Best personal loans for fair credit of May 2024

If you need a personal loan with fair credit, approval can be tough. But it's not necessarily impossible. Several lenders consider applicants with fair credit, and knowing which do can improve your chance of getting approved. 

To make your search easier, we compiled a list of the best lenders with a minimum credit score requirement that falls in the fair credit range (a FICO score between 580 and 669). We also looked at lenders that accept cosingers and offer secured loans.

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Best personal loans for fair credit

When considering personal loans for fair credit, prequalify with multiple lenders to compare the APRs, loan amounts, and repayment terms that you may qualify for. Prequalification takes just a few minutes and is available with most lenders. It won't hurt your credit score, but it's not a guaranteed offer of credit. You'll need to apply for the loan to see final terms. Once you do, the lender will conduct a hard credit pull which could ding your score.

Upgrade: Best for fair credit

Discover: Best for no origination fees (and low rates)

Best Egg: Best for high close rates if pre-approved

LendingClub: Best online experience

Avant: Best for all credit types

Happy Money: Best for consolidating credit card debt

OneMain Financial: Best bad credit personal loans

Upstart: Best fast personal loans for all credit types

Reach Financial: Best for fast funding and fair credit

Methodology

We evaluated the best personal loan lenders for fair credit based on factors such as customer experience, minimum fixed rate, maximum loan amount, funding time, loan terms, fees, discounts, minimum credit score, and whether cosigners are accepted. Our team of experts gathered information from each lender’s website, customer service department, directly from our partners, and via email support. Each data point was verified by a third party to make sure it was accurate and current.

Compare personal loans for fair credit

Not all personal loans for fair credit are created equally. Some may advertise a lower rate, but have higher fees. While others may let you apply with a cosigner, making approval easier, others will not.

That’s why it’s essential to compare lenders. As you do, consider the loan terms available to you, the amount of fees you’ll need to pay, how long it will take to receive the money, and any applicable discounts. Also, pay attention to eligibility, like minimum FICO score and income requirements, so you know how likely you are to get approved.

Additionally, when comparing rates, the annual percentage rate (APR) is a better tool to compare as opposed to relying on interest rate alone. The APR includes the interest rate and upfront fees.

What is a fair credit score?

Your FICO credit score is a three-digit number that lenders use to gauge how likely you are to pay back a loan. It may fall into one of these five categories: exceptional, very good, good, fair, and poor. A fair credit score ranges from 580 to 669.

While an exceptional or good credit score makes it easier to get approved and lock in a lower APR, you may still qualify for a loan with fair credit, especially if you apply with a co-borrower or a cosigner. But your options will be limited compared to applicants with higher FICO scores. For instance, you may have to accept a higher APR than someone with a higher score.

How to get approved for a personal loan with fair credit

If you have fair credit and need a personal loan, these steps can increase your chances of success.

1. Use a cosigner: A cosigner is a friend or family member with good credit and a stable income that can help you get approved for a personal loan. Even though the cosigner does not have access to the loan funds, they’re on the hook for payments if you default.
2. Get prequalified: Most lenders let you prequalify for a personal loan online via a soft credit inquiry. This gives you the chance to compare potential loan offers without hurting your credit score. Prequalification is not an offer of credit, however, and your final rate may differ from the estimate.
3. Reduce current debt: The more debt you have, the higher your debt-to-income ratio (DTI). This, in turn, makes you look riskier to lenders. Do your best to pay down debt through debt consolidation, the debt snowball method, the debt avalanche method, or any other method that works for you.
4. Research local credit unions and banks: You may be able to secure a good APR on a personal loan through a local credit union or bank. Learn about your options at your current bank or credit union as well as others in your area.

How to improve your credit score before applying

A fair credit score is any FICO score between 580 and 669. You may be able to get approved with fair credit, but your APR may be on the higher end of the lender’s range. If you’d like to land a lower APR, improve your credit before you apply. These tips can help.

• Pay your bills on time: Your payment history accounts for 35% of your FICO credit score, which is more than any other component. Be sure to pay your mortgage, car loan, and other bills on time, every time.
• Lower your credit utilization ratio: The amount of credit you’re using divided by the amount of credit available to you is known as your credit utilization ratio. Ideally, your ratio should be no more than 30%. Pay off your debt to lower it.
• Keep old credit accounts open: Don’t close credit accounts even if you no longer use them. By keeping accounts open — and your balances low — you can prevent your credit utilization from increasing and you can keep the length of your credit history intact.
• Limit new credit: If you apply for a new credit account, the lender will perform a hard inquiry, which can take a toll on your credit, usually for up to one year.
• Check your credit reports: Visit AnnualCreditReport.com to pull free copies of your credit reports once a year. Dispute any errors or inaccuracies you find with the appropriate bureau.
• Use a credit-boosting service: Experian Boost or similar services like eCredable Lift can help your score by reporting utilities and subscription services payments to the credit bureaus.
• Use a rent-reporting service: Some services, like Rent Reporters and Rental Kharma, report your rent payments to the credit bureaus. This can help build or improve your credit if you have a history of on-time rent payments.

How to choose a fair-credit lender

As you shop around for a lender that offers fair-credit loans, follow these tips.

Consider your needs

Think about what you’ll do with the funds from a fair-credit loan. Determining how much you need can help you eliminate some lenders, since all have maximum and minimum loan amounts. The more you borrow, the more you’ll need to repay with interest.

Find lenders that accept cosigners

Some lenders allow you to apply for a loan with a cosigner. If you have a friend or family member that agrees to cosign a loan, you may increase your chances of approval and even help you lock in a lower rate. However, if you don’t make your payments, your cosigner will be responsible.

Find lenders that accept fair credit

While most lenders prefer borrowers with exceptional or good credit, many will consider borrowers with credit scores below 700. Some lenders even post the minimum score they’ll consider. Use this to eliminate lenders seeking only good-credit borrowers.

Review APRs

The annual percentage rate (APR) is a measure of how much you would pay to borrow money from a lender each year. It considers not just the interest rate, but also any fees, like an origination fee. Since a lower APR can save you hundreds or even thousands of dollars, it’s important to compare APRs between lenders instead of interest rates alone.

Get prequalified

Many lenders allow you to prequalify for a loan — which gives you a sense of the rate and fees you’ll pay if you apply. Prequalification does not damage your credit. Try to prequalify with at least three different lenders that seem like they could be a good fit.

Carefully review fees and repayment terms

Before you commit to a personal loan, make sure you accept the fees and repayment terms. If they don’t align with your budget or you’re worried you won’t be able to afford the loan, continue your search and consider reducing the loan amount.

Personal loan alternatives for fair credit

A personal loan for fair credit isn’t right for everyone. Here are several alternative options you might want to consider:

• Low-APR credit card balance transfer: With a credit card balance transfer, you transfer the balance from your current card to another one with a lower rate and better terms. If possible, find a balance transfer card with a low promotional APR and low balance transfer fees. It’s important to pay off the balance before the end of the promotional period, as the standard APR will resume.
• Home equity loan or home equity line of credit (HELOC): With either a home equity loan or a HELOC, you can tap into your home equity, which is the difference between the value of your home and how much you owe on your mortgage. A home equity loan offers a lump sum of money upfront, while a HELOC is a revolving line of credit. However, these are both secured by collateral, in this case your home. If you default, the lender could seize it.
• Join a credit union for lower rates: Credit unions are nonprofit organizations that may offer lower rates than banks and other lenders. If you find a credit union with good rates for fair-credit loans, you may want to become a member of it.