The Bankrate guide to choosing the best personal loan for fair credit
As of Sunday, January 17, 2021
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When comparing the best loans for people with fair credit, the first thing to look for is the lender’s minimum credit score requirement. Then it’s important to compare interest rates across multiple lenders; fair-credit loans tend to carry higher APRs than loans for good or excellent credit, so shopping around is critical. Also, before you ultimately decide on a lender, make sure that it offers flexible repayment terms and keeps fees to a minimum.
Loan details presented here are current as of the publish date. Check the lenders’ websites for more current information. The lenders listed here are selected based on factors such as credit requirements, APR, loan amounts, fees and more.
Best personal loans for fair credit in 2021
| Avant |
9.95%–35.99%
|
$2,000
|
$35,000
|
| Best Egg |
5.99%–29.99%
|
$2,000
|
$35,000
|
| Upgrade |
7.99%–35.97% (with autopay)
|
$1,000
|
$35,000
|
| Payoff |
5.99%–24.99%
|
$5,000
|
$40,000
|
| Upstart |
7.98%–35.99%
|
$1,000
|
$50,000
|
| LendingClub |
10.68%–35.89%
|
$1,000
|
$40,000
|
| Prosper |
7.95%–35.99%
|
$2,000
|
$40,000
|
| FreedomPlus |
7.99%–29.99%
|
$7,500
|
$40,000
|
| Discover |
6.99%–24.99%
|
$2,500
|
$35,000
|
| PenFed |
6.49%–17.99%
|
$600
|
$20,000
|
| LendingPoint |
9.99%–35.99%
|
$2,000
|
$25,000
|
| LightStream |
2.49%–19.99% (with autopay)
|
$5,000
|
$100,000
|
What you need to know about fair-credit loans
What does it mean to have fair credit?
Fair credit means that you have some sort of credit history to your name but a moderately low credit score. People with fair credit typically have a credit score that ranges from 580 to 669.
If you have fair credit, you might have missed a few payments, or you might carry a high balance on your credit cards from month to month. You may qualify for a loan, but only with a select group of lenders. And if you do qualify, you might not score the lowest interest rate available. Those are reserved for people who have excellent credit.
Along with that, lenders that offer personal loans for fair credit might charge more or higher fees than lenders that target borrowers with good or excellent credit. This means that in addition to repaying your principal balance and interest, you might be on the hook for more money over the life of your loan.
FICO credit score ranges
| Excellent |
800–850
|
21%
|
| Very good |
740–799
|
25%
|
| Good |
670–739
|
21%
|
| Fair |
580–669
|
17%
|
| Very poor |
300–579
|
16%
|
Source: Experian
Can I get a personal loan with fair credit?
Not all lenders offer loans to borrowers with fair credit, since it's seen as a greater risk to the lender. However, there are many lenders that will consider credit scores in the low 600s, though keep in mind that they'll likely charge higher interest rates.
Explore lenders that advertise fair credit scores before you apply. Additionally, visit lenders that offer prequalification. Prequalification lets you share some information with the lender but doesn’t cause a hard credit check, which would temporarily cause your credit score to dip. It also lets you see if you’re eligible for a loan from a particular lender.
What are the best personal loans for fair credit?
It's critical to choose a reputable lender when searching for a fair-credit personal loan. In your search, you may encounter payday lenders or other predatory lenders, which advertise no-credit-check loans in exchange for extremely high APRs and fees. If you see a loan offer that's too good to be true, or one with APRs in the triple digits, it's best to steer clear.
The best personal loans for fair credit generally come with APRs between 10 and 30 percent, few fees and a variety of repayment terms. The lenders profiled on this page are good places to start; they are reputable companies with loans for a variety of needs.
How to qualify for a loan with fair credit
To improve your chances of obtaining a personal loan with fair credit, try taking the following steps before you apply:
- Use a co-signer: While a co-signer adopts some responsibility for your loan — and therefore some risk — they may also make it easier for you to qualify for a loan. Choosing a co-signer with good credit will improve your overall creditworthiness.
- Prequalify: If you're unsure if you'll qualify for a loan with a particular lender, look to see if it offers prequalification. That way, you'll avoid harming your credit even further before applying.
- Pay down debt: Many lenders assess your debt-to-income ratio in addition to your credit score. By paying down as much credit card debt as you can before applying for a loan, you'll look better to any potential lenders.
- Use a local bank or credit union: Your existing bank or a local credit union may be more lenient when it comes to your credit score, especially if you have a history of timely payments on your accounts.
How to apply for a fair-credit loan
It's typically best to check quotes from a few different lenders before making your decision, but the process is similar across lenders. Once you're ready to apply, take these steps:
- Check your credit score: You can check your credit scores from each of the three main credit bureaus (Equifax, Experian and TransUnion) once a year through AnnualCreditReport.com, though the service is offering weekly reports through April 2021. Knowing your credit score will help you narrow down the lenders worth applying to.
- Get prequalified: For most lenders, hitting the "apply now" button will take you to a prequalification form, which won't hurt your credit. You'll enter basic details about your personal and financial information, as well as your desired loan amount and any information about your co-signer. Aim to get prequalified with around three lenders, and try to compare both online lenders and banks/credit unions.
- Complete an application: If you are prequalified for a loan, you'll have to go through a more extensive application. During this process, the lender will do a hard credit check, which could temporarily lower your credit score by a few points.
- Submit verification documents: Before you can receive funds, you will need to submit documentation detailing your income and debts. Be prepared to share pay stubs, W-2s, bank statements and more.
How to improve your fair credit score
Having fair credit doesn't necessarily bar you from qualifying for a personal loan, but getting your credit score in the best shape possible will give you the best chance at qualifying and lower your rates. Some ways to improve your credit score include:
- Pay off existing debt: Your credit utilization ratio makes up 30 percent of your FICO score. By lowering your total amount of debt, you indicate to the credit bureaus that you use credit responsibly.
- Make payments on time: If necessary, set up a calendar reminder or automatic payments. Making late payments or missing payments altogether will tank your credit score, since payment history makes up 35 percent of your score.
- Keep old accounts open, and don't open new ones: It may be tempting to close old, unused credit cards, but keeping them open raises the average age of your credit history — 15 percent of your credit score. For that matter, try not to open new credit cards before applying for a loan, as doing so will lower the average age of your accounts.
How to choose a fair-credit lender
If you don’t have good or excellent credit, you might not find favorable lending terms for your personal loan needs. To find the best lender for you, keep an eye on the factors below.
Watch out for high interest rates
Interest rates for fair-credit personal loans aren’t generally as low as those for good- or excellent-credit personal loans. For instance, while many personal loan lenders advertise low APRs, those rates are reserved for those with the very best credit score and history. With fair credit, you can expect higher APRs.
When you’re exploring personal loan lenders, look for those that offer the lowest interest rates based on your credit score.
Assess fees and repayment terms
Find a lender that has minimal fees and flexible repayment terms. For example, some lenders let you choose which monthly payment due date is best for you. Some offer longer repayment terms that would reduce your monthly payment amount.
Unless necessary, avoid personal loan lenders with lots of fees, short repayment terms and high interest rates.
Find lenders that allow co-signers
If you’re not finding lenders that will work with you based on your credit score, consider waiting until you can boost your score or enlisting the help of a co-signer. You may also want to ask friends and family for money to tide you over until you can qualify for a personal loan with favorable terms.
Fair-credit personal loans for your needs in January 2021
Avant: Best for very low credit
Overview: Avant targets bad- and fair-credit borrowers. While Avant doesn't advertise its eligibility requirements on its website, a representative says that it requires 580 FICO and 550 Vantage. However, most of its borrowers have a credit score between 600 and 700.
Perks: With Avant, you can get access to your funds within a day of approval, and repayment terms are as long as five years.
What to watch out for: The lowest APR available is 9.95 percent, which is much higher than those of competitors. Avant also charges an administration fee and late fees.
| Avant |
| 4.5 / 5.0 |
| 580 FICO and 550 Vantage |
| 9.95%–35.99% |
| $2,000–$35,000 |
| 2 to 5 years |
| Not specified |
| Administration fee: up to 4.75%; Late fee: $25; Dishonored payment fee: $15 |
Read Bankrate's expert Avant Review
Best Egg: Best for home repairs
Overview: Best Egg offers personal loans to borrowers with credit scores ranging from fair to excellent. Terms are three to five years. Loan amounts range from $2,000 to $35,000, making them ideal for sizable expenses such as home repairs.
Perks: Approval and deposit of funds can come as quickly as within a day.
What to watch out for: The origination fee can go as high as 6.99 percent, and there’s a $15 late fee.
| Best Egg |
| 4.7 / 5.0 |
| 640 |
| 5.99%–29.99% |
| $2,000–$35,000 |
| 3 to 5 years |
| Not specified |
| Origination fee: 0.99% to 6.99%; Late fee: $15; Returned payment fee: $15 |
Read Bankrate's expert Best Egg Review
Upgrade: Best for fast funding
Overview: Upgrade offers loans ranging from $1,000 to $35,000 for a variety of purposes, like an emergency or debt consolidation.
Perks: You can take advantage of the 7.99 percent APR if you qualify. And while Upgrade doesn't disclose its minimum credit score, sources report that borrowers can qualify with credit scores in the mid- to low 600s.
What to watch out for: Upgrade’s origination fee can go as high as 8 percent, and if you don’t pay your loan on time every month, you could face a $10 late payment fee.
| Upgrade |
| 4.8 / 5.0 |
| 620 |
| 7.99%–35.97% (with autopay) |
| $1,000–$35,000 |
| 3 or 5 years |
| None |
| Origination fee: 2.9% to 8%; Late fee: up to $10; Returned check fee: $10 |
Read Bankrate's expert Upgrade Review
Payoff: Best for credit card debt
Overview: If you’re suffering from a mountain of credit card debt, you might be best suited for a Payoff personal loan for debt consolidation.
Perks: Payoff keeps fees to a minimum; there are no fees for late payment, paying off your loan early or paying by check.
What to watch out for: Even though you can get a Payoff loan with fair credit, its minimum credit score requirement is 640, which is on the higher end of a fair credit score. Payoff loans can also only be used for credit card debt consolidation, so it's not a good choice if you're looking to use a personal loan for emergency expenses or home improvements.
| Payoff |
| 4.6 / 5.0 |
| 640 |
| 5.99%–24.99% |
| $5,000–$40,000 |
| 2 to 5 years |
| Not specified |
| Origination fee: 0% to 5% |
Read Bankrate's expert Payoff Review
Upstart: Best for short credit history
Overview: While Upstart evaluates your credit score to determine your creditworthiness, it’s not the company’s only method. It’ll also consider your education and job history, which might be helpful if you’re struggling to qualify for a personal loan based on your credit score.
Perks: You can borrow as little as $1,000, and you can apply even with minimal credit on your report.
What to watch out for: If you don’t qualify for a loan on your own, you might have to look elsewhere, since Upstart doesn’t allow co-signers.
| Upstart |
| 4.5 / 5.0 |
| 600 |
| 7.98%–35.99% |
| $1,000–$50,000 |
| 3 or 5 years |
| $12,000 |
| Late fee: 5% or $15; Origination fee: up to 8%; Returned check fee: $15 |
Read Bankrate's expert Upstart Review
LendingClub: Best for using a co-signer
Overview: Having a co-signer might be the difference-maker you need to qualify for a loan. You can use one when you apply for a LendingClub personal loan.
Perks: Aside from being able to use a co-signer, you might qualify for a loan if you have a credit score of at least 600. The lender also allows a 15-day grace period on late monthly payments.
What to what out for: You could get your funds around four days after approval, which might be too long if you need your money right away. You’ll also face an origination fee of up to 6 percent.
| LendingClub |
| 4.5 / 5.0 |
| 600 |
| 10.68%–35.89% |
| $1,000–$40,000 |
| 3 or 5 years |
| Not specified |
| Origination fee: 2% to 6%; Late fee: $5 or $15 |
Read Bankrate's expert LendingClub Review
Prosper: Best for joint applicants
Overview: Prosper offers loans to borrowers with fair credit that’s on the higher side. The minimum credit score is 640, so if you’re still in the fair range but moving up, you might qualify.
Perks: While Prosper doesn’t accept co-signers, it does accept joint applications. Prosper also lets you change your monthly due date to ensure on-time payments.
What to watch out for: Prosper charges many fees, including an origination fee 2.41 percent to 5 percent, a late fee of 5 percent or $15 (whichever is greater), a $15 insufficient funds fee and a check fee of 5 percent or $5 (whichever is less). Getting your money can take up to three days after you’re approved, which might be too long, depending on your situation.
| Prosper |
| 4.6 / 5.0 |
| 640 |
| 7.95%–35.99% |
| $2,000–$40,000 |
| 3 or 5 years |
| None |
| Origination fee: 2.41% to 5%; Late fee: 5% or $15 (whichever is greater); Insufficient funds fee: $15; Check fee: $5 or 5% |
Read Bankrate's expert Prosper Review
FreedomPlus: Best for competitive interest rates
Overview: Even though its minimum loan amount is a bit high, FreedomPlus offers decent interest rates, even in its highest APR tier.
Perks: While FreedomPlus does not disclose its specific eligibility requirements, it is possible for borrowers with credit scores in the low to mid-600 range to be approved.
What to watch out for: The minimum loan amount of $7,500 is a bit high compared with other options on this list. If you need to borrow less, you may want to explore other personal loan options.
| FreedomPlus |
| 4.3 / 5.0 |
| Not specified |
| 7.99%–29.99% |
| $7,500–$40,000 |
| 2 to 5 years |
| Not specified |
| Origination fee: 1.99% to 4.99% |
Read Bankrate's expert FreedomPlus Review
Discover: Best for longer repayment terms
Overview: While Discover accepts borrowers with fair credit, it favors those on the higher end of the fair-credit spectrum — borrowers typically have credit in the mid-600 range to qualify for a personal loan. If you’re on the lower end of fair credit, you may not qualify.
Perks: Discover offers competitive interest rates, fast funding and no origination fee. Its relatively long repayment terms — up to seven years — could mean lower monthly payments.
What to watch out for: The $39 late fee is high compared with competitors. Additionally, Discover doesn’t have a co-sign option.
| Discover |
| 4.8 / 5.0 |
| 660 |
| 6.99%–24.99% |
| $2,500–$35,000 |
| 3 to 7 years |
| $25,000 |
| Late payment fee: $39 |
Read Bankrate's expert Discover Review
PenFed: Best for credit union members
Overview: PenFed is a credit union offering unsecured personal loans of up to $20,000. While you'll need to become a member of the credit union in order to receive your loan funds, PenFed claims that anyone can join. Its loan eligibility requirements are undisclosed, but third-party sources claim that credit score requirements hover in the mid-600s.
Perks: The low minimum loan amount of $600 is enticing for those who don’t need to borrow much but still need help.
What to watch out for: In order to apply for a loan with PenFed, you'll have to become a member of the credit union, which involves opening a savings account with the company. It's an extra step in the process that may be a deal breaker for some borrowers.
| PenFed |
| Not specified |
| 6.49%–17.99% |
| $600–$20,000 |
| 1 to 5 years |
| Not specified |
| Late fee: $29; Returned check fee: $30 |
Overview: LendingPoint specializes in loans for subprime borrowers. You could get a loan with a credit score as low as 585.
Perks: There is no prepayment penalty for paying off your loan early, and the credit score requirement is very low compared with other fair credit lenders.
What to watch out for: You’ll need to prove income and employment. There’s no co-sign option, which means if you don’t qualify on your own, you won’t be able to get a loan.
| LendingPoint |
| 4.4 / 5.0 |
| 585 |
| 9.99%–35.99% |
| $2,000–$25,000 |
| 2 to 4 years |
| $35,000 |
| Origination fee: 0% to 6% |
Read Bankrate's expert LendingPoint Review
LightStream: Best for a wide range of repayment terms
Overview: Despite a minimum credit score requirement of 660, LightStream has personal loan options to cover all your borrowing needs.
Perks: LightStream doesn't charge any fees, and depending on how you’ll use the loan, you can take up to 12 years to pay off your loan. LightSteam also allows co-signers, which may benefit you if you're having trouble qualifying on your own.
What to watch out for: The minimum credit score threshold is on the higher side of the fair-credit spectrum. You’ll need to prove a few years of credit history as well.
| LightStream |
| 4.6 / 5.0 |
| 660 |
| 2.49%–19.99% (with autopay) |
| $5,000–$100,000 |
| 2 to 12 years |
| Not specified |
| None |
Read Bankrate's expert LightStream Bank Review
Alternative loan options for fair credit
If you’re unable to take out a personal loan due to your fair credit, you may want to look at other options, like:
- Credit unions: While you usually have to join a credit union before taking out a personal loan, they tend to be more forgiving to those with fair credit. Talk to your local credit union about what you need to qualify.
- 0 percent APR credit card balance transfer: If you’re looking to pay off credit card debt, consider getting a credit card with a 0 percent APR introductory offer. That way you can move your balance over and remove extra interest from adding up. Keep in mind that you might not qualify for the full balance to be moved over, so there’s a chance that you’ll end up paying off your new card while still making payments on your old one.
- Home equity loans or lines of credit: If you have a home, you can use that as collateral and take out a home equity loan or home line of credit (HELOC). Remember that your home is used to secure the loan, which means that if you miss payments, you could be subject to foreclosure.
Additional personal loan resources:
