Best Personal Loans for Fair Credit

What’s the best type of personal loan for fair credit?

Generally, all personal loans are made equal, regardless of what they say they’re for. For example, looking for a home improvement personal loan will not really be any different from a debt consolidation personal loan, because the loan money will be deposited into your account.

That said, there are some better options out there for people with a fair credit score. You can consider:

• A secured personal loan – if you own property, such as a home, land, car, or another valuable asset, you may be able to secure the loan against your property. Most loans are unsecured, which means the lender gives you money based only on your promise to pay the loan back. A secured loan is a much safer bet for them because if you don’t pay they can legally seize your asset. For this reason, you need to step cautiously when looking into secured personal loans and be confident you can pay it back to avoid your property being seized.
• A co-signer – some personal loans will lend you money as long as you have a co-signer. A co-signer is someone else who has a stronger credit history than you who agrees to pay the loan should you default. For obvious reasons, this can be problematic, so only do this if you are absolutely confident in your ability to cover the costs of the loan, and it’s someone you’re close to, such as a parent, sibling, or spouse.
• Get pre-qualified – while this isn’t a different type of loan, it’s worth mentioning that many lenders will now allow you to get “pre-qualified” before you actually apply. You enter all your details, they’ll do a “soft” credit search on you (which won’t affect your credit score) and then tell you if they’re likely to approve you or not. They’ll do a hard search after that, but if they’ve approved you after the soft search, it’s unlikely they’ll reject you at this stage.

Are there alternatives to personal loans for borrowers with fair credit?

Some alternatives are:

• Credit cards – if you only need a nominal amount or emergency money, a credit card may be a better solution (if you’ll use it responsibly).
• Cash advance – some credit cards will allow you to get a short-term loan through a bank or an ATM, which may be a good option if you need cash in hand, though there are usually added fees.
• 401(k) loan – if you have a 401(k) that allows this, you can sometimes borrow the money from your future self. To do this, your retirement plan provider must allow it and you must have a secure position and be able to pay off the debt in 5 years or less, so the same affordability factor will apply.
• Car loan – if you are trying to buy a new vehicle, opting for car finance through the dealership you work with can help you get approved more easily because the loan is secured against the car you buy.
• Overdraft – if you’re on good terms with your bank, you may be able to apply for an overdraft. This is essentially money you can borrow when you reach the limit in your bank account. Overdrafts can be difficult because they’ll essentially “eat” all the money deposited in them each month, though you can reuse your overdraft until you get out of it. They are also usually terrible for added fees, so tread carefully.

What do I need to apply for a personal loan with fair credit?

To apply for a personal loan, you need:

• To know how much you make (after tax) a year and month
• Your bank details
• The cost of your monthly bills
• The total of other forms of debt you have (other than your mortgage)
• How much you need to borrow
• The reason why you want to borrow (they’ll ask about this, though the answer you give rarely makes a difference to your application)

In some cases, you may need to send proof of income before they’ll make their final approval. You will have a little time to do this if asked, so don’t panic. They’ll usually ask for proof of income, such as your pay stubs or bank statements.

How do I choose a fair credit personal loan lender?

If you’re planning to take out a personal loan with fair credit, go into it calmly – don’t rush into anything and take some time to think about whether borrowing this money is right for you. Also consider:

• High-interest rates – personal loans are usually better for this than credit cards because your set monthly payments will pay off the loan in the determined time, but don’t forget that the interest rate increases the cost of the loan.
• Look at additional fees – some lenders will tack on additional fees, so keep an eye out for those and how much they may increase the cost of the loan.
• Look at the repayment terms – don’t take a loan that won’t allow you to pay it off early if you choose, or that charges an early repayment fee. Also look at other terms, as some allow you to choose your monthly payment date or give you a few payment “holidays” which allow you to opt to skip a payment in an emergency.

How to qualify for fair credit personal loans

The key to qualifying for a personal loan with a fair credit score is making sure it’s well within your affordability. Spend some time looking at your budget and make sure you can pay for it without stretching yourself.

Apply for a personal loan for fair credit

Ready to find the right personal loan for you? Finding a personal loan with fair credit is easy with us – use the comparison tables here to find the one that suits your circumstances and offers the best terms and rates for you, then apply. Now you understand what it takes to get a personal loan with fair credit, you’re much more likely to get approved.

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