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A personal loan can help borrowers with fair credit build or rebuild their credit. But if your FICO score falls within the 580 to 669 range, you’ll likely face higher interest rates and shorter repayment terms than borrowers with good or excellent scores.
To boost your approval odds, pay down debt, raise your income and/or seek a co-signer. Here are some lenders that offer personal loans to borrowers with fair credit.
Bankrate’s Best Personal Loans for Bad Credit
Personal loans can be a good way to finance big purchases or consolidate debt, especially when you have fair credit. However, it’s important to understand the potential risks and costs of these loans before you apply. If you have bad credit or a fair FICO score, lenders might require a co-signer or charge higher interest rates to offset the risk of nonpayment.
There isn’t a set minimum credit score required for a personal loan, but borrowers with poor or fair credit may face increased application rejections or higher rates than those with good or excellent scores. Your creditworthiness is based on your history of paying bills and reducing debt, as well as your current income and debt-to-income ratio.
Lenders may use hard or soft credit inquiries to determine your eligibility, and will typically report your repayment history to the three major credit bureaus. Your credit utilization is the percentage of available credit that you’re using, and is calculated by adding your outstanding balances to your total credit limit.
Online lenders like LightStream offer low rates and fast funding on personal loans for borrowers with fair credit, as long as you can prove your income and identity. You can also find personal loans for fair credit from traditional banks and credit unions, including TD Bank and PenFed. These options might have a more personal touch and the potential for better approval odds than those offered by online lenders.
Upgrade
A personal loan can provide cash to pay for unexpected expenses or short term loan bad credit consolidate debt. If you have fair credit, your options for a loan are limited and you’ll likely pay higher rates than those with good or excellent credit scores. But, with on-time payments, a personal loan can improve your credit score by reducing your credit utilization ratio and diversifying your credit mix.
Upgrade’s combination of fast funding times, low minimum credit score requirements and multiple rate discounts makes it one of the best personal loans for bad credit. This lender also doesn’t charge an origination fee and provides a direct creditor payment service to help you manage your debt.
To compile this list, Investopedia reviewed 59 banks and credit unions offering personal loans for fair credit with bad credit. We considered each lender’s fees, APR range, loan amounts and terms, credit score requirements and more. You can read more about how we chose the lenders in our full methodology. This year, Lake Michigan Credit Union (LMCU) takes the top spot for this category. It offers the smallest loan amount on this list, but it still has an APR below 35 percent and no origination fee.
Oportun
A personal loan is a lump sum of money that is repaid over time with fixed monthly payments of both principal and interest. It’s a great option for people who need extra cash to cover expenses or pay down debt, but have bad credit. Unlike payday or auto title loans, personal loans don’t require collateral like a car to qualify.
Oportun is one of the best personal loan lenders for bad credit and offers unsecured options as well as secured loans. It has a simple online application that takes about ten minutes to complete and lets you pre-qualify with a soft credit check. It also offers a convenient mobile app for customers to track their status and make payments.
The lender reports your payment behavior to the credit bureaus and may be able to help you build a better financial profile over time with on-time payments. It is one of the few personal loan lenders that offer a cosigner option, allowing a friend or family member to join your application and take responsibility for your debt in the event you aren’t able to repay the loan.
LendingClub offers a wide range of personal loan amounts and repayment terms, competitive rates for borrowers with bad credit, and fair origination fees. It’s easy to prequalify, and funds are often disbursed within one business day of approval.
Bank of America
If you have a poor credit score (660 and below on the FICO model or 660 and below on VantageScore) or you’ve recently filed for bankruptcy, it can feel like you’re shut out of many financial products. However, borrowers with bad or fair credit still have options to get loans for medical bills, debt consolidation and other expenses. Most personal loans are unsecured, which means you don’t have to offer up something of value as collateral. Moreover, you can typically choose the loan term and monthly payments that work best for your budget.
If a Bank of America personal loan doesn’t work for you, there are plenty of other banks, credit unions and online lenders that offer competitive rates. To help you find a lender, WalletHub analyzed offers from more than two dozen top lenders to find the best personal loans for bad credit, fair credit and good credit.
The lender with the best personal loan for bad credit is Discover, which offers loans up to $40,000 with a starting APR of 8.99%. It also doesn’t charge any application or origination fees and allows borrowers to prequalify without impacting their credit score. Other high-rated lenders include LightStream, which has a maximum loan amount of $100,000 and offers flexible terms. The lender is backed by Truist, which evaluates your employment and education history in addition to your credit and financial profile.