Best personal loans for fair credit of December 2023

July 2024 · 21 minute read
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Borrowers with good or excellent credit scores generally have an easier time getting approved for a personal loan than borrowers who have fair credit. If you have a fair credit score (typically 580 to 669), you may also face higher interest rates. 

The good news is several lenders offer personal loans for fair credit, which means you should be able to find one for your personal financial situation. You’ll still want to consider all of your borrowing options before proceeding.

Here’s what you need to know about personal loans for fair credit:

What is a fair credit score?

A fair credit score ranges from 580 to 669, according to FICOⓇ. When your credit score lands in this category, lenders may consider you to be a riskier borrower. You may have a record of late payments, high credit usage, or a high number of credit inquiries within a short period of time. 

If you have a fair credit score, you’ll likely pay higher interest rates when taking out a personal loan or applying for a credit card. You may need a cosigner to increase your odds of approval. 

However, keep in mind that your credit score fluctuates, and what may be considered “fair” with one credit scoring model may fall into a “good” range with another. You can also improve your credit score so that you have a better chance of being approved for financial products and qualifying for lower interest rates (more on this later).  

How to qualify for a loan with fair credit

You can increase your chances of qualifying for a personal loan with fair credit by following a few steps:

How to improve your credit score before applying

You may want to consider improving your credit score before applying for a personal loan with fair credit, since this could increase your odds of approval and qualify you for better terms. Ways to improve your credit score include:

Our favorite personal loans for fair credit

The following 14 lenders are Credible partners that offer personal loans to borrowers with fair credit.

1. Avant

Avant is an online lender that strives to improve the borrowing experience for the middle class. The lender has provided funding to more than 2 million borrowers. Avant’s personal loans are accessible to borrowers with lower credit scores and, if approved, funds can be deposited into your account as quickly as the next business day.

Avant might be a solid choice if you need to cover a small expense, with loan amounts that start at $2,000 in most states. You can also manage your loan using Avant’s mobile app. However, Avant charges fees, and it may not be available in your state.

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2. Best Egg

Best Egg offers unsecured and secured personal loans that are accessible to borrowers with fair credit. If you qualify, you can receive funds as soon as the next business day. The lender might be a fit if you need to consolidate debt — if you allow Best Egg to send funds directly to your creditors, you may qualify for a lower rate.

However, loans for Best Egg aren’t available in all states. The lender also charges an origination fee that can be expensive, and Best Egg has limited options for repayment terms.

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3. Discover

Discover offers personal loans for borrowers with fair to excellent credit. Loan amounts range from $2,500 to $40,000, and the lender has flexible repayment terms.

Discover doesn’t charge origination or prepayment fees, which can make a loan more affordable. In addition, Discover offers free access to your FICO credit score and other credit report information.

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4. Happy Money

Happy Money offers a personal loan specifically designed to help you repay credit card debt. You can apply for what it calls the The Payoff Loan — once you’re approved, you can either have the money deposited into your bank account or applied directly to your credit cards.

The Payoff Loan comes in amounts ranging from $5,000 to $40,000, with terms spanning two to five years. You may qualify with fair credit, depending on your debt-to-income ratio and your credit history.

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5. LendingClub

LendingClub could be a worthy option if you want to apply for a personal loan with a co-borrower. Adding a co-borrower to your application can improve your chances of approval, especially if you don’t have the best credit.

LendingClub also offers a grace period for late payments — you have 15 days to make your payment before being charged a late fee. On the downside, funding may take a bit longer with LendingClub, as it can take up to a week to receive your loan funds after you’ve been approved.

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6. LendingPoint

LendingPoint has provided over $8 billion in loans since 2015. The lender considers other factors beyond your credit score when determining whether you qualify. LendingPoint’s mobile app also has free tools like credit score monitoring and budget tracking.

However, LendingPoint may take up to three business days to approve your application, and it doesn’t offer loans to borrowers in Nevada and West Virginia.

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7. LightStream

LightStream is an online platform that offers loans to individuals with good-to-excellent credit profiles. Unlike some lenders, LightStream offers benefits like an autopay discount. When you sign up for automatic payments prior to loan funding, you can qualify for a 0.50 percentage point discount on your interest rates.

In addition, LightStream has a convenient mobile app that makes it easy to check your loan balance and make payments. However, the lender has a high minimum loan amount, so if you only need a small loan, you’ll need to look elsewhere.

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8. Marcus

9. OneMain Financial

With over 100 years of industry experience, OneMain Financial is an established source for personal loans. Its loan process typically only takes one day, though this varies based on when you submit your application and other factors.

If you’re looking for a more personal touch, OneMain also offers the option to speak to one of its loan specialists over the phone or at a local branch. It also offers a low minimum loan amount, which is ideal if you’re looking for a small loan. On the downside, its interest rates aren’t competitive for borrowers with good credit.

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10. PenFed

Because PenFed is a nonprofit credit union, it’s able to offer lower interest rates than some lenders.

You don’t need to be a member to apply for a loan at PenFed. However, once you decide to go ahead with a loan, you’ll need to become a member. This is a simple process that only takes a few minutes.

PenFed can be a great option if you need a small loan, since its minimum loan amount is just $600. However, the lender doesn’t disclose many of its eligibility requirements online, which can make it difficult to determine if you’ll qualify for a loan before applying.

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11. Prosper

Prosper is a peer-to-peer lending platform that matches investors to borrowers. If you need money fast, Prosper can usually fund your loan within one business day after verification and final approval of your loan.

While you need a credit score of at least 600 to qualify, you can apply with a co-applicant to increase your chances of approval. On the downside, the lender charges an origination fee, and you may run into other fees for making late payments, paying with a check, and more.

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12. Universal Credit

Universal Credit offers fixed-rate loans between $1,000 and $50,000. The company enjoys high ratings on Trustpilot (4.8 stars) and Better Business Bureau (4.81 stars) as of May 2023. 

Universal Credit also offers fast funding — personal loans can be funded in as little as one day after you clear the company’s verifications. However, Universal Credit does charge an expensive origination fee, and it has just two repayment term options.

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13. Upgrade

14. Upstart

At Upstart, borrowers with poor credit or no credit at all can still qualify for a personal loan to meet their needs. Upstart’s lending model uses factors beyond your credit score — like your education and employment history — when determining loan approval.

With loan amounts as low as $1,000 and as high as $50,000, Upstart’s personal loans can help you consolidate your debt, cover unexpected medical bills, or finance home upgrades and repairs.

According to Upstart’s website, it only takes five minutes to check your rate. However, you won’t be able to apply with a cosigner, and your loan may come with an origination fee of up to 12% of the loan amount.

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Methodology 

Credible evaluated the best personal loan lenders on our marketplace for fair credit based on factors such as customer experience, minimum fixed rate, maximum loan amount, funding time, loan terms, and fees. Credible’s team of experts gathered information from each lender’s website, customer service department, and via email support. Each data point was verified to make sure it was up to date.

How to choose a fair-credit lender

Not all personal loan lenders are created equal, and the best way to know how each one works is to comparison shop. Look for a lender that’s transparent about the following:

Interest rates

You’ll often see a range of interest rates quoted when researching lenders. Going through the prequalification process can help you see the rate you’ll likely qualify for. It’s important to find a personal loan lender that’s up front about interest rates. It’s also critical to compare APRs, not just rates, so that you can account for each lender’s fees.

Cosigner acceptance

Before you submit an application, you can save a potential headache by verifying whether the lender accepts cosigners. Not all lenders advertise this, and not all lenders allow cosigners on loans.

Fees and repayment terms

The interest rate is not the only cost of a loan. Consider if there are any administrative fees, origination fees (the cost to process your loan application), late fees, and any other potential costs. 

You should also consider a lender’s repayment terms. Not all lenders offer a wide range of repayment options, and you may require a longer repayment term than what a lender will approve.

Alternative financing options for fair credit

A personal loan isn’t the best option for everyone. You may want to consider the following alternatives:

A 0% APR balance transfer credit card

If you’re trying to knock out debt, a 0% APR balance transfer credit card may be the way to go. With this option, you can consolidate your debt and transfer it to a single credit card. Some companies offer a 0% interest rate for a specified period of time — typically 12 to 21 months — and if you’re able to pay off the balance within that period, you can avoid paying interest entirely. 

Keep in mind, there may be a balance transfer fee (typically either a flat fee or a percentage of the amount you transfer). It’s also important to consider whether you’ll be able to pay off the debt within the 0% interest period — if you can’t, it’s probably best to avoid this option.

Home equity loan or home equity line of credit (HELOC)

If you own your own home, you can tap into the equity and establish a line of credit (where you can borrow at any time during a specified “draw” period, for any amount within the approved range) or take out a home equity loan (similar to a credit caird, it has a fixed repayment term and fixed interest rate). Keep in mind, you’ll have to meet eligibility requirements for both options. 

Also, failing to repay a home equity loan or HELOC could be destructive to your finances and especially risky; after all, your home serves as the collateral to these forms of secured debt and could be vulnerable to seizure if your repayment goes awry.

Join a credit union for lower interest rates

Credit unions offer numerous advantages. One of them is typically lower interest rates, since credit unions are not-for-profit and pass their savings on to their members. You can shop around to find one in your area where you can qualify for membership, and usually receive more personalized customer service. 

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