A personal loan may allow you to borrow money at a reasonable rate and pay it back with fixed monthly payments. The catch: You need to meet credit score requirements to qualify.

With a fair credit score, you could qualify for personal loans to pay for debt consolidation, home improvement or other expenses. They could be a better option than credit cards, which may charge higher interest rates than personal loans, and payday loans, where you risk falling into a cycle of debt all too easily. Here’s what you need to know about getting a personal loan for fair credit.

What you’ll learn here:

When you shop around for the best personal loan interest rate, you can save. Compare your personal loan offers with national average trends for personal loans to know if you’ve found a good deal.

*Rate as of Feb. 8, 2021

Select your desired loan amount and loan purpose, your credit score range, and your state to see estimated annual percentage rates and loan terms.

Fair credit can be a barrier to approval with some personal loan companies, but not all. Lenders may rely heavily on your credit score to determine whether you’ll be approved for a loan and the terms they’re willing to offer, though that’s not the only thing lenders consider. A fair credit score is considered below-average credit and falls between 580 and 669 on the FICO scale. It’s a step up from bad credit.

“Lenders don’t always disclose whether they have a minimum credit score for applicants, but often they prefer to see a good or excellent credit history,” says Lauren Anastasio, certified financial planner for online lender SoFi.

You can get a loan with a 600 or 650 credit score, though it depends on the lender. One lender might set the bar at 620, while another might require a score of 680 for loan approval.

Even though your credit score may be weighted heavily when applying for a personal loan, it is not the only thing that matters. Lenders that work with fair credit borrowers will weigh other approval factors, such as your annual income.

Your credit score is just one metric personal loan lenders use to determine your creditworthiness, says Leslie Tayne, debt resolution attorney and founder and managing director of Tayne Law Group. “Lenders also take your credit history, income and debt-to-income ratio into consideration to determine their risk of lending to you,” she says.

Lenders typically want to confirm that you can afford the monthly payment if you’re approved for a personal loan. You will likely verify your income or employment, and some lenders have a minimum annual income requirement. Your current expenses may be considered, such as rent and debt payments.

If your credit report has some blemishes, you have a short credit history or your credit score is on the lower end of fair, you might still get approved for a personal loan. But you likely won’t qualify for the lowest interest rates or the full loan amount you requested.

“Having a low score doesn’t mean you won’t get approved for the loan, but it could mean that you’ll pay more for the loan,” Tayne says. Expect the loan company to charge you higher interest rates and fees than borrowers with good credit, who typically get approved for the best rates and loan terms. If you’re taking out a loan for debt consolidation, that could make it tough to secure a lower interest rate than what you’re paying on credit card debt.

One way to boost your odds of personal loan approval, especially with a fair credit score, is to improve your credit score before you apply.

Start by getting a free copy of your credit reports from the three major national credit bureaus: Experian, Equifax and TransUnion. You can get one from each bureau weekly at AnnualCreditReport.com through April 2021. Your credit report summarizes your credit history, including details about unpaid debts and your track record of paying bills.

“Review your report for errors and omissions that impact the score. Errors can occur on credit reports and could be a reason why your score isn’t as high as you anticipated,” Tayne says.

The amount of credit you’re using compared with the total credit you have available, known as credit utilization, also affects your credit score. The higher the amount of credit card debt you carry, the lower your score. This measure indicates that you could be in over your head with credit. Aim to use no more than 30% of your total credit by paying down credit card debt or by asking for a credit limit increase on your revolving accounts.

If you are struggling to get approved on your own, you may still have options. “Adding a co-borrower may increase your chances of approval as well as help you get a better rate and terms,” Anastasio says. A co-borrower or co-signer essentially uses his or her good credit history to vouch for your loan. But before you apply for a personal loan with a co-signer, make sure you know the risks, as co-signers are legally responsible for your debt.

Finding the right personal loan offers can give you the financial opportunity you need. The best personal loan for fair credit depends on your financial situation. Compare loan companies based on:

Rates are the most important factor to consider when you choose a loan, even with fair credit. Competitive interest rates can save you money, so shop around for the lowest rate. Keep in mind your actual rate depends on your credit score and other approval factors. Most lenders will allow you to do a rate check with a soft credit check, which has no impact on your credit score. Also compare loan fees, including late fees and origination fees.

Loan type matters, too. Many lenders offer loans for credit card refinancing, also known as debt consolidation loans. If you’re looking for another type of loan, such as one that can cover home improvements or medical expenses, verify the lender allows you to use the funds for that purpose.

Check each lender’s minimum credit score requirement to make sure you can at least get your foot in the door. Some lenders set maximum and minimum loan amounts, and most have specific repayment terms, or term lengths. Like loan type, it’s key to make sure your needs are aligned with what lenders offer on these factors. If speed is a factor, find out when you receive funds, which is sometimes as soon as the next business day.