All’s fair in love and credit? Not quite. For borrowers with fair credit — FICO Scores of 580 to 699 and VantageScores of 601 to 660 — finding a personal loan is often challenging. Many mainstream lenders prioritize borrowers with good or excellent credit, making it difficult (if not impossible) for fair-credit borrowers to find their financial best fit. Newer lending solutions, however, may offer loan products that come with substantial origination fees or APR.
What are your options? How do you find the best personal loans to boost your budget without breaking the bank? Using our data-driven SimpleScore methodology, we’ve compiled our top lending list. Here’s a look at the six best fair credit loans in 2021.
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The 6 best personal loans for fair credit of 2021
The best fair credit personal loans at a glance
| APR Range | Loan Amount | Term | Min. Credit | |||
|---|---|---|---|---|---|---|
| Avant | 9.95%–35.99% | $ 2K–$ 35K | 24–60 months | N/A | 600 | 3.2/5 |
| LendingClub | 10.68%–35.89% | $ 1K–$ 40K | 36–60 months | N/A | 600 | 3.2/5 |
| Upstart | 8.27%–35.99% | $ 1K–$ 50K | 36–60 months | N/A | 620 | 3.4/5 |
| Prosper | 7.95%–35.99% | $ 2K–$ 35K | 36–60 months | N/A | 640 | 3.2/5 |
| Upgrade | 7.99%–35.89% | $ 1,000 to $ 50,000 | 36 or 60 months | N/A | 620 | 3.5/5 |
| LendingPoint | 9.99%–35.99% | $ 2K–$ 25K | 24–60 months | N/A | 585 | 3/5 |
Best for secured loans – Avant
Feeling Avant-terous? This fair credit lender makes the personal loan journey quick and painless with next-day disbursements.
Sometimes if you’re having trouble getting approved for a personal loan, you may have to consider using a secured loan where you put up an asset as collateral. While this isn’t always an ideal situation and does carry additional risk, it may be necessary to secure the funding you need.
Avant is a personal loan company that allows you to put up your car as collateral to secure the loan. This may help you to get easier approval and possibly lower rates than with some of the other companies. But do be aware that if you default on your loan, the company can take your car in lieu of payment.
Avant is all about quick approval and funding of personal loans with OK credit and notes on its website that most borrowers have credit scores between 600 and 700. Just keep in mind all Avant loans are subject to an administration fee of up to 4.75%, and APR varies significantly based on your credit score.
Best online lender – LendingClub
Although LendingClub left the P2P lending game, it still offers a seat in the personal loans club.
Peer to peer (P2P) lending is when a company connects individual investors with people looking to borrow money. LendingClub was a leader amongst P2P lenders, but recently left the space and received regulatory approval to acquire Radius Bank at the beginning of 2021. Despite P2P being off the radar for LendingClub, fair credit loans are still available. You’ll have the option to add a co-borrower if you have a lower-than-average credit score. And what’s nice about LendingClub is you can get up to $ 40,000 with funding available in as little as four days. You can also see loan rates without your score being impacted. You can set up automatic payments from your bank, and there are no prepayment penalties if you don’t need the money for the whole length of the loan. It’s always great to know you won’t have to pay for borrowing money for longer than you have to with LendingClub.
However, you can expect an origination fee of 1%–6% when you join the club.
Best for AI approvals – Upstart
If Upstart kicks off the robot revolution, things aren’t so bad — these AI operators are fast to fund potential borrowers.
The brainchild of former Google employees, Upstart leverages AI technology to evaluate more than just your credit score, making it possible for more people to access personal loans. It’s worth noting, however, that while approvals and funding happen quickly, borrowers are on the hook for 1%–8% origination fees.
If you’re looking for personal loans with OK credit that give you a ton of flexibility, you may want to check out Upstart. Loans are available as low as $ 1,000 and go all the way up to $ 50,000. What’s really nice about Upstart is the fact you can get this much money in as little as one business day after you accept the terms of your loan. If fast-funding is part of your needs, Upstart should be towards the top of your shortlist.
Rate-wise, the company is on par with most of the other higher-quality options out there. Repayment terms are available in three and five-year options. These do come with no prepayment penalties, so you don’t have to keep the money for longer than you need to and keep paying interest.
Best peer-to-peer lender – Prosper
Prosper’s peer-to-peer priority powers panoramic personal loan product potential.
Like LendingClub, Prosper is a peer-to-peer lender — but this personal loan provider looks past your credit score to assess approvals. If you find yourself towards the top of the fair credit score range, you’re probably looking for fair credit loans that reward you for that work. Prosper has slightly higher credit score requirements than some of the other lenders out there at 640. Because of this, though, you can expect to get some of the better available interest rates possible.
Prosper uses the peer-to-peer model for loan financing, which means full funding may take some time as money is collected from multiple investors. The advantages to Prosper are that along with your credit score, the company considers your debt-to-income ratio, bankruptcy history and number of credit bureau inquiries to determine if you’re eligible for a personal loan. Borrowers will pay between 2.41% and 5% in origination fees.
Best for building credit – Upgrade
Level up your lending game with credit-building borrowing options from Upgrade.
Personal loans for fair credit are available from Upgrade for as little as $ 1,000, which is great if you have a smaller need. The max loan size is still impressive at $ 35,000, which can still help out with medium or larger needs. Upgrade advertises that some of the more popularly approved uses of their loans are refinancing credit cards, debt consolidation, home improvement and major purchases. Each of these options comes with some helpful resources to walk you through the process.
Upgrade offers easy online application and approval processes along with the ability to get “pre-approved” for loans without damaging your current credit score. In addition, Upgrade offers credit monitoring tools and online financial management education options to help borrowers improve their credit rating, but watch out for its origination fee, which ranges from 2.9% to 8%.
Best for debt consolidation – LendingPoint
Point your finances in the right direction with personal loans from LendingPoint.
LendingPoint is looking to get borrowers out of the costly payday loans cycle by offering personal loan and consolidation options for clients with less-than-perfect credit.
LendingPoint recognizes the risks of paying 400% interest with payday loan providers. It’s focused on supporting borrowers with less-than-perfect credit scores and histories by offering reasonable rates on personal loans to help consolidate outstanding debt. While you’ll still pay an origination fee of up to 6%, personal loans from LendingPoint can help break the payday lending cycle. The maximum loan size is a bit smaller at $ 25,000, but this should still be sufficient for a lot of people. Additionally, the lowest rate possible is a little higher than a few of the other available options, which might make this a less-desirable option for people towards the top of the fair credit rating spectrum.
What is a fair credit personal loan?
The better your credit score, the easier it is to get a personal loan with a solid APR and low origination fees. So it’s no surprise that most lenders prioritize clients with great credit ratings, leaving borrowers with fair or average scores stuck with less-than-ideal options such as high-interest payday loans.
Fair credit personal loans are exactly what it says on the tin — loans designed for borrowers with fair or average credit. While you’ll pay more in APR than borrowers with excellent credit, more lenders are now leveraging options such as peer-to-peer financing and AI assessments to speed up the approval process and fully fund loans ASAP, all without breaking your budget.
How personal loans work
Personal loans are offered by lenders, including traditional financial institutions and emerging financial technology (fintech) firms to qualified borrowers. To apply, borrowers must provide financial data including current income and proof of any other outstanding loans and must also agree to a credit check. The better your credit score, the more favorable your loan terms, since borrowers with higher credit ratings are lower debt-to-income ratio are considered at lower risk to miss payments or default entirely.
- Interest: This is the percentage you have to pay in addition to the money you borrowed as the main cost of borrowing. With fair credit, you should be able to get a lower interest rate than a lot of borrowers.
- Fees: Many personal loans with OK credit come with fees that you have to pay. Generally, these fees are upfront and should be counted into the cost of borrowing. Your fees may be lower because of your credit score, but you should expect to pay them, as even borrowers with great credit have to as well.
[ Read: Is a Personal Loan My Best Option? ]
What does it mean to have fair credit?
The two most popular credit rating systems — FICO Score and VantageScore — convert their numerical score ranges into five rating categories: Poor, Fair, Good, Very Good and Exceptional. A poor rating indicates your credit score is well below that of other consumers, and most lenders will look at you as a credit risk. Your rating is negatively impacted if your credit cards and lines of credit are constantly maxed out, you have defaulted on previous loans or you have declared bankruptcy.
[ Read: How to Raise Your Credit Score ]
An exceptional rating, meanwhile, demonstrates your credit score is well above the consumer average. You can increase your credit score by always making payments on time, diversifying the types of credit you use and keeping your credit utilization low.
| Credit Score Rating | FICO Score Range | VantageScore Range |
|---|---|---|
| Poor | Less than 580 | Less than 499 |
| Fair | 580–669 | 500–600 |
| Good | 670–739 | 601–660 |
| Very Good | 740–799 | 661–780 |
| Exceptional | 800 or more | 781–850 |
How to apply for a fair credit loan
Wondering how to get a personal loan with fair credit? Follow these steps:
- Collect your financial data. This includes current proof of income and any outstanding debts, along with personal information such as your address, date of birth and Social Security number.
- Determine how much you need. Before applying for a fair credit loan, know how much you need and what you’ll use it for; this might include consolidating other debts or paying for large projects such as home renovations.
- Get quotes from multiple lenders. Most lenders offer personal loan quotes that won’t negatively impact your credit rating. Shop around to see which lender can offer you the best terms and APR.
- Apply online. Once you’ve found your best fit, use your prospective lender’s online application portal to provide all relevant information and request your loan amount. Approval times range from just a few minutes to a few days with most online lenders.
- Collect your funds. In most cases, your funded loan will be directly deposited into the bank account you specify. Some loans are fully funded the business day after approval, while others — such as peer-to-peer loans — may take longer.
[ Read: The Best Bad Credit Personal Loans ]
How to qualify for a fair credit personal loan
Qualifying for a fair credit personal loan has become increasingly simple. Many lenders provide online tools so customers can check their rate without impacting their credit score. In order to qualify for a fair credit personal loan, you’ll first need to check your credit score against what the selected lender’s minimum credit requirement is. Be sure that when you shop for rates, you aren’t subjecting yourself to unnecessary credit checks as this can further damage your credit score. Read the fine print before submitting any personal information in order to prevent unsolicited hard credit checks.
How to improve your credit score for a personal loan
- Pay your bills on time: Payment history is often an area that lenders look at to determine loan eligibility. Making timely payments will help increase your creditworthiness and help you qualify for better personal loans.
- Get credit for making utility and cell phone payments on time: Utilities and cell phone bills in particular have a bigger impact on restoring your credit score than other payments. If you can’t afford to pay all your bills on time, make an effort to prioritize these bills in order to get a leg up.
- Pay off debt and keep balances low on credit cards: The less debt you have, the higher your credit worthiness. Pay off any debts you can afford to and be sure to keep balances low on your credit cards to avoid lowering your score.
- Apply for and open new credit accounts as needed: Especially if you’re just starting to build credit, opening a new credit account might be necessary to improve your score. Just be careful not to open up too many as each new credit account will have a hard credit check attached to it, which will lower your credit score.
- Don’t close unused credit cards: If you have a credit card that you aren’t using, hang onto it! The longer you hold a credit account, the better it will look for your score — even if you aren’t using it to make purchases.
- Dispute inaccuracies on your credit report: Access your free credit report and be sure there aren’t any discrepancies. If there are, report them immediately to have them removed from your account. Additionally, request for good faith bad marks to be dropped as this can make a big impact.
- Don’t apply for too many credit cards at once: Again, each time you open a credit account, you’ll undergo a hard credit check. Don’t apply for too many credit cards at once because each check results in a decrease to your score.
Alternatives to a fair credit personal loan
Not able to find a personal loan that works for your situation? There are plenty of alternatives that you can take advantage of that may be better suited to your needs. Some alternatives include:
- Peer-to-peer loan: These loans are funded by investors instead of financial institutions and are better suited to individuals who may not qualify for a traditional loan.
- Home equity loan: If you’re looking for a personal loan for home renovations, a home equity loan might be a great option — especially if you’re looking for low interest rates and are confident in your ability to adhere to the repayment plan.
- Credit cards: If your credit is just food enough, you may be able to snag a 0% introductory APR credit card. In fact, as long as you use the card responsibly, it may even increase your credit utilization ratio and thus, your credit score.
If you’re still unable to find a product that works for you, don’t give up hope just yet. By following the aforementioned steps to improve your credit score, you may be able to qualify for better loan products within a few months’ time.
[ Related: The Best Credit Cards for Fair Credit]
How to choose the best fair credit personal loan for you
How do you know which fair credit personal loan is your best fit? Start with our simple loan checklist.
- Consider your needs. How much money are you looking for? Some providers offer loans of up to $ 25,000, while others let you borrow $ 50,000.
- Examine the APR. APR interest varies across lenders. Depending on your credit score and credit history, you could pay less than 10% or more than 35%. Get a quote from multiple lenders before making your choice.
- Look for hidden fees. Most fair credit personal loan lenders charge one-time origination fees that range from 2% to 10% of your loan’s total value. For example, if you take out a $ 10,000 loan with a 5% origination fee, you’ll receive $ 9,500.
- Take term length into account. While 36- and 60-month terms are the most common for personal loan lenders, you can also find providers that offer 24 months or customized term lengths.
Fair credit personal loans FAQs
There are several ways you can improve your credit before applying for a loan. First, make all of your payments on time. If you’ve been late or missed a few payments, spend a few months catching up before applying for a loan. It’s also a good idea to lower your credit utilization wherever possible.
Absolutely. While some traditional lenders prioritize borrowers with good or excellent credit, many newer companies recognize that clients with fair credit do not represent an increased risk. While you can expect to pay higher APR and origination fees with these lenders, most consider a variety of factors for approval decisions.
Yes. All of the lenders on our personal loans with fair credit rating list will offer loans to borrowers with a 650 credit score, so long as there’s no evidence of previous bankruptcy or pattern of late or missed payments.
While some lenders — such as Avant — tend toward borrowers with scores over 600, others such as Upstart and Prosper consider more than your credit score to make their decision. While you’ll be paying more in APR and origination fees, these loans can help get your finances back on track.
Personal loans are available through a broad number of direct, peer-to-peer, and marketplace lenders. Be sure to check with different financial institutions to find the best product to meet your needs.
While more difficult, securing a personal loan with bad credit is not impossible. Many financial institutions provide personal loans to people with either no credit history or bad credit. In fact, some have no minimum credit score requirement at all.
Everyone is different, so this really depends on your personal situation. However, we recommend the lenders outlined in this article as they offer competitive rates and a broad range of solutions for personal loans for fair credit.
Yes and no. Securing a personal loan involves a hard credit check, which will ultimately decrease your score. Additionally, taking out a personal loan increases your debt ratio, meaning your credit score will go down. However, securing a personal loan can help you improve your credit in the long-run since you’ll have a bit of a cushion to get back in good financial standing. Plus, by making timely payments on your personal loan, you’ll naturally increase your credit score.
Too long, didn’t read?
If you need a personal loan — but have fair or average credit — you’ve got options. To quick approvals and funding with options like Avant to AI-driven loan decisions from Upstart, peer-to-peer funding from Prosper and even loans to help you build better credit with Upgrade, the evolving personal loans market makes it possible to find best-fit loans to defray unexpected costs, pay for large projects or consolidate existing debt — without breaking the bank.
We welcome your feedback on this article and would love to hear about your experience with the personal loans we recommend. Contact us at inquiries@thesimpledollar.com with comments or questions.
Last updated January 20, 2021 – Updated SimpleScore data and editorial guide.
