Are you able to get a personal loan with fair credit?

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Personal loans can be a great option for many financial problems. A personal loan could be the right option if you need money to pay a large bill or medical bill or consolidate credit card debts at a lower rate of interest. Personal loans are an installment loan that is paid back in fixed monthly payment and does not require collateral like your car or home.

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A personal loan is possible even if you don’t have perfect credit. If your credit is not in the “fair” category, it may be harder to get a loan and you might have less options. If your credit score is not in the “fair” category and you are considering applying for a personal loan, we can help you evaluate your situation and find the best options.

Your FICO(r), scores are calculated using information from your credit reports, which are maintained by Equifax, TransUnion, and Experian. FICO(r), when calculating credit scores, considers the following five factors:

Your payment history is the most important aspect of maintaining good credit scores. This includes how consistent you have been in paying your bills on-time. This account is 35% of your FICO(r), so even one late payment can have a significant impact.

To calculate your credit utilization, add all of your credit card debts to your total credit limit. This, together with the amount of progress you have made in paying off any loans, is 30% of your credit score. The better your credit utilization and how close you are to paying down your cards is, the lower.

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Credit history length

This factor affects 15% of your credit score. It is determined by how long you have had your loan and credit cards accounts. This factor also takes into account the average age of your accounts.

Credit mix

Experienced credit users can manage a range of credit products, including loans, credit cards and lines of credit. Your FICO(r), Score is 10% based on the diversity of your credit portfolio.

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New credit

Your final 10% is determined by how many credit accounts have you opened in recent months and how many hard inquiries were made to your credit report. An excessive number of credit applications can make you look more risky to lenders.

Lenders use your credit score when you apply for credit to assess whether you are a risky borrower. High credit scores indicate that you are familiar with managing credit and have been successful in repaying debt. Fair credit scores indicate that you are either new to credit use or have had some difficulties in the past. Fair credit borrowers may not be eligible for the best interest rates or terms because they are perceived as more risky to lenders. Finding the right lender and loan is one of your biggest challenges if your credit score falls within this range.

How to get a personal loan with fair credit

Applying for a personal loan is easy. First, evaluate your credit score. Your credit reports are available for free through AnnualCreditReport.com. Experian also allows you to view your credit score and access your credit report for free. Check your credit reports for inaccuracies or other factors that could be affecting your scores.

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Find the right fit

It is crucial to find the right lender. Start by contacting the bank or credit union that you do business with. Experian CreditMatch ™ is another useful resource that you can use to find potential lenders that match your credit profile. CreditMatch is a tool that can help you sort through all the options and find the best lenders for you. This is particularly important if you have poor credit because the terms and rates of loans that you are likely to get can be very different. Multiple options allow you to find the best loan for you.

Another note: Payday lenders and title loan lenders should be avoided if your search leads to payday lenders. Borrowers can be trapped in a vicious cycle of debt by high interest rates and long-lasting financial damage.