Best Personal Loans for Fair Credit of September 2023

Final Verdict

If you have a lower credit score, there are still plenty of options for personal loans. Not all companies require great credit, and applying with a co-signer or co-applicant will increase your chances of qualifying—and getting a better rate.

PenFed offers great rates and flexible loan terms for borrowers, and membership is open to anyone. There are no hidden fees or costly origination fees on its personal loans, making it a cheaper option than other lenders. The other companies on this list are great for borrowers looking for a lender that can work with their personal financial situation.

Guide to Choosing the Best Personal Loans for Fair Credit

Should You Get a Fair Credit Personal Loan? 

If you have fair credit and you’re thinking about getting a personal loan, there are a few things you should consider before making a decision. Some of the most important considerations are why you need the loan, how quickly you can repay it, what you can afford, and if you can qualify.?

• Why you need the loan: A personal loan can be a good option if you have a one-time expense you want to pay off over time or if you want to consolidate debt into a lower fixed-rate payment. It’s a better option than a credit card for these purposes since you’ll pay the debt in full at the end of the repayment period and will usually get a lower rate.
• How quickly the loan can be repaid: If you think you can pay off the money you’re borrowing very quickly (e.g., in a matter of weeks or months), then you may be able to use a credit card to fund the expense. However, if you need more time to pay (e.g., two to seven years), a personal loan is a better choice.
• What you can afford: Before you get a loan, one of the most important things to do is make sure you can afford it. Qualifying for a loan and affording it are two separate things. Carefully evaluate your budget and make sure you can comfortably make the monthly payment before signing on the dotted line.
• If you can qualify for the loan: Qualifying for a loan with fair credit can be challenging, particularly if you have active delinquencies on your accounts. To improve the odds that you’ll get approved, bring all of your accounts current before applying for a loan. If you still can’t qualify on your own, consider applying with a co-signer.

Ultimately, the decision to get a personal loan depends on what’s important to you and your financial situation.?

FICO Credit Score Ranges

Where to Get a Personal Loan With Fair Credit

Although you won’t get the best rates with fair credit, there are still lenders willing to work with you. You should explore the typical sources of personal loans:

• Online lenders: There are many online lenders that partner with banks and credit unions to provide loans, and some of them advertise loans for people with fair or worse credit. Online lenders may be your best bet for finding a loan with fair credit; see our picks for the best online personal loan lenders to check your rates.
• Credit unions: You can also go directly to certain credit unions and banks; some online credit unions, like First Tech Federal Credit Union, offer loans to people with scores in the fair credit range. Local credit unions are worth checking, too; if you’re already a member, you may have an easier time qualifying.
• Traditional banks: Check your rates with some traditional big banks, like Discover, TD Bank, and/or U.S. Bank. You may have a harder time qualifying, but pre-qualifying is free and doesn’t hurt your credit, so there’s little downside aside from the time investment.

Comparing Personal Loan Lenders for Fair Credit

When comparing personal loans for fair credit, it’s important to consider the qualifications, APR, repayment terms, and funding speed.

• Qualifications: It’s harder for people with fair credit to get loans, so knowing what it takes to qualify for a personal loan is important. Most lenders evaluate your credit score, but they’ll also consider such things as your income, ability to repay the loan, and credit history. To improve your odds of qualifying, make sure you can afford the loan and you don’t have any actively delinquent accounts.
• Annual percentage rate (APR): When comparing loans, make sure you compare the APR rather than the interest rate. Unlike the interest rate, the APR also includes the fees you’ll be required to pay. For instance, many lenders charge origination fees, which are often reflected in the APR. By comparing APRs across different loans, the effect of these fees is taken into consideration.
• Repayment terms: Ensure that the lender you select offers the repayment term length you want. Many lenders offer limited repayment terms of 36 or 60 months. However, if you need more or less time to repay your loan, you may be able to find a lender that offers a shorter term of a year or less or a longer term of up to 180 months.
• Funding speed: If you need money quickly, look for a lender that can get you funded in a matter of days. Many of the best personal loan providers can get you funded as quickly as the next business day after your loan is approved.

How to Apply for a Fair Credit Personal Loan

The basic steps you’ll need to take to apply for a fair credit personal loan are:

• Submit a preliminary application with basic information about yourself and the loan
• Review introductory offers from your lender and decide if you want to proceed
• Agree to a hard credit check and submit a full application
• Review and accept the terms offered by the lender
• Provide any additional information requested by the lender (e.g., pay stubs, tax returns)
• Receive funding as soon as the same day or up to several days after you apply
• Set up an online account with the lender to manage your loan

Provide Basic Information

If you’re ready to move forward with a personal loan, the first step is to submit an application. You’ll usually be required to share information about why you need the funds, the amount of money you want, and how long you’ll need to repay the loan. As part of the process, you’ll also need to share personally identifiable information (e.g., your Social Security number and birthdate) along with information about your income.

Review Preliminary Offers and Agree to a Hard Credit Check

Once your initial application is submitted, some lenders will run a soft credit check to pre-qualify you and let you know the rates and terms you can get. Only after you’ve had a chance to review loan options and choose the one you want will the lender proceed to the full application and hard credit check. Other lenders don’t offer pre-qualification and will require that you submit a full application and undergo a hard credit inquiry to see your loan options. Make sure you understand when and how your credit will be checked at the onset.

Accept the Terms and Provide Additional Information

After the lender has evaluated your credit, you may be asked to provide some other information so they can confirm your income and identity. For example, you may need to share your tax returns, pay stubs, and driver’s license. Keep in mind, the more completely you fill out your application, and the quicker you submit any required information, the quicker your loan can be approved and funded.?

Receive Funding and Manage Your Account Online

When the lender is done evaluating your file, they’ll let you know if you’re approved and provide details about the terms of your loan—e.g., rates, fees, repayment terms, etc. After you accept the terms, then you’ll receive the funds in the way you identified in your application; usually, you can request that funds be disbursed into your bank account or sent directly to your existing creditors. Sometimes this can happen as soon as the day you apply. However, it can take up to a few days.

Then, all that’s left is to manage your loan and make your monthly payments. Most lenders allow you to manage your account online through a customer portal or an online app.

Fair Credit Personal Loan Alternatives

• Cash advance apps: Cash advance apps like Earnin are an alternative to traditional payday loans; they lend you money against your paycheck, but still come with some fees.
• Buy now, pay later: Buy now, pay later apps provide short-term financing for purchases; they usually don’t charge interest but they often require an upfront payment. Buy now, pay later loans allow you to pay for a purchase in several weekly or monthly installments. BNPL loans don’t usually affect your credit unless you fail to pay on time. They’re also known as point-of-sale (POS) installment loans.
• 0% purchase APR credit cards: A credit card with a 0% purchase APR—many of which last for a year or more—can be a useful way to pay for an expensive purchase over time. Just be sure to make your payments on time, and pay off the entire balance before the 0% period is over. If you don’t, you could end up paying more and/or damaging your credit.
• 0% balance transfer APR credit cards: If you’re paying down one or more debts, a 0% balance transfer credit card allows you to move the balances over and pay them off without accruing more interest. You’ll usually pay a transfer fee, and if you don’t make your monthly payments you can lose the 0% rate and hurt your credit. But if you abide by the card terms and pay off the balance within the 0% period, a balance transfer can be a great way to help reduce your debt.
• Crowdfunding: A crowdfunding site like GoFundMe or Meal Train could be worth exploring, depending on why you need a loan. These platforms can be helpful if you need to raise funds for medical, emergency, educational, or memorial expenses.
  

How to Improve Your Fair Credit Score

If you want to improve your credit, start by learning how credit reports and credit scores work. Once you have the basics down, there are several steps you can take to raise your credit score—some will take more time to show positive results, while others will be more immediate.

• Check your credit reports: Get your credit reports from Equifax, Experian, and TransUnion. Look for errors that could hurt your credit, like incorrect late fees or accounts that don’t belong to you. Dispute them with the credit bureaus and you may see your score rise. Consider using a credit monitoring service to keep tabs on your reports.
• Always pay your bills on time: This is essential for long-term credit health. You won’t see your score go up every time you pay a bill on time, but missed payments will have a significant negative effect on your credit. Set up autopay to help ensure you don’t miss payments (and be aware that autopay is not foolproof).
• Reduce credit card balances: Credit cards are a form of revolving credit—where you can spend up to a limit, pay the balance down, and then spend again. The amount of revolving debt you have compared to your credit limit is known as your credit utilization ratio, and this has a big impact on your credit. The closer you are to your limit, the worse it is for your credit score. Paying down your credit cards can quickly boost your score; consider making multiple payments throughout the month to keep your balances low.
• Improve your credit mix: Having a diverse set of credit accounts on your credit reports is good for your score; if you don’t have both a revolving credit account and an installment loan on your credit reports, getting the one you’re missing (or both, if necessary) could improve your score. But don’t get into debt just to improve your credit.
• Get a credit builder loan: If you don’t have an installment loan on your credit reports and/or you need to recover from some missed payments, a credit builder loan is an inexpensive way to accomplish both—without going into debt. A credit builder loan is like a reverse loan: You make all the monthly payments first, building up a record of on-time payments, and then you get the money at the end.
• Become an authorized user on a credit card: As an authorized user on a credit card, the account will appear on your credit reports. This means it can help build your credit, as long as the card is used responsibly. If the card is used irresponsibly, like missing payments or maxing out the limit, it can hurt your credit. This is why it’s important to only become an authorized user of someone you trust to manage the account well.
  

Methodology

Investopedia is dedicated to providing consumers with unbiased, comprehensive reviews of personal loan lenders. To rate providers, we collected hundreds of data points across more than 40 lenders, including interest rates, fees, loan amounts, and repayment terms, to ensure that our reviews help users make informed decisions for their borrowing needs.