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How to Get a Personal Loan with Fair Credit

May 30, 2019

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Bad credit scores are like predominant scars that can make life uneasy. However, with a fair credit rating, there’s still hope. Before you decide to borrow or write off yourself, take time to find more about fair credit and how you can still secure a personal loan to consolidate your debt. Luckily, we have got you covered. Here’s more on how to get a personal loan with fair credit right from the word, “Go”.

What is Fair Credit anyway?

A credit score is what banks and credit unions refer to before approving a loan.  On the flip side, credit score also reflects how likely one might default on the loan. Having a fair credit score puts you somewhere between “Good” and “Bad”. Generally, credit cards for credit scores of 650-700 are regarded to be a fair credit score. In other words, you have a very limited option for borrowing money. Don’t be alarmed. It’s not the end of the world. You still stand a chance to get a personal loan, the only condition being a higher rate of interest and other applicable fees.

What Leads to a Fair Credit Score

Now that you know what a fair credit score is let’s take a look at what contributes to it. Remember, your payment history has a massive impact on your credit score. A fair credit score would suggest that you have been behind your payments at some point. Here are a few things that affect credit score:

  • High debts hit credit score. If you are holding a credit card with a balance that’s higher than one-third of the available limit, your credit score is bound to take a nose dip. 
  • Credit score also depends on the length of your credit history. Sometimes, having a fair credit score means, there isn’t much credit history available under your name.
  • Number of times you have inquired for credit score.

With time, a fair credit score can improve into a good one. All you need to do is to pay your bills on time and clear any outstanding as fast as you can.

How to qualify for a personal loan

Once you come to know of your fair credit score, take steps to improve the same. Pay your bills timely and try to bring down your credit card balance to at least thirty percent of your available credit limit. Besides; it’s also essential that you pay off any existing debt before you can take a new loan. With fair credit, it’s seemingly difficult to get a loan from banks or credit unions. Having low-interest rates, they prefer lending to individuals with high credit score, which minimizes risks. Hence, a personal loan is the only option for any individual with a fair credit score. Although it attracts higher interest rates, personal loans are easier to get when compared against traditional loans. If you are lucky, lenders might get you the money to your account, in just under a week.

Evaluate & Decide

Compared to banks, credit unions have the reputation of being more forgiving of their lending policies. However, these days, there are multiple lenders in the market, promising competitive lending. Online personal loans also wind in to offer good rates, which make it worthwhile to stop and evaluate before you can take a final decision. Apart from personal loans, one can also opt for secured loans, if there’s any collateral available. Balance transfer credit cards are also a common option that offers zero interest, and many have resorted to them to get back on the road with their fallen finances.

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