Best Personal Loans for Fair Credit

Contributor, Benzinga

A personal loan can provide some much-needed access to cash. Whether you want to renovate your home, pay off medical bills or even splurge on a wedding, a personal loan can be used for just about anything. 

You might have a harder time securing a loan if you have fair or average credit. You also may not qualify for the kinds of loans and best terms typically reserved for people with top-notch scores. 

But you should still have access to a healthy range of lending opportunities. Follow this guide to find the best personal loans for fair credit. 

Best Personal Loans for Fair Credit

A fair credit score is typically in the range of 580 to 669 for FICO® and 601 to 660 for VantageScore®. Your FICO® Score is generated by the Fair Isaac Corporation and is one of the primary factors lenders will look at to determine your eligibility for a loan. 

Your VantageScore® was developed by national credit reporting companies (CRCs) — Experian, TransUnion and Equifax. It’s another commonly used scoring metric alongside FICO®. Both credit scores categorize creditworthiness based on a scale of very poor, fair, good, very good and excellent. 

Having fair credit is better than having poor credit or no credit history at all. However, you’re still considered a less-than-ideal candidate in the eyes of lenders. 

Take a look at our picks for the best personal loans for fair credit. 

APR
Fixed 5.99% – 24.99%.
Loan Amounts
$5,000 – $40,000
APR

Fixed 5.99% – 24.99%.

Origination Fee

0%–5% of the loan amount

Term Lengths

2–5 years

Min Credit Score

550

1 Minute Review

Happy Money offers personal loans that allow you to more efficiently consolidate high interest payments. Happy Money was previously known as Payoff. The company was founded in 2009 and has since helped fund over $3.5 billion in loans. Happy Money is a financial company that works with approved lending partners to fund loans. Happy Money designed its Payoff Loans to provide borrowers with the financial freedom and power to be matched with a lending partner. Benzinga reviews Happy Money Loans as a way for people to consolidate debt with potentially lower APR rates. 

Best For
  • People with lower credit scores
  • Credit card debt consolidation
Pros
  • No prepayment fees
  • Potentially lower APR rates starting around 5.99%
  • Improve credit score
Cons
  • Personal loans only available for credit card debt
pre-apply securely through Figure Personal Loans’s website
APR
Between 5.99% and 15%; autopay discount of 0.25%
Loan Amounts
$5,000 – $50,000
APR

Between 5.99% and 15%; autopay discount of 0.25%

Origination Fee

Between 0% and 5% (dependent on state and local laws)

Term Lengths

Fixed-rate loan terms of 3 or 5 years

Min Credit Score

680

1 Minute Review

Figure’s online personal loan application process eliminates the painstaking process of following up your paperwork to scan or send to the lender. With an entirely online application, you can get your prequalification rate without impacting your credit score. You’ll get approval within a few minutes and await funding in as little as 2 business days — up to $50,000 you can direct toward what matters most.

Figure personal loans come with multiple fixed term options so you can map out your payment schedule so that it doesn’t strain your finances. Figure also offers some perks for spreading the word out to others. You’ll receive a $150 gift card for every friend you refer, and they too will get a $150 gift card when their loan funds.

Figure’s home equity line of credit lets you turn your home equity into up to $250,000 cash in as few as 5 days. Rates start as low as 2.88% APR1, and you can choose among 5-, 10-, 15- and 30-year fixed term options. You can also get up to $500,000 cash-out in mortgage refinance, all with custom rate and payment options.

While you can easily land better rates with a higher credit score, Figure also has options for applicants with less than perfect credit. You may secure a HELOC with a credit score as low as 620 (except in Oklahoma where the minimum is 720).

Best For
  • Online loan application
  • Unsecured loans
  • Affordable loan fees
Pros
  • 100% online application
  • Quick funding
  • Competitive rates
  • Stellar customer service
  • Multiple fixed term loan options
  • A gift card for every referral (personal loan only)
  • Personal loan offered in all 50 states
Cons
  • Products not available in some states
  • Personal loans capped to $50,000
get started securely through SoFi’s website
Disclosure: Fixed rates from 6.99% APR to 21.78% APR. APR reflect the 0.25% autopay discount and a 0.25% direct deposit discount. SoFi rate ranges are current as of 3/24/22 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. Lowest rates reserved for the most creditworthy borrowers. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, income, and other factors. See APR examples and terms. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.
APR
9.95%-35.99%
Loan Amounts
$2,000-$35,000
APR

9.95%-35.99%

Origination Fee

Up to 4.75%

Term Lengths

24-60 months.

Min Credit Score

580

1 Minute Review

Established in 2012, Chicago-based Avant helps people obtain personal loans while offering transparent credit. Since its inception, Avant has helped over 1.5 million people receive funding. 

One thing that makes Avant so unique is its background as a financial technology company instead of a traditional bank. Banking needs are addressed by Evolve Bank & Trust, a member of the Federal Deposit Insurance Corp. (FDIC). The FDIC insures deposits and protects consumers in case of bank disasters. Benzinga’s review of Avant determined it is a strong option for personal loans because of its reputation for positive customer experiences and fast funding options. 

Best For
  • People with below-average credit scores who need unsecured personal loans
  • People who need fast funding
Pros
  • Quick funding
  • Fixed payments
  • Mobile accessibility
Cons
  • Additional costs such as origination fees
  • No third-party guarantor such as a co-signer on a secured personal loan
Disclosure: *AutoPay discount is only available prior to loan funding. Rates without AutoPay are 0.50% points higher. Excellent credit required for lowest rate. Rates vary by loan purpose.
APR
3.49%- 19.99%
Loan Amounts
$5,000 – $100,000
APR

3.49%- 19.99%

Origination Fee

$0

Term Lengths

Up to 240 months

Min Credit Score

660

1 Minute Review

LightStream was founded by its parent company Truist Financial. The company offers a wide range of traditional and innovative personal loan benefits and opportunities such as home improvement loans and fertility financing to address a wide range of needs. The company charges APRs between 3.49% and 19.99%. Benzinga offers a review of LightStream’s personal loan options that provide a variety of personal loans while minimizing additional fees and promoting financial flexibility. The company offers diverse loans with varying term lengths, APRs, and uses. For example, Lightstream offers a variety of home improvement loans that are designed to assist with specific needs such as funding for landscaping or solar panels.

Best For
  • Potential borrowers interested in quickly funded unsecured personal loans
  • Same day funds
  • People with stronger credit scores
Pros
  • Doesn’t require collateral
  • No late fees
  • Potential same day funding
  • Self-selected funding dates
  • Offers a mobile application to ease access to loan information
Cons
  • Not recommended for bad credit scores

Types of Personal Loans for Fair Credit 

The terms and interest rates you qualify for when you take out a personal loan will heavily depend on your credit score. With fair or average credit, you won’t receive the kind of favorable terms someone with very good or excellent credit would receive. 

You might have to put up with higher interest rates or fewer choices. In fact, some lenders may deny you a personal loan altogether. If you are denied by a lender, remember not to become discouraged. You’re still able to shop around for a lender that will approve you. In the meantime, take a look at some common types of loans you could be offered. 

Secured Loans

A secured loan is a personal loan that is backed by collateral. Collateral is an asset you own that has significant value. Collateral can be your home, car, jewelry, antiques, an investment portfolio or even art. Lenders will verify that you are the owner of the asset and that the asset’s value is high enough to cover the loan amount. 

Secured loans are a great way to obtain cash without a credit check. However, they are not without their downsides. Secured loans can be especially dangerous if you are unable to pay back the money you owe. You risk losing the asset you’ve put up for collateral if you can’t meet the loan’s terms. 

Unsecured Loans

Unlike secured loans, unsecured loans don’t require you to put up any collateral in order to qualify for the loan. Instead, lenders will consider other factors when deciding whether to approve you. Your credit score and income levels are both important in determining your eligibility. 

Many lenders will still approve you for a personal loan even if your credit score is only fair, or average. However, if you have a high-income or low debt-to-income ratio, your chances of being approved on more favorable terms are higher. 

Fixed-Rate Loans

Fixed-rate loans come with an interest rate that remains the same for the duration of the loan. Common examples of fixed-rate loans include auto loans, student loans and mortgages. Fixed-rate loans are the opposite of variable-rate or adjustable-rate loans, which have interest rates that can change over time. 

It’s ideal if you can secure a fixed-rate loan at a low-interest rate. This way, even if interest rates go up you’ll keep paying your original rate. Personal loans generally have shorter timeframes than mortgages or student loans. So even if you are stuck with a fixed-rate loan at a higher rate, rest assured that it won’t be for the long-run. 

Personal Loan Requirements and Criteria

It’s a guarantee that most lenders will pull your credit report before approving you for a personal loan. Your fair credit score could hinder your chances of getting approved. Even if you are approved, your options will be limited and you may have to accept a higher interest rate. 

The good news is that lenders won’t base the entire decision on your credit report. There are other important factors they consider to get an accurate estimate of your overall financial health. Check your status in the categories below to gauge your chances for approval:

  • Steady income
  • Debt-to-income ratio
  • Payment history
  • U.S. citizen or legal resident
  • Minimum age (usually 18 but varies in different states)

Personal Loan Considerations

The good news about having fair credit is that you are on your way to good credit – and maybe even excellent credit in the future. Taking out a personal loan can help you boost your credit score. 

Be sure to make all your payments on-time and always pay above the required minimum amount. This practice will lower your credit utilization ratio (the amount of available credit you are using up). A lower credit utilization ratio shows lenders you are responsible with your credit and reflects positively on your credit score. 


Some other good tips for boosting your credit include paying off your higher-interest debts 1st, refraining from opening up too many accounts at once and keeping unused accounts open. 

Never take out a predatory loan. Predatory loans exploit borrowers with unfair or abusive terms. Some lenders might try to coerce, force or hide important information from you to try to get you to agree to a predatory loan. These loans charge high-interest rates, excessive fees and have the potential to pull you into a cycle of debt. They’re also notorious for harming people’s credit scores. 

Personal Loans vs. Credit Cards

Personal loans have fixed interest rates and fixed timeframes. On the other hand, credit cards charge variable interest rates and offer a continuous credit line. Credit cards are a great option if you are looking for long-term access to credit and you can make continuous payments towards your balance. Personal loans are better if you need a set amount of cash and you’re able to pay it off in full by the required dates. 

Borrow Money With Fair Credit

Whenever you decide to borrow money, it’s a good idea to meet with multiple lenders to shop around for the best rates. Always work with licensed lenders and avoid lenders that sound too good to be true. 

Don’t want to engage with lenders who rush you to sign documents, leave blank spaces in documents or offer packaged services. With a bit of work, you’ll find you can still access the lending options you need even with fair credit.