Best Personal Loans for Fair Credit in 2024
Here are the best personal loans for fair credit, plus information about how to qualify and build your credit.
Upstart: Best fair-credit personal loans for thin credit histories.
Achieve: Best fair-credit personal loans for joint applicants.
First Tech: Best fair-credit personal loans with flexible features.
Upgrade: Best fair-credit personal loans for debt consolidation.
Navy Federal: Best fair-credit personal loans for military members.
LendingPoint: Best fair-credit personal loans with fast funding.
Prosper: Best peer-to-peer personal loans for fair credit.
Best egg: Best secured personal loans for fair credit.
Lender
Rating
Amount
Credit score
4.5/5
$5,000-$50,000
620
5.0/5
$500-$50,000
660
4.5/5
$2,000-$50,000
560
How to compare personal loans for fair credit
Here are the top features to compare on fair-credit loans.
Annual percentage rate: A personal loan APR includes the interest rate and any additional fees imposed by the lender. It serves as the most accurate tool for comparing the costs of personal loans and other financing choices, such as credit cards. Individuals with fair credit may encounter slightly higher personal loan APRs, hence it is beneficial to make comparisons.
Monthly payments: A lender is required to provide you with information about the monthly payments before you sign a loan agreement. This usually happens when you check your rate or after you have been approved. With personal loans, the monthly payment remains the same throughout the entire duration of the loan.
Borrower requirements: Make sure to compare the borrowing requirements of different lenders, such as the minimum credit score, income, and maximum debt-to-income ratio. It’s important to note that meeting the minimum credit requirements may not guarantee qualification, as lenders also take into account your income and existing debts. This is especially crucial if the monthly payment would strain your finances.
Repayment term: Repayment periods for personal loans with fair credit usually span from two to seven years. Opting for a longer term will result in lower monthly payments, but it will also lead to higher overall interest expenses. It’s important to select a repayment term that allows for manageable payments and enables you to pay off the debt within the agreed timeframe or even earlier.
Fees: It’s not very common to come across prepayment fees when it comes to personal loans. However, there are a few fair-credit lenders who may charge origination fees. These fees usually range from 1% to 10% of the loan amount, and the lender usually deducts the fee from the funds before depositing them into your bank account.
Other features: If you’re choosing between two affordable offers, compare these other features:
– Funding speed: Personal loans can be funded in less than a week, with some lenders even offering funding the next business day after application.
– Credit building opportunities: It’s important to choose a lender that reports payments to all three major credit bureaus, ensuring that your on-time payments contribute to improving your credit score. Some lenders also provide credit score monitoring to help you track the impact of your payments on your score.
– Payment flexibility: If you anticipate needing more flexibility with your payment schedule, consider finding a lender that allows you to change the payment date instead of requiring you to stick to the original date for the entire loan duration.
Fair-credit personal loan rates
If your credit score is lower, it’s likely that the annual percentage rate on your personal loan will be higher. However, if you are a qualified borrower, you may find the most affordable loans from federal credit unions as they limit the APR to 18%. To get an idea of your monthly payments, you can make use of a personal loan calculator.
| Borrower credit rating | Score range | Estimated APR |
|---|---|---|
| Excellent | 720-850 | 13.40% |
| Good | 690-719. | 15.86%. |
| Fair | 630-689. | 18.93%. |
| Bad | 300-629. | 21.14%. |
Source: Average rates are based on aggregate, anonymized offer data from users who pre-qualified in NerdWallet’s lender marketplace from Jan. 1, 2024, through Jan. 31, 2024. Rates are estimates only and not specific to any lender. The lowest credit scores — usually below 500 — are unlikely to qualify. Information in this table applies only to lenders with maximum APRs below 36%.
Where to get a personal loan with fair credit
Credit unions and online lenders are the top choices for obtaining a personal loan with fair credit. However, having a solid connection with a nearby bank can also greatly benefit you.
– Credit unions may consider your membership history, in addition to credit and income, when reviewing your personal loan application.
– Online lenders have the ability to use alternative data to assess your full financial situation, rather than solely relying on your credit and income.
– Fair-credit borrowers may face challenges in qualifying for a loan from major national banks, but having a strong relationship with your local bank could increase your chances of approval.
How to get a personal loan with fair credit
– Review your credit reports to identify any errors or areas for improvement in your credit.
– Compare the requirements of different lenders to understand what they consider when evaluating loan applications.
– Pre-qualify for a personal loan to assess your chances of approval and explore various offers from different lenders.
– Submit your application, most lenders offer convenient online applications that can be completed in just a few minutes. However, keep in mind that certain banks and credit unions might prefer an in-person visit. To make the process smoother, gather all the necessary documents like W-2s, pay stubs, and government-issued IDs beforehand. This way, you’ll be well-prepared and can speed things up.
Tips to boost your chances of qualifying for a fair-credit loan
1. Increase your loan security: While most personal loans are unsecured, there are options for secured personal loans that require collateral. By providing the bank with something valuable as collateral, such as a savings or investment account, you reduce the risk for the lender.
This increased security may improve your chances of getting approved for the loan. Online lenders, on the other hand, often prefer a vehicle as collateral. So, consider securing your loan to enhance your approval odds.
2. Consider a co-applicant: If you want to qualify for a lower interest rate, adding a co-signer with a higher income and better credit can be beneficial. A co-signer is someone who agrees to take responsibility for the loan if you are unable to repay it. However, it’s important to note that the co-signer does not have access to the loan funds. .
Alternatively, you may explore a joint personal loan, which is similar to a co-signed loan but allows your co-applicant to access the funds as well. In both cases, if you fail to repay the loan, your co-applicant becomes responsible for repayment, and both of your credit scores may be negatively impacted. Adding a co-applicant can be a helpful strategy to improve your loan eligibility