It’s indeed amazing to note that the industry of personal loan lending is booming. In recent years, the growth of this industry reached over $72 billion, with approximately 19 million people in the United States currently having personal loans. These numbers make personal loans among the most popular borrowing options right now.
People who take out personal loans have a variety of reasons for their decisions. Among the most common uses of this loan are consolidating debts, covering business expenses, paying off medical bills, financing house renovations, etc.
Even if you have a fair credit score, there’s still a possibility of obtaining a personal loan. Consider applying for personal loans online for fair credit with Match Financial if you want to try this loan option. Check this blog article if you want more information on how to get a personal loan for fair credit.
Online Personal Loans: Defined
This loan option is under the category of installment loans, meaning that you have to pay what you owe in installments every month. Online personal loans have an interest rate ranging from 6% to 35%, and their repayment terms can last up to two to seven years.
As its name suggests, this loan type can be found and obtained online through an online lending company. For regular personal loans, you can apply for them at banks or credit unions.
In most cases, borrowers don’t have to put up collateral to get a personal loan. But you can also find secured personal loans that offer more affordable interest rates due to the collateral offered as security against the loan. The catch with secured personal loans is that you may lose the asset you put as collateral if you fail to pay back what you owe in full.
What Does It Mean if You Have a Fair Credit Score?
Online lenders assess a borrower’s creditworthiness by looking at his/her credit score. There are five categories of credit scores. Scores below 580 are called poor credit scores, 580 to 669 are fair, 670 to 739 are good, 740 to 799 are very good, and 800 and up are exceptional.
You won’t have a hard time qualifying for an online personal loan if you have a good credit score and beyond. On the other hand, if your credit score is only fair, getting a personal loan can be challenging. In this situation, you should go to a lender specializing in lending personal loans for people with fair credit scores.
Tips When Applying for a Personal Loan for Fair Credit
The main thing that lenders examine when you apply for a loan is your credit history. The length of time since you first take out a money loan or credit card, your payment track record, credit utilization rate, and credit score are shown on your credit profile. The history of your cash transactions can also be a factor for lenders when conducting credit checks.
As mentioned already, if you have fair credit, it may be challenging for you to get approved for a personal loan. If ever a lender accepts your loan application, a higher rate of interest will be charged on the amount you owe.
An average APR for personal loans is 10%. However, for folks with fair credit, you should expect a higher APR than that percentage. You may also get charged with extra fees, such as origination fees when taking out a personal loan for fair credit.
So, don’t forget to compare lenders to get the best deal. Ensure that the interest rate is not that expensive because a higher interest rate can cost a lot in the duration of the loan.
It’s also crucial to get a pre-qualification before you decide on submitting a loan application to the lender. Loan providers conduct a pre-qualification involving a soft credit inquiry that doesn’t impact your credit score. If you’re pre-qualified for a loan, you’ll know that the lender is willing to approve your loan application up to a certain amount.
Things to Do When You Get Denied a Personal Loan
Now, what if your application gets rejected by a personal loan provider? What should you do next? Read this list to increase your chances of getting an approval for your next loan application.
- Boost your credit score. It may take some time to turn your credit score up a notch, but you must work on it. Having a good to exceptional credit increases your chances of obtaining a personal loan.
- Put importance on your credit utilization ratio. You’re more likely to get approved for a loan if you have a credit utilization ratio below 30%. So, make sure to maintain it at or under that percentage.
Now you know that it’s possible to obtain a personal loan even if you have a fair credit score. However, you need to compare lenders that offer the best deal because it’s common to encounter expensive interest rates in such circumstances. Review this blog article if you want to understand the essentials of getting a personal loan for fair credit.