You always hear about good and bad credit scores. But what happens if you fall into the “fair” range and need to get a loan?
Getting a personal loan with a 600 credit score can be difficult, but it’s not impossible. Here’s what you should know if you have fair credit and need a loan.
What is a fair credit score for personal loans?
If you’re looking to borrow a personal loan, the lender is going to check your credit score. In fact, FICO Scores are used by 90% of top lenders. So, where does a score of 600 put you?
You fall below the average score but aren’t in the “poor” category, according to FICO. This means you’re considered a subprime borrower when you apply to take out a personal loan. As a subprime borrower, you can expect to have a harder time getting a loan or finding a low interest rate.
About 27% of consumers with a credit score between 580 to 669 become seriously delinquent on their account, according to credit reporting agency Experian. That represents a big risk to lenders.
Tips for getting a personal loan with a 600 credit score
It can be a stressful process shopping for a personal loan with a below-average score. You could have trouble finding options. Luckily, there are some tips you can try to secure a personal loan with fair credit.
1. Build your credit
First and foremost, you should work on your credit score. To start, request a free copy of your credit report and review it for any errors. If you notice any mistakes, such as incorrect debt amounts, dispute them immediately. This could bump your credit score up quickly.
You can also start building up your credit score. You can do this in several ways:
Pay all your bills on time.
Only put what you can afford in cash on your credit card.
Pay down your debt.
All these actions take time and won’t help with your immediate need of getting a personal loan. But improving your score over time can help if you later need to apply for a student loan or take out a mortgage.
2. Get a cosigner
If you don’t have the credit score to get a loan, you could turn to a friend or family member who does. They could cosign your loan.
In this case, the lender takes both you and your cosigner into account. If your cosigner has a strong credit history, the lender is more likely to approve your application and give you a favorable interest rate.
However, your cosigner will be on the hook for the loan. If you fail to make payments, it could affect their credit. The lender also could go after them for payments. So, when you have a cosigner, make sure you’re making on-time payments.
3. Use collateral
So, you don’t have the credit score to get the loan you want. But maybe you have a car that’s worth about the same as the loan amount you need. Your property could help you get a personal loan with a 600 credit score.
You can find secured and unsecured personal loans. With an unsecured loan, you don’t need to put down collateral. With a secured loan, though, you put down an asset as collateral. For example, you could offer up your car, home, or savings. If you fail to pay back your secured loan, then the lender can repossess it.
4. Find a fair credit lender
While many lenders might be wary of issuing a personal loan to someone with fair credit, some advertise it.
Most of the borrowers at Avant, for example, have a credit score of 600 to 700. And the same is true for LendingPoint.
You can also look into credit unions, which are member-owned financial institutions. They tend to be community-based and, therefore, more likely to look at you as a person rather than a number.
Many credit unions require you to meet certain criteria in order to join. For example, Navy Federal Credit Union is geared toward members of the armed forces and government employees, among others. It offers personal loans with rates between 7.99% and 18.00% as of April 3, 2018.
Shop around to find other fair credit lenders near you.
5. Try peer-to-peer lending
If a traditional lender doesn’t let you borrow, you might want to consider peer-to-peer lending. This is when a personal loan is funded by individual investors. Online marketplaces such as LendingClub can help you secure funds.
You might have a better chance of getting a loan through peer-to-peer lending. The lenders you apply with might be willing to look beyond your fair credit score when reviewing your application.
Getting a personal loan with a fair credit score
Although it might seem overwhelming trying to borrow the money you need when you’re already facing financial hardship, know that there are options to get a personal loan with a 600 credit score. Do your research on more flexible lenders now and start building your credit to make the process less stressful in the future.
Interested in a personal loan?Here are the top personal loan lenders of 2018!
|Lender||APR Range||Loan Amount|
|1 Includes AutoPay discount. Important Disclosures for SoFi.
2 Includes AutoPay discount. Important Disclosures for Payoff.
3 Important Disclosures for FreedomPlus.
4 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
5 Important Disclosures for LendingPoint.
6 Important Disclosures for LendingClub.
All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage & history. The APR ranges from 6.16% to 35.89%. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at time of application. The origination fee ranges from 1% to 6% and the average origination fee is 5.49% as of Q1 2017. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months or longer.
7 Important Disclosures for Earnest.
8 Important Disclosures for Avant.
* The actual rate and loan amount that a customer qualifies for may vary based on credit determination and other factors. Funds are generally deposited via ACH for delivery next business day if approved by 4:30pm CT Monday-Friday. Avant branded credit products are issued by WebBank, member FDIC.
** Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33
* Important Disclosures for Upgrade Bank.
Upgrade Bank Disclosures
** Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days.
|7.73% – 29.99%||$1,000 - $50,000||Visit Upstart|
|6.26% – 14.87%1||$5,000 - $100,000||Visit SoFi|
|6.99% – 35.97%*||$1,000 - $50,000||Visit Upgrade|
|8.00% – 25.00%2||$5,000 - $35,000||Visit Payoff|
|4.99% – 29.99%3||$10,000 - $35,000||Visit FreedomPlus|
|5.99% – 18.99%4||$5,000 - $50,000||Visit Citizens|
|15.49% – 34.49%5||$2,000 - $25,000||Visit LendingPoint|
|6.16% – 35.89%6||$1,000 - $40,000||Visit LendingClub|
|6.99% – 18.24%7||$5,000 - $75,000||Visit Earnest|
|9.95% – 35.99%8||$2,000 - $35,000||Visit Avant|