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How to get a loan with fair credit

Don't let your credit stop you from getting affordable financing.

Credit is one of the big deciding factors lenders look for when processing your application. While you may not get the lowest rates available, you may still be able to get a loan with fair credit — all while building your score along the way.

Where can I get a loan for fair credit?

While you likely won’t be able to get the best rates, there are multiple lenders willing to work with people who have fair credit. Your main choices will be online lenders and peer-to-peer marketplaces. These provide quick access to loan funds and typically don’t have the same stringent requirements as banks. For example, LendingPoint specializes in loans for borrowers with fair credit, offering up to $25,000 to people with credit scores in the mid-600s.

However, some banks and credit unions also offer loans to people who have fair credit. Many offer personal loans that can help you build credit. Repairing your credit score can take time, but you still have options if your credit is sitting at fair right now.

6 best personal loans for borrowers with fair credit

What exactly is a fair credit score?

A fair credit score generally sits between 620 and 679. But there’s no exact measure — your score will largely depend on your past financial history and the credit bureau your lender uses.

How does my credit score affect my application?

Lenders use your credit score — along with other factors — to determine your loan terms. Although your score may differ between agencies, it’s used to gauge how well you’re meeting your financial obligations.

The better you are at meeting your financial commitments, the less risk you’ll pose to a lender. On the other hand, if you’ve struggled to pay your bills on time or have missed payments, your offered rates will most likely be subprime.

How do I compare my loan options if I have fair credit?

A fair credit score limits your options slightly. Not all lenders will be willing to fund you, and others won’t give you the best loan terms. Here’s what you should look for when comparing lenders:

  • Interest rate. One of the biggest factors to look at is the APR that’s offered. Your credit score, the amount you want to borrow, your ability to repay and the loan term can all impact this number.
  • Maximum loan amount. Borrowing more than you need can lead to bigger trouble in the long run. Consider exactly how much you need to borrow, and why that amount is necessary.
  • Loan term. While a shorter term can mean you’ll be making larger payments, you’ll end up paying less in interest.
  • Turnaround time. Some lenders are able to get you the funds you need as soon as the day after you apply. These lenders may not always have the best rates though, so consider whether you really need to prioritize speed over savings.
  • Requirements. Different lenders may require you to meet different criteria. Credit score, age, income and residence are all factors that may determine your eligibility.
  • Cosigners. Some lenders allow you to apply with a cosigner, which may help increase your chances of approval — especially if your cosigner has good credit. Check to see if your lender does, and if not, take the time to compare providers that allow cosigners.

5 ways to improve a fair credit score

To repair your credit, keep in mind these five factors: payment history, credit utilization, how long you’ve held credit, type of credit used and number of credit inquiries.

To help, take four simple steps to make your credit file more appealing to potential lenders.

  1. Pay off open balances. Credit utilization includes your debt compared to your total credit. If you aren’t using as much credit as you have available, your score can improve by paying down balances. Simply moving the balances will not affect your utilization rate.
  2. Keep open balances low. Experts advise to keep your balance below 30% of your approved credit limit.
  3. Don’t close an unused account if you don’t have to. Closing an account can negatively affect your credit utilization rate.
  4. Avoid opening new accounts. Once your score improves, you can take advantage of better interest rates. So wait to open new accounts if you can.
  5. Fix errors. If there are any errors or fraudulent activities listed on your credit report, contact the bureau to have them fixed. Even small corrections can have a positive impact on your score.

You may also want to consider a credit builder loan offered by some banks, credit unions and online lenders.

What are some alternatives to personal loans if I don’t qualify?

A personal loan may not be the solution you’re looking for, especially if you need to borrow a larger loan amount or you have a short credit history. In these cases, it may be best to compare some short-term options.

  • Installment loans. Installment loan providers generally don’t use your credit as a main decision factor, so you won’t have to worry about your score getting in the way of borrowing. However, this results in a high APR – often well over the 36% cap personal loan lenders must abide by. Actual terms vary by lender and state law, so read up on installment loans before you apply.
  • Payday advance apps. Payday advance apps use your income, not your credit score, and often have much lower fees than other short-term loan options. But there are a few caveats. Many advance just a few hundred dollars at a time, and you can typically only borrow against hours you’ve worked.
  • Auto title loans. Auto title loans use your car title as collateral. This means your fair credit score likely won’t prevent you from qualifying, but it also means you pay the same high fees as you would with an installment loan. And if you default, you may have your car repossessed.

Compare loan options for different credit scores

Loans for good credit (680+)

Loans for excellent credit (720+)

Compare more personal loans

Name Product APR Min. Credit Score Max. Loan Amount
Credible personal loans
2.49% to 35.99%
Fair to excellent credit
Get personalized rates in minutes and then choose an offer from a selection of top online lenders.
Best Egg personal loans
5.99% to 35.99%
A prime online lending platform with multiple repayment methods.
PenFed Credit Union personal loans
4.99% to 17.99%
With over 80 years of lending experience, this credit union offers personal loans for a variety of expenses.
SoFi personal loans
5.74 to 20.28%
A highly-rated lender with competitive rates, high loan amounts and no fees.
Monevo personal loans
1.99% to 35.99%
Quickly compare multiple online lenders with competitive rates depending on your credit.
Tally+ Express Line of Credit
7.9% to 25.9%

Only available for Line of Credit and Debt consolidation

Upgrade personal loans
5.94% to 35.97%
Affordable loans with two simple repayment terms and no prepayment penalties.
Avant personal loans
9.95% to 35.99%
Conveniently check your loan options without affecting your credit score.

Compare up to 4 providers

Bottom line

Your credit score can affect your ability to get a loan and the rates you get, but fair credit won’t necessarily keep you from being approved by a lender.

When you’re looking to take out a loan, make sure it’s both what you need and something that you can financially handle. Compare your personal loan options, research, ask advice from an expert or even a trusted friend — and sleep on any big decisions.

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2 Responses

    Default Gravatar
    DavidAugust 27, 2017

    I have a credit score of less than 680 and need a loan of $20,000.00 to pay off some credit cards. But I need a monthly payment of less than $400.00. Is there an institution through which I might be able to secure that type of loan?

      Avatarfinder Customer Care
      KyleAugust 28, 2017Staff

      Hi David,

      I’d be glad to help you. Your monthly payment will depend on a few things, some being your creditworthiness, loan term length and whether you choose a fixed or variable rate. If you want to have a payment of $400 or less, you should shop around to see what lenders are offering low fixed rates – a fixed rate will not change once you are locked in. Start here to find a loan that could work for you.

      Good luck loan hunting!


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