Personal loans with fair credit: What to know

A personal loan is a type of installment loan that you can repay over time with interest. Personal loans may be helpful for making big purchases. They can also be used to consolidate high-interest debts.

If you have a fair credit score, you may be wondering whether you can get a personal loan. Learn more about getting a personal loan with fair credit.

What you’ll learn:

• Credit-scoring company FICO® says a fair credit score falls between 580 and 669. 

• There isn’t a universal minimum credit score needed for a personal loan. It depends on the lender and the loan. 

• When shopping for personal loans, consider things like approval requirements, borrowing limits, repayment terms and how to qualify.

• Credit cards are an alternative to personal loans.

There’s no set minimum credit score needed for a personal loan. 

Your creditworthiness helps determine your loan approval odds. It’s based on factors like your debt-to-income ratio, payment history and overall credit profile. Each lender sets its own rules for what credit score is needed for a personal loan.

Lower credit scores can make it harder to get approved and may lead to higher interest rates if you get approved.

A fair credit score ranges from about 580 to about 660. The exact range depends on the company that calculates the credit score. FICO® and VantageScore® are two major credit-scoring companies. Here’s their criteria for what’s considered a fair score:

• FICO considers a fair credit score to range from 580 to 669.

• VantageScore says a near-prime credit score, which is similar to FICO’s fair, ranges from 601 to 660.

Banks, credit unions and online lenders might offer personal loans to people with fair credit. Each lender sets its own rules about necessary credit scores and other requirements.

If you have fair credit, exploring different lenders and loan options can help you find the best personal loan for your needs. Before you open any account, it can help to understand typical features and terms. Here are a few things to consider:

• Approval requirements: If you know your credit score is in the right range to qualify, you might be able to limit hard inquiries on your credit report.

• Loan type: Secured loans require the borrower to back the loan with an asset, such as a car, house or cash. Unsecured loans don’t require collateral and typically have stricter eligibility requirements, like higher credit scores. 

• Interest rate: Even slight differences among interest rates offered can make a big difference over the life of a loan. 

• Repayment terms: A longer repayment term may mean lower monthly payments, but it could also increase your interest rate.

• Fees and discounts: You can weigh things like origination fees, prepayment penalties, late fees, autopay discounts and flexible due dates.

If you have fair credit and are considering a personal loan, there are a few steps you can take that may help.

Finding out whether you’re pre-qualified or pre-approved for a personal loan can give you an idea of how likely you are to be approved. Narrowing down your options can help you avoid unnecessary hard inquiries.

Having a co-signer with strong credit might help you get approved for a loan and secure a better interest rate. But if you make late payments or miss payments, it can hurt both your and your co-signer’s credit. Plus, your co-signer is ultimately responsible for the loan if you can’t pay.

Depending on your needs and financial situation, these personal loan alternatives might be worth considering.

Credit cards are a type of revolving credit, which means you can use and repay funds over time as long as the account stays open and in good standing. You can see whether you’re pre-approved before you accept a credit card offer. Pre-approval is quick and won’t affect your credit scores.

If you’re interested in a personal loan to help you consolidate debt, a balance transfer can also help you combine existing payments, often at a lower interest rate. Consider fees, limits and limited-time offers before you apply.

P2P lending companies connect borrowers and individual lenders through online services. Each service has its own application requirements and terms. The Consumer Financial Protection Bureau (CFPB) recommends reviewing fees, interest rates and repayment terms before you apply.

Check out these answers to some frequently asked questions about getting a personal loan with fair credit.

There isn’t a set minimum credit score that’s required for a personal loan. But the lower your credit score, the harder it may be to get approved. And the higher your interest rate might be if you’re approved.

If you have fair credit and are considering a personal loan, you can take steps to improve your scores and increase your chances of approval. And there might be other options available. You can compare cards to see which offers you the best terms, APR and features. You can even find out whether you’re pre-approved without harming your credit scores.