Securing a personal loan with a good interest rate and terms is tough without a good credit score.
Can I get a personal loan with a fair credit score? With a fair credit score below 670, getting a personal loan from a conventional lender is tough. But you can get a secured personal loan, add a cosigner or a co-borrower, get a loan from online lenders, etc. Plus, how long does it take for personal loan approval?
Here, veteran credit supervisors explain proven loan strategies.
Relationship Between a Fair Credit Score and a Personal Loan Approval
As per FICO, a fair credit score ranges from 580 to 669. However, conventional lenders usually approve personal loan applications with a credit score above 670. An above 670 credit score confirms a few factors. Moreover, get a personal loan without income proof.
- First, this score showcases that you are good at managing your finances.
- Second, it indicates that you are highly concerned about paying off your debts.
- Third, this score also shows you will pay the monthly payments in a timely manner.
- Furthermore, it assists the lender to offer you a loan with good terms and conditions.
Strategies to Get a Personal Loan with a Fair Credit Score
This section gives the answer to “Can I get a personal loan with a fair credit score?”
Taking a Personal Loan from Conventional Lenders
As your credit score is below 670, getting approval for a personal loan from a conventional lender is critical. We inform you that some banks and financial institutions will give you a loan with this credit.
But in this case, the interest rate will be high, and the payoff period will be less. Also, with a fair credit score, you won’t be able to get a sufficient loan amount for you. Below are the strategies to deal with these disadvantageous issues. Moreover, get the differences between a personal loan and a credit card.
Take a Secured Personal Loan
In the process of getting a secured personal loan, you give something valuable to the lender as a promise in case you can’t pay back the loan. This strategy is called collateral to the lender.
In the case of a secured personal loan, you can expect to get a loan with an APR of 7.99%-18.99% and a maximum payoff duration of 60 months.
We suggest you be careful about two things. First, pay the monthly instalments timely. Otherwise, it will negatively impact your credit score. Second, pay off the loan within the agreed-upon timeline. Otherwise, the lender will get the right to revoke the property that was given as collateral.
Adding a Cosigner
You can add a cosigner to secure a personal loan from a conventional lender with a fair credit score. A cosigner acts as a backup and strengthens your personal loan application. He or she shares the responsibility of paying off the loan but does not get a share of the loan amount.
But remember, if you’re late with payments or can’t pay at all, it affects both your credit scores, and the lender can take legal action against both of you. Also, you will generally arrange a cosigner from friends and family.
If you do not pay off the loan, that person will face enormous problems without any reason. It can destroy your relationship with the cosigner. Furthermore, know the requirements for a personal loan.
To find the right cosigner and get your loan approved, here’s what you need:
- A cosigner with a good credit score, i.e., above 670.
- The selected cosigner must have a low debt-to-income ratio, i.e., less than 40%.
- He or she must have a good credit history showing that all debts are returned on time.
- The cosigner must make enough monthly money to cover their expenses and your loan payment.
Adding a Co-borrower
The concept of adding a co-borrower is the same as adding a cosigner. Here, the main difference is that the co-borrower receives an equal share of the responsibility to pay off the loan and the loan amount as well.
The requirements of an ideal co-borrower are a good credit score with a credit history. Also, he or she must have a low DTI, i.e., below 40%. By the way, are personal loans considered income?
Taking a Personal Loan from an Online Lender
Several online lenders provide loans even if you have a fair credit score. But, the offered APR will be high: 18.99%-35.99%. The loan terms of online lenders will be less. Also, you can expect at most $50,000 from an online lender. Also, is LendingTree good for personal loans?