Most borrowers lie on, or below the average credit mark. And, let’s face it – it’s hard to get loans with a fair credit score than it is for people with excellent and good credit scores. But, that’s where personal loans for fair credit scores come in.
These loans are meant for individuals with scores lying slightly above 580. In this article, we’ll explore all about them. But first, we singled out some lenders offering personal loans for fair credit scores at the best rates. Take a look;
A fair credit score, according to FICO, lies between 580 and 669.
Individuals with these credit scores have a hard time finding loans with most borrowers. However, there are still lenders willing to offer them loans. Such lenders consider more than just credit scores.
They also pay fairly higher interest rates than their counterparts with excellent credit scores. This is because lenders regard them as risky borrowers to some extent.
Most borrowers with fair credit scores are relatively new with credits. They’ve also likely experienced such setbacks as late repayments in the past.
They also probably carried high credit balances through months in the past.
Apart from getting lenders to offer them loans and the high-interest rates, fair credit borrowers have to deal with the fact that they won’t get the best loan terms.
Like other personal loans, lenders have different criteria gauging eligibility for one to qualify for personal loans for a fair credit score.
The most basic include being a legal US resident and being aged 18 years and above.
Additionally, borrowers should have a credit score between 580 and 669. Most lenders will also likely look at your debt-to-income ratio. The lower, the better.
You’ll also need to show proof of your income. Borrowers with a stable income will more likely get approved. Lenders use this to demonstrate the ability to repay.
To boost your chances, avoid harming your credit score by first checking if the lender offers prequalification. Most fair credit score personal lenders do.
You can also do well to pay your existing loans including your credit card debt. Doing so will keep your debt-to-income ratio to a minimum hence painting a good image to potential lenders.
Alternatively, you can approach banks and credit unions. These institutions are likely to be more lenient to members, especially those with good repayment history.
Here are some of the things you should keep in mind if you’re looking to take a fair credit score personal loan;
Be sure to shop around for lenders with better terms before committing to one.
The prequalification procedure will show you beforehand which terms you’re open to. Qualify and take advantage of this. A formal application will likely include a hard credit check which will cost you a few points off your credit score.
Only go for a loan if it’s absolutely necessary, and you’ve exhausted other options. Remember to carefully go through the lender agreement and ensure each term works well with you.
Here are some personal loan products you can take with a fair credit score;
For the lenders we singled out, you can borrow from $100 to $50,000.
Like we earlier noted, being on the higher side of the fair credit score bracket will unlock higher loan limits with most lenders.
Getting a co-signer with an excellent credit score will also work to your advantage. Ensure they have a steady source of income and a low income-to-debt ratio. That will, in a way, boost the lender’s confidence.
If you have a property you can offer as collateral, go for a secured loan. If it’s a property with a higher value, the lender will likely increase your loan limits.
However, how much you can borrow shouldn’t be your only concern. Ensure you borrow what you’ll be able to repay comfortably. Overlooking this could place you in a recurrent debt cycle.
If you had a co-signer, you also risk your relationship should you put them in a position to repay your loan. Further, you can also your property if you used one as collateral.
As you shop around for a suitable fair credit score loan lender, keep the following in mind;
If yours isn’t an emergency, you could take time to grow your credit score. While there’s no shortcut for that, the following steps will come in handy;
Yes. You don’t need an excellent credit score to get a loan. The lenders above will offer you a loan with a fair credit score.
Credit scores from 580 will get you a loan with most lenders. However, you’ll have limited choices.
The lenders above are some of the best fair credit score personal loan lenders.
By repaying your loans on time. You should also make timely repayments for your bills, and avoid opening additional credit card accounts.
Look out for interest rates charged, repayment terms, and fees charged.