fair credit personal loans to borrowers with a minimum FICO of 660. A big perk about Best Egg is they don’t charge any prepayment penalties.
- APR between 5.99% and 29.99%
- Loan amounts up to $35,000
- Loan terms between 3 and 5 years
- Best Egg charges origination fees of between 0.99% and 5.99%
Freedomplus (700 FICO minimum)
Freedomplus offers loans to borrowers with a minimum FICO of 700. To qualify, you must have verifiable income of at least $25,000.
- APR between 4.99% and 29.99%
- Loan amounts between $7,500 and $35,000
- Loan terms between 2 to 5 years
- No prepayment penalties
- Freedomplus charges origination fees of 0% to 5.00%
Student Loans for Fair Credit
If you have fair credit, you may find yourself in a sticky situation. You need a better education to earn more money. But you also don’t have enough cash to finance your education. What can you do? Have you considered getting student loans for fair credit? These are student loans that you may qualify for even if you only have a fair credit score. If you search with some diligence you might also find student loans with no cosigner required.
Federal Student Loans
Federal Student Loans are a great option. Just note that only U.S. citizens and permanent residents are eligible for federal student aid. There are mainly three types of federal student loans.
Direct Subsidized Loans
These types of loans are based on your financial need. The interest on the loan gets subsidized while you study. The federal government pays the interest on your behalf whilst you are studying. You start paying interest once you leave school or as soon as the grace period (the time when interest won’t accrue) ends.
Direct Unsubsidized Loans
This type of loan is based on the graduate or undergraduate’s course. Your school will have to confirm the cost of your specific course. This is not like a subsidized loan in that you are required to service the interest that accrues on your loan while you are studying.
A Perkins loan is only available to someone with exceptional financial need. Your school is actually the lender in this loan option. Check with your school if they do have any Perkins loan options. This type of student loan for fair credit usually has a lower interest rate when compared to private loan options.
Private loans typically have higher interest rates when compared to federal student loans. They also generally don’t have interest free grace periods. Private loans may be expensive but it is still an option to consider, especially if you aren’t a U.S. citizen or permanent resident.
You can use a personal loan for whatever you want. You may very well turn it into a student loan for fair credit. You can decide whether you want to offer something of value as security for the loan and turn it into a secured loan (which generally lowers your interest rate) or to leave it unsecured.
Business Loans for Fair Credit
You might be surprised to hear that there are indeed business loans for fair credit out there. Even if your personal credit score is as low as 500 you could still be eligible for a business loan for fair credit. Below are some of the options you can consider. Just beware, don’t lie on a business loan application. You are obligated to tell the truth irrespective of the size of the loan you are applying for.
Bad Credit Business Loan
The type of credit you apply for will depend on your situation. If you have a small cash flow issue and only need a couple of hundred dollars every second month or so, you might only have to consider a business credit card. These business credit cards can be both secured or unsecured.
For larger projects or situations requiring more capital, you can consider business loans for bad credit. Apply for a business loan with the credit score you have. Your business partner might be willing to sign as a co-signer for the loan (if applicable in your situation). Having a co-signer in certain situations can help cheapen the loan cost.
Invoice Factoring or Financing
Invoice factoring or also called invoice financing is almost like a secured loan. You offer your unpaid customer invoices to a lender as security for a loan. The lender offers a loan to you knowing they will receive your unpaid customer invoices as payment. The lender usually pays out only a percentage of your unpaid customer invoices as they will keep the remainder for themselves as interest.
Small Personal Loans for Fair Credit
You no longer have to worry about that small issue which requires some money to be solved. Even if your credit score is quite low, you can consider small personal loans for fair credit. It might be your best option.
Here is some small personal loan for fair credit options you can consider:
- Avant – They require a minimum FICO score of 580.
- LendingClub – This peer-to-peer lending platform only requires a minimum FICO score of 600.
- Upstart – They require a minimum FICO score of 620.
Home Loan for Fair Credit
It can be quite tough to get a mortgage on a visa. Are you looking to buy a home? Are you perhaps short with the required financing and out of luck with a loan from the bank? You can always consider a home loan for fair credit.
Mortgage Lenders for Fair Credit
Here are some home loan for fair credit options. Keep in mind these companies mainly serve the U.S.
- Rocket Mortgage – Requires a minimum FICO score of 580 and a minimum 3% down payment.
- J.G. Wentworth – Requires a minimum FICO score of 580 and a minimum 3% down payment.
- Quicken Loans – Requires a minimum FICO score of 580 and a minimum 3% down payment.
- New American Funding – Requires a minimum FICO score of 580 and a minimum 3% down payment.
- Vylla – Requires a minimum FICO score of 500 and a minimum 3% down payment.
- Network Capital – Requires a minimum FICO score of 600 and a minimum 3% down payment.
- Homebridge – Requires a minimum FICO score of 550 and a minimum 3% down payment.
- Mr. Cooper – Requires a minimum FICO score of 620 and a minimum 3% down payment.
- Citibank Mortgage – They don’t mention a minimum required FICO score. They consider alternative credit data and require a minimum 3% down payment.
- Navy Federal – They only serve military members and their families. They also don’t mention the minimum required FICO score. They take other sources of financial data into consideration and require no minimum down payment.
Consolidation Loans for Fair Credit
Are you struggling with many overdue loans, credit cards, or other types of credit? Are you looking for ways to simplify your payment schedules or even perhaps lower your monthly payments? Why don’t you consider consolidation loans for fair credit?
You can consolidate your loans in many different ways. It essentially requires you to bunch all of your different forms of credit into one single loan. This helps you to budget much easier since you only have to worry about one single monthly payment. Some consolidation loans offer you the option to extend the loan terms as well. Extending the loan terms can decrease your monthly payment, but beware it does increase the total amount of interest you need to repay over the lifetime of the loan.
Just a quick tip – some credit cards have a certain balance transfer fee that kicks in the moment you want to transfer your debt to another lender. Keep an eye on this to prevent any unnecessary expenses.
Best Consolidation Loans for Fair Credit
Below are two debt consolidation loan options you can consider. Some of these consolidation loans are only available to specific groups of people. Make sure you are eligible before you apply.
Upstart offers loans of up to $50,000 for you to settle your debt. They have an easy application process which only requires a soft credit check which does not affect your credit score. Their loan details are as follows:
- Interest rates – 6.00% to 29.99% depending on your financial profile
- Loan terms – 36 to 60 months
- Maximum loan amount – $50,000
Pioneer Services is a military lender who only serves military veterans. They want to help ex-members of the military to settle their bad debt. They offer the following:
- Interest rates – 11.99% to 35.95% APR’s (Annual Percentage Rate) compliant with the Military Lending Act)
- Loan terms – 36 to 48 months
- Maximum loan amount – Not available at this time.
5 Tips to Help Get A Personal Loan with Fair Credit
You will probably end up paying a little more for your fair credit loan than those with excellent credit so it is a good idea to put extra effort into doing your homework about the different lenders and loans available. Just because you will be paying more doesn’t mean you won’t be able to get a better deal at a different lender.
Here are 5 tips you can use to make sure you get the best deal.
1. Know and Understand Your Credit Score
The most important step in getting a fair credit loan is to actually know and understand your credit score and what your credit history looks like. This will help you look at the right loan from the get-go and understand what the lender will be seeing.
You can get one free credit report from each of the three credit bureaus (Experian, Equifax, Transunion).
Make sure to go through your report carefully so you can pick up on any errors. If you find any, make sure to dispute it, as it will definitely make an impact on your score.
If you have some time before you need the money from your loan, it might also be a good idea to focus on building your credit score. If you can raise your credit score by a few notches you might qualify for a better fair credit personal loan with a better interest rate.
2. Get Prequalified
Many online lenders offer you the option to do a soft credit check and to do a pre-qualification. This soft credit check won’t impact your credit score like a hard credit check does. Doing this pre-qualification will give you a better idea of whether you qualify and exactly the rates and terms the lender can offer you.
3. Review Different Lenders
It will definitely be worth it to take some time to do a proper review of lenders and your available options for fair credit personal loans. There are many different types of lenders out there, for example, traditional banks, online lenders and credit unions. Each lender has different pros and cons. Some lenders (like credit unions) offer flexible repayment terms, while other lenders (like online lenders) may offer lower interest rates.
If you spend time reviewing and comparing lenders, you can make sure the rate you get offered is the best one out there and that you won’t be paying an unnecessary cost for your fair credit loan. You can also make sure that you get the best repayment term and dodge possible hidden fees (like origination fees and prepayment penalties).
Comparing different lenders will be quite easy if you went through step 2 and did a prequalification.
4. Compare Personal Loan Rates
If you’ve done a pre-qualification for your top loan picks, you can easily compare the rates these lenders offer. You will also be able to see the additional costs involved in taking out the loan with them. Comparing this information will help point you at the best deal and ensure that you don’t get ripped off. This is especially important if you are getting a personal loan for fair credit, as these loans tend to be more expensive.
5. Read the Fine Print
As with most things in life, you have to read the terms and conditions. We know it is easier to just skip this part, but you might be agreeing to something that will have a negative impact in the future.
If there is anything you don’t understand in the fine print make sure to ask. It’s better to know what you’re getting yourself into upfront than being surprised later on.
Here are a few things you should be looking out for in the fine print:
- Prepayment penalties: This additional fee is sometimes charged by lenders if you pay the loan off sooner than planned.
- Origination fees: These are fees you get charged when your loan is processed.
- Unplanned APR: APR is your Annual Percentage Rate. This rate takes your interest amount and total costs like origination fees into account.
- Auto-withdrawals: Your lender might require payments to go off from your checking account automatically. If so, make sure you plan your cash flow and set a low balance alert on your checking account to avoid possible overdraft fees.
If you only have a fair credit score, all hope isn’t lost if you want to take out a personal loan. There are a few options for personal loans for average credit out there you can consider. If you keep in mind that your fair credit personal loan might cost a little more and you do proper homework you will likely find a fair credit personal loan that is a good fit for you.