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- Best Personal Loans
- Best Personal Loans for Fair or Average Credit
Best Personal Loans for Fair or Average Credit of January 2021
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If you're looking for the best personal loans for fair credit, you're in the right place. You have fair or average credit if your credit score is between 580 and 669. A personal loan is a great way to consolidate debt, pay for home renovations, or cover medical bills. In fact, if you have a fair credit score, you could find a personal loan with a better interest rate than you'd get with a credit card.
With that in mind, here are the best personal loans for borrowers with credit scores ranging from 580 to 669.
Here are The Ascent's picks for best personal loans for fair or average credit:
- Reducing high interest debt: Upstart
- Borrowers with poor credit scores: Avant
- Borrowers with poor credit scores: LendingPoint
- Debt consolidation and fair credit: Upgrade
Ratings Methodology
Best for Reducing high interest debt
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Minimum credit score: 580
Upstart
Rating image, 4.5 out of 5 stars.
4.5 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Upstart has a minimum FICO® credit score of 620, so borrowers in the upper half of “fair credit” could potentially qualify for the company’s loans. Upstart is one of my favorite lenders for fair credit borrowers because it considers non-traditional factors as part of its underwriting process, such as the borrower’s educational background. Because of this, Upstart can be an especially good choice for people with limited credit histories, such as recent college graduates. Read the full review to learn more.
Best for Borrowers with poor credit scores
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Minimum credit score: 580
Avant
Rating image, 4.0 out of 5 stars.
4.0 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Avant is perhaps the best choice for borrowers deep into fair credit territory, as the company accepts applicants with FICO® credit scores as low as 580. There are also some unique features designed to help struggling borrowers get back on track, such as the lender’s late-fee forgiveness program. If an Avant borrower makes one late loan payment, but makes the next three on time, the $25 late fee is refunded to them. Read the full review to learn more.
Best for Borrowers with poor credit scores
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Minimum credit score: 585
LendingPoint
Rating image, 4.5 out of 5 stars.
4.5 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
LendingPoint’s APR range is among the highest on this list, but its loans are built for “customers with credit scores in the 600s,” according to its website. Like Avant, LendingPoint’s minimum FICO® credit score is 580, and like Upstart, the lender considers non-credit factors such as job history and behavior with other credit accounts. LendingPoint’s loan terms range from two to four years, and amounts go from $2,000 to a maximum of $25,000. Read the full review to learn more.
Best for Debt consolidation and fair credit
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Minimum credit score: 620
Upgrade
Rating image, 4.0 out of 5 stars.
4.0 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
With low minimum and high maximum loan amounts, Upgrade is a solid option for fixed-rate personal loans for borrowers without great credit, and for debt consolidation. Applicants can also lower their interest rate by using their vehicle as collateral, which is a rare perk. Read the full review to learn more.
What is a fair or average credit score?
A fair credit score is generally in the 580-669 range.
FICO® Scores are the most commonly used credit scores. These scores range from 300 to 850, with higher scores being better. There's no official cutoff point that determines what is considered good credit , fair credit, poor credit, and so on, but FICO does offer some guidelines:
| If your FICO® credit score is in this range… | ...then your score is generally considered… |
|---|---|
| 800-850 | Exceptional credit |
| 740-799 | Very good credit |
| 670-739 | Good credit |
| 580-669 | Fair or average credit |
| 579 or lower | Poor credit |
Data source: www.myFICO.com
We'll use FICO's definition and say you have fair credit if your FICO® Score is in the 580-669 range. That means if your credit score is 600, you have fair credit. The above best personal loans for fair credit are a great place to start looking for a personal loan if your credit score falls in this range.
If your credit score is well under 600, then you may want to consider some of the best personal loans for bad credit instead. A bad credit loan can also help you raise your credit score. If you make your monthly payments on-time, you can eventually qualify for a fair credit loan.
If you aren't sure what your credit score is, there are several websites where you can check it before applying for a personal loan. You may be able to access a free FICO® Score through certain credit card issuers if you're a cardholder. My personal favorite (although it isn't free) is myFICO, which is run by the Fair Issac Corporation -- the creator of the FICO® Score. I've been a customer for well over a decade and love the comprehensive score reports and tools I have access to.
Choosing the best personal loan for credit scores ranging from 580-669
When you're looking for the best personal loans for fair credit, make sure you shop around. Find out which lender offers an interest rate and loan term that works for you. You can also compare loan amounts between different personal loan lenders.
How to compare personal loans
There are a few important parts of a loan offer every borrower should compare before agreeing to work with a personal loan lender:
Loan amounts offered
How much do you need to borrow? Some lenders specialize in larger loans, while others offer small or mid-range loans. Knowing how much you need to borrow ahead of time can help you narrow down your list of lenders.
Interest rate and other fees
The interest rate is the fee your lender charges you for the service of lending you money. In general, it's good to look for a low-interest personal loans.
An origination fee is something you pay the lender for the service of processing your loan application and funding your loan. A prepayment penalty is a fee you'll pay if you pay off your loan before the loan term ends. The best personal loans for fair credit won't have these fees, or will not charge much for these services.
When you're comparing loans, look at each loan's annual percentage rate (APR). The APR combines interest with other fees to give you the true, total cost of getting a loan.
Repayment term
If you repay your fair credit loan over a long period of time, your monthly payments will be lower. However, you'll end up paying more in interest over the life of the loan. If you instead get a loan with a short repayment term, you'll have a higher monthly payment -- but you'll pay less in interest long-term.
Missing loan payments can hurt your credit score, so it's important to pick a loan term and monthly payment that fits your budget. But if you can repay the loan quickly, you'll save yourself hundreds (or thousands) in cash by the time the loan term is up.
TIP
Budgeting for loan payments
Before you look at loans, look at your budget. What sort of loan payments can you afford? This will help you narrow down possible loans to ones you can afford. For example, if you need to borrow a large amount, but you can't afford much in repayments, you might want to stretch out repayment over several years. If you can afford bigger payments, you might want a shorter loan term.
Secured or unsecured loan
Also notice whether the loan you're interested in is a secured personal loan or unsecured personal loan. If you're approved for a secured personal loan, you'll need to provide collateral (like a savings account). The lender can take this collateral if you don't make payments.
Get pre-qualified for a personal loan
What's the best way to find the fair credit personal loan? Get pre-qualified with many different personal loan lenders.
Pre-qualification doesn't hurt your credit score, and isn't a commitment to work with one specific lender. Pre-qualification is an opportunity for lenders to look at your credit history and offer you personalized fair credit loan offers.
Here's how to get pre-qualified for a personal loan with fair credit:
- Start the lender's pre-qualification process by giving the lender some basic information.
- Wait for the lender to look into your financial history.
- Find out the types of loans you'll probably qualify for with that lender.
The loan term and interest rate you're offered will differ from one fair credit lender to the next. If you really want to find the best personal loans for fair credit, you'll need to look at more than one loan option. Every time you're pre-qualified for a fair credit loan, you can add another loan offer to your list.
How to qualify for a personal loan with fair credit
There are a few things you can do to give yourself a leg up on your loan application.
Ways to increase your chances of qualifying for a personal loan with fair credit include:
- Increase your credit score. Two ways to quickly improve your credit score: check your credit reports for mistakes and pay down debt. Methods that take a bit longer include making on-time payments, avoiding applying for new credit, and consolidating debt.
- Consider getting a cosigner. If your credit score or income is low, you might have trouble getting approved for a loan. A cosigner improves your chances of getting approved.
- Shop around. If your application is denied once or twice, don't get discouraged. Get pre-qualified with several lenders to increase your chances of getting approved. If you're having a lot of trouble, you can also look at personal loans for bad credit -- it might be easier for you to get approved for a bad credit loan.
How to apply for a personal loan
Once you're ready to apply for a personal loan, follow these steps to get a loan:
- Submit your loan application. You'll need to provide some personal details, like your Social Security number, income information, and address.
- Wait for a decision. How long it takes to get a loan depends on the lender -- and, sometimes, the borrower. Sometimes, you'll hear back same-day or in one day. Other times, you may need to wait a couple days to hear back.
- Agree to the loan terms. Make sure the loan terms meet your needs. Then, formally agree to pay back the loan according to the terms.
- Receive loan funds. At this point, your lender will give you the loan funds.
If your loan application is denied, don't give up hope. Check our guide on how to get approved for a personal loan to find out the best next steps for your situation.
Here are the best personal loan lenders for fair or average credit
FAQs
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Yes. There are personal loans available for those with credit scores between 580 and 669, as well as options available for those with lower credit scores. If you're not sure what your credit score is, you can request it from one of the three major credit bureaus or through the FICO® website.
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The ideal personal loan combines a low interest rate, reasonable repayment terms, and low fees. Each of these factors into your monthly payment, so look at these parts of your loan offer carefully before agreeing to a fair credit loan.
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Yes. Before applying, though, get pre-qualified with multiple lenders. When you get pre-qualified, a lender will tell you whether or not they'll lend to you (and what terms you can expect). This step doesn't hurt your credit score and can ensure you only apply for a loan you'll likely be approved for.
About the Author
Matt is a Certified Financial Planner® and investment advisor based in Columbia, South Carolina. He writes personal finance and investment advice for The Ascent and its parent company The Motley Fool, with more than 4,500 published articles and a 2017 SABEW Best in Business award. Matt writes a weekly investment column ("Ask a Fool") that is syndicated in USA Today, and his work has been regularly featured on CNBC, Fox Business, MSN Money, and many other major outlets. He’s a graduate of the University of South Carolina and Nova Southeastern University, and holds a graduate certificate in financial planning from Florida State University.
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