The best places to apply for a personal unsecured loan if you have only fair credit are credit unions or online lending sources such as peer-to-peer lenders Prosper or Upstart. Traditional banks generally shy away from granting personal loans to anyone with less than sterling credit, which means a credit score of 700 or higher. However, credit unions and online lending sources frequently have somewhat less stringent requirements, accepting applicants with credit scores below 700 or even slightly below 650.
Another option in seeking a loan with fair credit is to secure a co-signer, such as a family member, who has excellent credit. Paying down your outstanding debt as far as possible prior to applying for a personal loan can increase your chances of approval, since the level of your total outstanding debt and your monthly debt obligations are important factors that lenders consider when they review your loan application.
Credit unions are generally less stringent with their loan criteria than traditional banks, and they often offer lower interest rates as well. Dealing with a local credit union is also the fastest way to get money in hand, as opposed to using online lending sources that typically take a week or more to fund your loan following approval. Your chances of being approved for a personal loan increase if you already have an existing checking account, savings account or another loan with the credit union.
One credit union that operates nationwide and offers personal loans online is Penfed Credit Union. You have to join the credit union prior to applying, but you can do that online as well. Penfed offers personal loans up to $25, 000, with terms up to five years. Penfed also offers lines of credit, which may be an easier, less costly way to get the money you need if you don't need it in one lump sum. The lowest interest rate offered on a line of credit is the prime rate plus 7%, adjusted quarterly. The lowest rate offered on a standard personal loan is 10.25%, as of December 2015, available for loans with repayment terms of no longer than three years. Veterans get preferential treatment. Penfed does not charge any loan origination fees.
Prosper is one of the oldest and more well-known online peer-to-peer lenders. Prosper is typically a bit less demanding on credit scores than Lending Club, a similar peer-to-peer lender. Loan applications may be approved with credit scores as low as 640. One of the drawbacks to using Prosper, as opposed to using a local or online credit union, is that it generally takes up to two weeks to have your loan funded. Prosper operates in all states except Iowa, North Dakota and Maine, and it offers loans from $2, 000 to $35, 000, with repayment terms up to three to five years. Rates range from 7 to 34% and are heavily impacted by your credit score. Loan origination fees range from 2 to 5% of the loan amount, and these are also affected by your credit score.
Upstart is another online peer-to-peer lender that considers applicants with credit scores as low as 640. Upstart requires that your monthly payments not exceed 55% of your monthly income. The firm is a bit different in that it takes into account schools attended, grades and work history, particularly for younger borrowers with limited credit histories. Upstart offers loans up to $35, 000 for a maximum of three years. Interest rates are lower on the top end than with most peer-to-peer lenders, maxing out at 22%. The minimum rate is 4.67%. Upstart's loan origination fees range from 1 to 6% of the total loan amount. Upstart is available in all 50 states.
Orion Bank is one of the largest, privately held community banks in the nation. Founded 31 years ago and approaching $3 Billion in total assets, Orion Bank is FDIC Insured and an Equal Housing Lender. Orion Bank has 23 offices located throughout south Florida. Orion Bank offers various personal banking and business banking solutions...
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