Best Personal Loans for Fair Credit in December 2023

Managing your finances with a fair credit score can sometimes feel limiting, especially when looking for the best personal loan options. A personal loan can be an excellent tool to consolidate debt, make significant purchases or handle unexpected expenses. While those with excellent credit might have many options with low interest rates, those with fair credit often need to search a bit harder to find competitive offers.

Navigating the personal loan landscape with fair credit might come with its challenges, but being well-informed can ease the journey. In the article below, we've spotlighted the best personal loans tailored specifically for those with fair credit. We've also incorporated key insights and considerations, ensuring you have a comprehensive understanding. This knowledge empowers you to determine the most suitable loan option for your unique circumstances.

In 2023, many lenders have offered loans for people with fair credit, but only a few have really impressed. They've attracted customers with good deals, reasonable interest rates and helpful customer service. Whether you're looking to streamline multiple payments or reduce hefty interest expenses, these top lenders have set the standard this year.

A credit score is a number that reflects how well you've managed your credit. Lenders use it to judge how risky it might be to lend you money.

Scores generally range from 300 to 850:

580 - 669: Fair

300 - 579: Poor

670 - 739: Good

740 - 799: Very Good

800 - 850: Excellent

A fair credit score falls between 580 and 669. It means you've had a few credit issues in the past, but not major ones.

With a fair score:

Loan Approval: You can still get loans, but maybe not with the best rates.

Higher Interest Rates: Lenders might charge more due to the perceived risk.

Rebuilding Options: Secured credit cards can be an option to help improve your score.

While a fair score is okay, aiming for a higher score can give you better financial options.

Navigating finances with a fair credit score can sometimes be challenging. But with personal loans tailored for fair credit, you can tap into several advantages while consolidating debts:

More Accessible Approvals: While those with excellent credit might have a wide array of loan options, it can be more challenging for those with fair credit to get approved. Lenders focusing on fair credit understand your situation and are more likely to offer loan options when mainstream lenders might not.

Opportunity to Consolidate: Juggling multiple debts? With a personal loan, you can consolidate them into one manageable monthly payment. Instead of tracking various due dates like the 5th, 15th and 25th — imagine the simplicity of one payment on the 10th.

Competitive Interest Rates: Although rates for fair credit might be higher than those for excellent credit, they can still be competitive, especially compared to high-interest credit cards. For instance, if you're dealing with credit cards demanding 23% interest, a personal loan at 18% could offer significant savings.

Boost Your Credit Score: Consistently repaying a personal loan can reflect positively on your credit report. As you manage this loan responsibly, it offers a chance to improve your credit score over time.

Simplified Financial Management: With a personal loan designed for fair credit, you're consolidating debts and simplifying your finances. One statement, one payment and one interest rate make budgeting and planning more straightforward.

Acquiring a personal loan with fair credit can be a practical solution for many financial needs. However, it's essential to be aware of the potential challenges that come with these loans:

Possibility of Higher Interest Rates: Having a fair credit score may subject you to higher interest rates compared to those with excellent credit. For instance, while someone with a stellar credit score might receive an offer at 10%, a fair credit score might lead to rates of 20% or more.

Risk of Accumulating More Debt: Obtaining access to more credit, especially if not managed responsibly, can lead to accumulating additional debt. For instance, if you secure a loan and then face unforeseen expenses without adequate financial management, you might find yourself in an even more difficult position.

Losing Collateral on Secured Loans: Some personal loans for fair credit might be secured, meaning they require collateral, such as a car or home. If you can't make timely repayments, you risk losing the asset tied to the loan. For example, if you take a loan against your car and default, the lender could have the right to take your vehicle.

Unexpected Fees and Charges: Thoroughly review the terms. Lenders may incorporate origination fees, penalties for early repayments or charges for late payments. If you take out a $10,000 loan with a 3% origination fee, there's an immediate $300 charge.

Acquiring a personal loan with fair credit can be a suitable solution for various financial needs. The table below highlights common uses for such loans and what to consider when choosing them:

While personal loans for fair credit provide a viable option for many individuals, there are other financial avenues to consider. Depending on your needs, financial situation and objectives, one of the alternatives below might better suit your circumstances:

Balance Transfer Credit Cards: A card with a low or 0% introductory interest rate can help you manage high-interest debt. Remember to stay alert about rates post the promotional period.

Home Equity Loans or Lines of Credit: Using your home's equity can secure better interest rates. But remember, failure to repay means risking your home.

Debt Settlement or Management Programs: Companies that negotiate your debt or modify repayment terms can reduce your overall financial burden. However, they may affect your credit negatively.

Bankruptcy: This option offers a reset but has profound credit implications and should be a last resort.

401(k) Loan: Borrowing against your retirement savings can offer favorable terms and rates, but be aware of potential long-term impacts on your retirement funds.

Peer-to-Peer (P2P) Lending: Online platforms can sometimes provide competitive rates for those with fair credit, connecting borrowers with individual lenders.

Credit Counseling: Expert guidance and structured debt management plans can help you navigate financial difficulties without resorting to additional loans.

Personal Savings: If you have the means, using savings to cover immediate expenses can be wise, but always ensure you maintain an emergency fund.

Negotiate Directly with Creditors: Sometimes, a direct conversation can lead to better repayment terms or reduced interest, streamlining your financial responsibilities without new credit.

We reviewed over 30 personal loan lenders using 35+ individual data points across six key categories: loan affordability, accessibility, consumer friendliness, customer service, flexibility and lender transparency.

Within each ranking criteria category, we considered several data points that carry the most weight when choosing a personal loan lender for debt consolidation. These factors include APR ranges, available loan amount, minimum credit score, minimum income amount, application fees and disbursement time.

Here at MoneyGeek, we value you — the consumer — so we also factor in each lender’s customer support, business ratings and additional features that could make your experience easier and more accessible — like prequalification, payment options and mobile apps.

After careful consideration and calculation, our picks are chosen with your best interest in mind. Our personal loan recommendations and expert tips are meant to help you make the best decision when choosing a lender to consolidate your debts and meet your needs.