Loans » Personal Loans » Best Personal Loans for Fair Credit in 2021
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Best Personal Loans for Fair Credit in 2021

If you have fair credit, you'll still have the opportunity to get a loan, however the interest you should pay may be higher than average.

Personal loans tend to have interest rates between 5% to 36%, although with a high credit score, you might be able to go lower. If you have fair credit, you'll still have the opportunity to get a loan, however the interest you should pay may be higher than average.

Every lender is different and every loan they offer is also different. From interest rates to loan terms, from flexibility to other fees, there is a lot to take into account when looking for your loan. Compare your different options smartly and pick up the right loan for your needs.

Here are The Smart Investor select’s picks of personal loans for fair credit. If you can't find a suitable lender for you, you can always compare your options on our personal loan comparison tool.

Credible

  • Overview
  • Details
  • Pros & Cons

Credible is a personal loan marketplace. They have a few different lending options and a variety of different personal loans that range from a standard personal loan to home improvements to debt consolidation. 

Once you get through their simple questionnaire process, you will get results of pre-qualified rates. You can shop your rate options there and compare lender options that are produced for you. They have a client success team on standby in case you need any help in the process. 

  • Interest Rate Range: 2.49%-35.99%
  • Minimum credit score: Varies based on lender
  • Terms: 12-84 months
  • Loan Amount: $1,000 – $100,000
  • Origination Fee: Varies based on lender
  • Best Rate Guarantee (*)
  • Soft Pull Inquiry
  • Competitive Rates
  • Rate Comparison Tool
  • Top-Notch Service
  • Information on Repeat
  • Unexpected Fees
  • Requires Free Cash Flow
  • Fewer Choices
credible logo

OneMain Financial

  • Overview
  • Details
  • Pros & Cons

OneMain is unique to other online personal loan providers in that they have over 1,500 physical locations or branches. This is helpful to borrowers who may have issues getting lending with traditional banks. OneMain Financial is best for borrowers with less than perfect credit and could be a good fit for you if you have issues getting funding through traditional methods. OneMain rates are higher than average, but it is a much better deal than payday lenders. There is also have a quick turnaround time, so if you are in a financial jam they might be a good choice. 

However, if you have good to excellent credit, you may want to look at other providers first. This review will cover mostly OneMain Financial personal loan offerings, even though OneMain considers auto loans like personal loans.

  • Interest Rate Range: 18.00% – 35.99%
  • Minimum credit score: No Minimum
  • Terms: 24-60 months
  • Loan Amount: $1,500 -$20,000
  • Origination Fee: Up to 5% (varies by state)
  • Time to funding: As soon as same day
  • Application Options
  • Less than perfect Credit
  • Joint Applicants
  • No Prepayment Penalty
  • Many Payment Options
  • Higher interest rates
  • Fees
  • Not Available in All States
  • Restrictions
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LoansUnder36

  • Overview
  • Details
  • Pros & Cons

As a personal loan marketplace, Loansunder36 has a variety of options from regular personal loans to even loans specializing in debt consolidation if that is your primary goal. Like most marketplaces, Loansunder36 will put you through a process to pre-qualify you. 

With this online marketplace, you are told up front that the maximum interest rate you will be offered is 35.99% (thus the company name Loans Under 36%). While that might seem high, chances are you will qualify for lower rates if you have decent credit. The application process is fairly straight forward and you can be connected with lenders in a matter of minutes. 

You will be able to easily compare different loans and rate options after you complete the application process, so you can easily see which the best choice will be depending on your need and your credit history. 

Upgrade looks for a credit score of at least 620. However, the company may consider other factors to establish your creditworthiness.

  • Interest Rate Range: 5.99% - 35.99%
  • Minimum credit score: Varies based on lender
  • Terms: 2-72 months
  • Loan Amount: $500 – $35,000
  • Origination Fee: Varies based on lender
  • Great Customer Service
  • Get Money Quickly
  • Most Credit Types Accepted
  • Guaranteed Rate Under 36%
  • Lenders might have Fees
  • 72 month maximum payment plan
  • Small Website
loandsunder36_logo svg

Monevo

  • Overview
  • Details
  • Pros & Cons

Monevo is an internet platform that can easily and quickly connect you to a wide variety of personal loans. You can use the platform without affecting your credit score, and you can use the platform to explore a variety of different options without ever having to leave their convenient website.

Monevo's platform is built on cutting-edge technology that is easy and convenient to use for everyone. And the loans you can search for can be for as low as $500 all the way up to $100,000.

  • Interest Rate Range: 2.49% - 35.99% APR
  • Minimum credit score: 580
  • Terms: 3 - 144 months
  • Loan Amount: $500 – $100,000
  • Origination Fee: Varied by lender
  • Wide Range Of Loan Amounts
  • Fair & Bad Credit Scores Usually Accepted
  • Won’t Impact Your Credit Score
  • Loans Are Mixed
  • You’ll Receive Emails/Phone Calls
  • Limited Network
Monevo logo svg

AmOne

  • Overview
  • Details
  • Pros & Cons

AmONE is a  personal loan marketplace. With different lending options available, you can shop here for any type of personal loan. After becoming pre-qualified, they will help you find the right loan.  You will get approved quickly and can have access to the right loan for you within a matter of minutes. The first thing you will do is select the purpose of your personal loan and what your estimated credit score is. 

After this step, you input how much money you are trying to borrow and what your employment status is. It takes you through other basic information like income, marital status, and mortgage information. You can see your loan options right on the screen after inputting all your information. 

  • Interest Rate Range: 6.78-35.99%
  • Minimum credit score: 300
  • Terms: 24-84 months
  • Loan Amount: $1,000 – $50,000
  • Origination Fee: Varies based on lender
  • Time to funding: Varies based on lender
  • Easy Application Process
  • Compare Options
  • Excellent Service
  • Great Resources Available
  • Rate Information is Tucked Away
  • Detailed Application Process
  • Too much Information
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Find the Best Fair Credit Loan

What Does Fair Credit Mean?

A fair credit score usually falls into the range of 580 to 669 with FICO. The FICO Score is used by many lenders to help determine who they should and should make loan agreements with. It is split into five groups: poor, fair, good, very good, and excellent.

Credit scores are determined by the information collected from your credit reports, making it a good insight into your personal credit history. That is why lenders will want to know it.

There are a number of factors that influence personal loan APRs. One of the factors with the most weight is credit score. If you have a lower credit score, you represent a greater risk to the lender and this is reflected in the rate. In this chart compiled with LendingTree customer data, you can see that those with a 720+ credit score pay an average of 7.63%. At the other end of the scale, those with a poor credit rating of less than 560, the rate shoots up to an eye watering 113%.

Personal Loan Average APR by Credit Score

Why You Need to Know Your Credit Score?

You will need to know your credit score if you want to take out a loan. Banks and other lenders will use your score to determine the interest rate on your loan, which is going to be lower if you have a better credit score.

So, you generally have more loan options the higher your score is.

If you have a fair credit score, the offer may not be as good as it could be. The score will impact your interest rate as well as the amount needed to make the down payment.

If you need to improve your score, making timely payments on your bills and debts is a good place to start.

What Should I Look for in a Personal Loan if I Have Fair Credit?

Before you do anything else, you will want to compare loans and lenders as much as possible. People with fair and lower credit are also targeted by payday lenders. If they offer loans without a credit check, you will want to steer clear of them. Often, these loans come with APRs that go into the triple digits- making them almost impossible to pay back.

Here is what you should look for in a personal loan.

The Interest Rate

Always check the interest rate. If you have fair credit, you can expect to receive personal loans that have APRs ranging between 10% and 30%. In most cases, you can expect your APR to be closer to 30 than to 10, due to your credit score.

However, some lenders may be more willing to negotiate than others. Always talk with lenders about the interest rate before you sign. The difference of a few percentage points can potentially save you a lot of money.

Check Reliability

You only want to engage lenders who are reliable. Banks and credit unions should be your first choices, although there are credible online lenders. You will want to check out the Better Business Bureau’s online page and search for any lenders you are interested in.

That way, you can research the lender and determine if they are a reliable loan source.

Keep in mind that not all lenders will make offers to you, since they may see fair credit as a risk. Some will consider lower credit scores, but they are also likely to only offer you high APRs.

You will also want to try prequalifying with the lenders you are interested in. This is not a hard credit inquiry, so it will not harm your credit score.

How Do You Pick the Best Personal Loan for Your Specific Needs?

You will want an unsecured loan, which means you do not have to offer private property for collateral. These loans are offered by most banks, credit unions, and online lenders. However, if you have fair credit, credit unions might be the best option for you.

  • Credit Unions

These facilities usually offer lower interest rates when compared to banks and online lenders. Even if you have fair credit, they are usually going to make the best offers. They also offer a lot more flexibility than their competitors.

Credit unions are also known for being the best place to get small personal loans, which are considered to be $2,500 or less.

Most big banks will not offer unsecured loans. That means you will need to offer collateral in order to receive them.

  • Do Research

You will want to study all of your loan options before prequalifying with the lender. Doing so will allow you to clearly see the rates and terms of the loans.

Research is essential when trying to find the best loan- it lets you know that you are making smart financial decisions.

  • Consider Cosigners

If you have fair credit, you may not be able to get a loan without a cosigner. This option will help you qualify for a loan that you likely could not on your own.

However, you will want to be sure that you can back the loan, as it will fall on the cosigner if you do not.

Most lenders will offer loans with cosigners, so be sure to think about them if possible. You will want to make sure that the person who signs with you understands the risks before they agree to anything binding.

  • Choose the Correct Amount

Most loans will offer a minimum amount. However, you do not want to take out more than you need. If you take out too much, you will be putting yourself into debt for longer than you had to. It is best to go with an amount that covers your expenses, but is not too high for you to manage paying back.

Most personal loans tend to fall into a range of $1,000 to $40,000. So, if you need $20,000, you will not want to take out the maximum amount. It would become much harder to pay back.

Personal loans are one of the most flexible finance products on the market. You can use a personal loan for practically any purpose from making a purchase to refinancing your debt. In this chart using TransUnion data, we can see that the number of individual personal loan borrowers has steadily increased since quarter one of 2017, increasing from 15.7 million to 20.2 million in quarter three of 2019.

Number of Individual Personal Loan Borrowers (Millions)

Is it Better to Get a Personal Loan or Balance Transfer?

First, you will need to understand what each is. Credit card balance transfers allow you to move outstanding debts to another credit card, with some fees attached. Personal loans can also be used to consolidate all of your debts into one place, making it easier to keep track of payments.

But, which option is better?

Well, it Depends.

Typically, personal loans are going to be the better choice. They consolidate different kinds of debts and may even be more flexible. The funds can be used to pay off your debts.

Balance transfers come with an appealing low APR, although that does not last. If you can not make the payments quickly, the interest rate will start rising- making it more costly in the long run.

Personal loans usually have a lower amount after the promotional APR on your balance transfer runs out. That way, you end up paying less with a personal loan.

Plus, the balance transfer will likely come with a fee between 3% and 5% of the amount of funds. Personal loans come with an origination fee too, which is between 1% and 8%.

Still, credit balance transfers can be worth it if you know you can pay them off before the APR goes up.

J.D. Power 2020: What Can We Learn From It About Lenders and Customer Satisfaction?

During a study released in 2020, J.D. Power sought to measure Consumer Lending Satisfaction. What can we learn from this study?

How to Build Trust

One of the key takeaways from the study was that consumers need to trust their lenders. If they do not, then they will not feel very satisfied with the loans and services they receive from the company.

Lenders can build trust by providing easy to use online tools, allowing their borrowers to interact with them whenever they need to. Plus, it allows people to make payments simply online. There are plenty of benefits to having these tools- including building trust and satisfaction.

What to Look For

So, if you are interested in signing up for a loan, you will likely feel more satisfied with the lender if they offer a variety of online tools for you to use. Be sure to look out for those features. Without them, consumers can become frustrated trying to interact with the lender or may feel that making payments is inconvenient.

Overall, customers are the most satisfied when they can make payments through a mobile app. Lenders enjoy this feature too, as it allows them to receive their funds more reliably.

J.D. Power U.S. Lending Consumer Satisfaction 2020

What are the Requirements for a Fair Credit Loan?

There are some requirements that you will need to fill before you can get your loan. When you have fair or lower credit, you may need someone to sign the loan with you. Other than that, you will need to go through a more thorough application process.

This is called a hard credit check. It will temporarily lower your credit score for a period, so you will only want to do one at a time. Wait until it goes back up before you fill out another application.

Documents

You will also be required to have copies of certain documents with you. They may require bank statements, your W-2, pay stubs, documents relating to your other debts, and more.

The lender will require you to provide them with everything they need to get an accurate idea of what your financial situation looks like.

If you are unsure of what the bank, credit union, or online lender will require from you, do not hesitate to ask. They should be up front with what they need, so you can prepare to provide them with your documents.

What are the Risks of Personal Loan for Average Credit

There are always risks that come with taking out a loan. However, you will want to be aware of all of them before you make any final decisions. Plus, when you have average credit, there are some more risks available.

You Can’t Pay the Interest

When you have a lower credit score, your interest rates are going to be much higher.

If they are too high, you may have more trouble paying them back. Always check out the APR before you sign and shop around- you might be able to find a much better interest rate somewhere else.

Higher Up Front Costs

Additionally, you are more likely to face higher up front costs. There are origination fees and possibly prepayment fees. Lenders may also charge you for more before you get the loan, although it may be taken from the loan before you receive it.

Overall, you need to be prepared to have to cover a lot of expenses before you receive the loan.

Payday Loans

Payday loans tend to target people with lower credit scores. They are very hard to pay back and essentially require that you put all the money you make towards the loan- they are predatory and should be avoided.

The interest rates are purposefully extremely high and the loan will roll over into more terms, making them very hard to get out of. To avoid these loans, always check the BBB and the interest rate on the loan offered before signing up.

How Big of a Loan Can I Get With a 550 Credit Score?

While you are less likely to receive a large loan, you still might be able to get a small personal one. This type of credit score is considered to be very poor, meaning you will not get a good interest rate. It may be worth trying to improve your credit before applying to anything.

When it comes to funds, you should not expect to receive a lot of money. Usually, $2,500 or under is all you will be able to get. You may also be able to apply for credit cards, but most lenders will consider your score to be too low.

Check With Online Lenders

Some online lenders have a lower FICO score requirement, meaning you might get prequalified with them. Ask about applications that will not harm your score. If they only offer hard credit checks, it may not be worth it until you raise your credit.

What Else to Know

With a score of 550 or lower, you may not be able to apply alone. You might need a cosigner or collateral in order to take out the loan.

However, local credit unions will be your best option. If you have done banking with them in the past, they are more likely to offer you a decent loan amount.

How to Build a Good Credit Score?

Building your credit score requires that you practice good financial habits every day. You will need to start by checking your score online. There are sites that offer this service for free, so you should not need to pay to find out what it is.

Paying Bills

Lenders will review your credit to determine how likely you are to pay them back. If you always pay your bills on time, they will consider you for a loan offer. Paying late can negatively impact your scores.

If you have the option to set up automatic payments, you will want to do it. It makes you less likely to forget to cover the bills.

Keep Balances Low on Credit Cards

You will want to use your credit card, without getting too close to your credit limit. This is because of something called the credit utilization ratio.

This is calculated by adding all of your current credit card balances together, then dividing that number by your credit limit. The lower that utilization ratio is the better your credit score will be.

Keep Unused Cards Open

Next, you do not want to close any of your unused credit cards. Closing your accounts will increase your credit utilization ratio. Plus, the longer your accounts are open, the higher your score will be.

That means that it is generally a good idea to keep your oldest accounts open.

Pay Loans and Credit Cards on Time

Loans, such as student loans or personal loans, are reported to your credit score. Credit card payments are too. That means that you want to pay all of them on time.

The more you do, the more your score will steadily rise. It takes a long time to restore or build up your credit, but the sooner you start working on it, the better off you will be.

There are a number of factors that influence personal loan APRs. One of the factors with the most weight is credit score. If you have a lower credit score, you represent a greater risk to the lender and this is reflected in the rate. In this chart compiled with LendingTree customer data, you can see that those with a 720+ credit score pay an average of 7.63%. At the other end of the scale, those with a poor credit rating of less than 560, the rate shoots up to an eye watering 113%.

Personal Loan Average APR by Credit Score

How Long Does it Take to Build Good Credit?

According to the major credit bureaus, it can take between three and six months of using credit for your credit score to start to change. That is if you are just starting out on building your credit.

If you have a low score already, it can take between 12 and 18 months to build up your credit score again. But, each positive action you take with your finances is likely to positively affect your credit.

It actually gets harder to improve your credit score the higher it gets. However, by that point, you will have created good habits that keep you at that high credit score.

How Often to Check Your Credit Score?

You will want to check your score fairly often to ensure you are trending in the right direction. Overall, you will want to check in on it about once a month when you are trying to make changes.

That way, you can see if what you are doing is working. If it is not, you will be able to react quickly and make the changes you need. Plus, you will be able to catch errors in the score. On average, one in five people have mistakes in their credit history.

If you do notice mistakes, you will want to contact the credit companies to file a dispute. When it is corrected, your score will likely increase.

What are the Costs of a Fair-Credit Loan?

A fair-credit loan is geared towards people who fall into the fair credit range. The interest rates are not going to be as low as they are for someone with good credit, but they can still be manageable.

Fees

Any loan will come with fees. But, for a personal fair-credit loan, you can expect origination fees. These fees usually fall between 2.5% to 5% of the total loan. You will need to consider them while planning on taking out a loan, so you know you are getting enough funds.

They also may charge you late fees if you miss a payment. Plus, prepayment fees may also apply if you finish paying off the loan earlier than agreed upon. It is worth checking to make sure this does not apply to your offer

Lowered Credit Score

If the lender runs a hard check into your credit history, you will notice your credit score drop slightly for a time. You do not want to run too many hard checks, as this can greatly harm your credit score.

It is best to put some waiting time between loan applications. That way, you do not lower your credit further.

What are the Expected Loan Rates for Fair Credit?

Your credit score will impact the expected loan rates, however, you can expect between 9% and 36% from a majority of lenders.

They also will tend to offer loans anywhere from $2,000 to $25,000. The origination fee you have to pay will vary slightly, usually somewhere around 6% of the loan amount. The higher your score, the better your rates will be.

However, if you are able to get a cosigner, you can expect better approval odds and lower APRs. Plus, you might be able to qualify for a higher total loan amount.

No matter which lender you decide to go with, you need to make sure that you research them thoroughly before you sign with them. That way, you know you are getting a good deal and will not harm your finances in the future.