Personal Finance
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Best Loans for Fair Credit in December 2024

Best Loans for Fair Credit
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Our evaluations and opinions are not influenced by our advertising relationships, but we may earn a commission from our partners’ links. This content is created by TIME Stamped, under TIME’s direction and produced in accordance with TIME’s editorial guidelines and overseen by TIME’s editorial staff. Learn more about it.

updated: September 1, 2024
edited by Wendy Connett

When looking for a loan with less-than-perfect credit, you may encounter challenges, including high rates and difficulty finding a suitable lender. Shopping around for the best loans for fair credit can help you find the most favorable costs and terms for your financial situation. Here’s a look at the top lenders for fair credit to help you hone in on the best loan for your unique needs.

Best loans for fair credit compared

ProviderBest forMax loan amountAPRLoan termsBetter Business Bureau rating
Low fees
$40,000
7.99% to 24.99%
36 to 84 months
A+
Debt consolidation
$50,000
8.49% to 35.99%
24 to 84 months
A+
Customer experience
$40,000
11.72% to 24.67%
24 to 60 months
A+
Credit union loans
Up to $50,000
7.99% to 17.99%
Up to 60 months
A+
Auto loan refinance
$55,000
5.99% to 24.99%
24 to 80 months
A+
Student loan refinancing
Up to 100% of existing loan amounts
5.74% to 11.24%
60 to 240 months
A+

Our recommendations

Taking out a loan of any kind is a major financial decision. Here’s a look at the best loans for fair credit based on our research.

Best for low fees: Discover

Discover

Discover® Bank

Discover® Bank

APR
7.99% to 24.99%
Loan amount
$2,500 to $40,000
Term
36 to 84 months
Min. credit score
660

Discover is a large financial services company offering a range of banking and lending services. For personal loans, it’s a top choice for low-cost offerings. You won’t encounter any fees as long as you always pay on time. Discover personal loans are not subject to any origination fees or prepayment penalties. Customers also get free access to their FICO credit score and other credit-building tools.

Loans for $2,500 to $40,000 are offered to those with credit scores as low as 660. Terms last 36 to 84 months, and rates range from 7.99% to 24.99% annual percentage rate (APR). If you’re looking to use Discover for debt consolidation, it will pay off your existing debts directly, saving you time and ensuring loans are paid off as expected.


Best for debt consolidation: Upgrade

Upgrade

Upgrade

Upgrade

APR
9.99% to 35.99%
Loan amount
$1,000 to $50,000
Term
24 to 84 months
Min. credit score
580

Upgrade offers personal loans, credit cards, and online banking products. It offers personal loans for nearly any purpose and suggests them to refinance credit cards to a lower interest rate or consolidate your loans to a single monthly payment. As with most competitors on this list, you can check your rate quickly without impacting your credit score.

You can borrow $1,000 to $50,000 with an Upgrade personal loan if approved. Rates range from 9.99% to 35.99% APR and terms last from 24 to 84 months. Be aware that origination fees apply, from 1.85% to 9.99%. Funds are typically received the day after full approval and acceptance.


Best for customer experience: Happy Money

Happy Money

Happy Money Personal Loan Credible

Happy Money Personal Loan Credible

APR
8.95% and 17.48%
Loan amount
$5,000 to $40,000
Term
24 to 60 months
Min. credit score
640

Happy Money makes consolidating credit card debt easy with The Payoff Loan. The website is easy to navigate, and you can get your rates in about two minutes without impacting your credit score. The Payoff Loan is designed specifically for credit card payoffs. Getting help from customer support is a straightforward process where you can quickly reach a human on the phone.

Loan interest rates range from 8.95% and 17.48% , which is lower than many credit cards. However, given the top interest rate, refinancing with a loan at a higher interest rate is usually not a good idea. Loan balances must be between $5,000 to $40,000, and terms last from 24 to 60 months.


Best for credit union loans: PenFed

PenFed

PenFed

PenFed

APR
8.99% to 17.99%
Loan amount
Up to $50,000
Term
Up to 60 months
Min. credit score
580

PenFed Credit Union is a nonprofit financial institution offering banking and lending services. While it’s historically focused on military households, anyone can join nationwide regardless of military affiliation or veteran status. Credit union members often find more favorable costs when borrowing from a credit union than they would with a for-profit lender.

You can check your rate before joining, but you need to open a savings account with at least $5 to join and receive a loan. Loans are offered with interest rates as low as 7.99% for qualified borrowers. If approved, you can borrow up to $50,000 with terms of up to 60 months. Funds are received one to two days after clearing all verifications.


Best for auto loan refinancing: LendingClub

PenFed

PenFed Personal Loan Credible

PenFed Personal Loan Credible

APR
8.99% to 17.99%
Loan amount
$600 to $50,000
Term
Up to 60 months
Min. credit score
580

LendingClub offers several types of loans, including auto refinance loans. Refinancing your car loan can help you qualify for a lower interest rate or monthly payment, depending on your credit history and goals. LendingClub auto refinance loans have no origination fees or prepayment penalties.

For auto loans, terms last from 24 to 84 months, with interest rates from 5.99% to 24.99%. The maximum loan amount is $55,000, which may be an issue for some applicants with expensive vehicles. Remember that with auto loan refinancing, a lower monthly payment and longer payback period can lead to higher total interest costs over time, so do the math to compare your options.


Best for student loan refinancing: Laurel Road

Laurel Road

Laurel Road Student Loan Refi

Laurel Road Student Loan Refi

APR
5.99% to 11.24% fixed; 5.24% to 10.64% variable
Loan amount
Minimum $5,000 up to 100% of outstanding private and federal student loans; (maximum $50,000 for those refinancing associate degree loans or parents refinancing)
Term
Five, seven, 10, 15 or 20 years
Min. credit score
N/A

Laurel Road is a bank and lender offering student loan refinancing, mortgage loans, and personal loans. You may qualify for an interest rate discount with a Laurel Road checking account. Remember that refinancing from federal student loans to private student loans means giving up certain valuable benefits, so only refinance if you completely understand what you’re doing.

Laurel Road allows you to refinance up to 100% of your outstanding federal student loan balance. Different types of loans, such as Parent PLUS loans and associate degree loans, may have different limits. Fixed and variable interest rates are available, ranging from 5.74% to 11.24%. Terms are offered from 60 to 240 months.


Methodology

To choose the best loans for fair credit, we reviewed a long list of lenders with a focus on interest rates, fees, types of loans supported, and available terms. Every lender uses unique criteria to approve applications, so your results may vary. It’s generally a good idea to shop around for the best loan for your unique needs and financial situation.

How to select the best loans for fair credit

When looking for a loan with fair credit, shopping around is important. Start by looking for lenders who make loans to people with fair credit. You can apply for several loans and compare your offers to pick the best loan for your situation. Many lenders allow you to check your rate without negatively impacting your credit score, allowing you to shop around without risk of harming your credit with too many hard inquiries.

It's also important to understand all the costs of the loan, not just the interest rate. Look at the APR, which includes the interest rate and any extra fees. This tells you the real cost of the loan. Also, think about how long you'll be paying the loan. A longer loan means lower monthly payments, but you might end up paying more in interest over time.

Choose a loan that has a good APR and a payment plan that works for you. This way, you can handle your loan well and even improve your credit score as you pay it back.

Alternatives to loans for fair credit

For individuals with fair credit seeking financial solutions beyond traditional loans, there are several alternatives to consider. Each of the following options offers unique advantages and may be more suitable depending on your specific financial circumstances:

Savings

Using your savings is a risk-free way to address financial needs without incurring debt. It's the most cost-effective option, as it avoids interest rates and fees associated with loans. But it's important to ensure you maintain an emergency fund for unforeseen expenses.

Credit cards

Credit cards can be a convenient alternative for short-term financing, especially if you qualify for a low-interest rate or a 0% APR introductory offer. However, managing credit card use carefully is crucial to avoid high interest and accumulating debt, particularly after any promotional periods end.

Peer-to-peer lending

Peer-to-peer (P2P) lending platforms connect borrowers directly with individual investors, often allowing for more flexible terms and approval criteria than traditional banks. This can be a viable option for those with fair credit, but comparing rates and terms is important, as P2P loans can sometimes carry higher interest rates.

More on loans for fair credit

How to qualify for a loan with a fair credit score

Qualifying for a loan with fair credit can be more challenging. Still, it's certainly achievable with the right approach. Here’s how to increase your chances of approval:

Improve your credit score

Before applying for a loan, take steps to improve your credit score. This can include paying down existing debts, making all current payments on time, and checking your credit report for any errors that need correcting. Small improvements in your credit score can significantly enhance your loan eligibility and terms.

Research and compare lenders

Look for lenders that are known for working with borrowers with fair credit. This includes online lenders, credit unions, and community banks. Compare their loan terms, interest rates, and fees. Some lenders may offer pre-qualification, which lets you see potential loan terms without affecting your credit score.

Prepare your application carefully

When you're ready to apply, gather all necessary documentation, such as proof of income, employment verification, and any relevant financial statements. Be honest and accurate in your application. Consider adding a co-signer if possible, as their good credit can bolster your application and possibly secure better loan terms.

How to apply for personal loans for fair credit

If you’re ready to apply for a personal loan with fair credit, follow these steps to get started:

  1. Check your credit report: Before applying, obtain a copy of your credit report from the major credit bureaus to understand your credit standing. Fix any errors you find, as this could potentially improve your credit score.
  2. Research suitable lenders: Look for lenders that cater to applicants with fair credit. Compare their terms, interest rates, and fees, focusing on those who offer pre-qualification options to gauge your chances without impacting your credit score.
  3. Gather necessary documents: Prepare documents such as proof of income (like pay stubs and tax returns), employment details, and financial statements. These documents are essential for verifying your ability to repay the loan.
  4. Consider a cosigner: If it makes sense for your household, find a cosigner with good credit. A co-signer can increase your approval chances and potentially secure a lower interest rate.
  5. Apply and review offers: Apply to multiple lenders that fit your criteria to have options. Once you receive offers, carefully review the terms and conditions, paying close attention to the APR, repayment terms, and any additional fees.
  6. Accept and sign your loan: Once you’ve selected the best offer, carefully read your final loan agreement. Ensure you understand all terms and obligations before signing. After signing, the lender will process the loan, and you can expect to receive the funds as per the agreement.

Always make at least the minimum payment by the due date to avoid fees and build a positive credit history.

TIME’s take

Securing a loan with fair credit requires a strategic approach and shopping around for the best deal that fits your unique financial needs. Challenges like higher interest rates and a limited choice of lenders with fair credit are common. Focus on understanding loan terms, especially the APR, which indicates the true cost of the loan.

Choosing a loan is a major financial decision that should align with both your immediate needs and long-term financial strategy. Every loan decision is an opportunity to improve your credit, leading to better terms in the future. A careful and informed approach to loan selection can help you navigate the nuances of each loan, ensuring your borrowing decision improves your financial wellbeing in the long run.

Frequently asked questions (FAQs)

What is fair credit?

A fair credit score is generally considered a score from 580 to 669. Higher credit scores improve your borrowing options and odds of approval.

How does a personal loan affect your credit score?

In the short term, a new personal loan typically lowers your credit score due to new inquiries on your credit report, a lower average age of credit, and a new loan being added to your credit history. Over time, if you always make on-time payments as agreed, your score should improve.

What is the lowest credit score you can borrow money with?

There’s no specific minimum credit score to borrow that’s universally accepted across all lenders. Each lender uses its own criteria to approve new loans. Credit scores are just one part of the equation. Finding a loan with bad credit may be difficult, but it’s not impossible.

The information presented here is created by TIME Stamped and overseen by TIME editorial staff. To learn more, see our About Us page.

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