When you borrow money today, you only rob yourself of money in the future. This is especially true if you don’t have a job, money, or assets to collateralize a loan. Still, you have a few loan options if you have at least a fair credit rating.
Considering current events, perhaps taking out a loan is not a priority now.
Tens of millions of Americans, especially so-called, “nonessential,” workers, are out of work.
And they may need a loan to get through this rough period but can’t get one because they are out of work.
Or, you may already have unmanageable debt already and just don’t see the point of taking out a loan.
Realistic Loan Options With a Fair Credit Rating
I don’t suggest taking out a loan if you’re struggling financially and won’t be able to pay it back responsibly.
However, pandemic or no pandemic, it is still hard to get through life financially without assuming debt.
Be realistic about your ability to take out a loan. Understand that your inability to take out a loan now doesn’t mean your situation is hopeless.
Things take time. Responsibly handle your debt problems now and taking out a loan in the near future won’t be an impossibility.
If you’re in over your head with debt, I don’t have to tell you about how hard it is to get a loan.
And owning massive debt usually means having a bad credit score.
Getting a loan with a bad credit score negates the usefulness of getting one in the first place.
I’ll tell you what you need to do to rehab your credit and become creditworthy enough for a loan.
If you have fair credit, there are many loan opportunities available to you.
Loans For Applicants With a Fair Credit Rating
Before we get into it, know that you need at least a fair credit score, or fair credit rating.
Know your credit score before wasting time and potential opportunities.
You can get one free credit score report annually from the three major credit score bureaus:
- Experian
- Equifax
- Transunion
Many credit cards also provide your credit score free as a perk of membership and/or as a metric guide for responsible charging use.
Rocket Loans
Rocket Loans has a reputation for issuing loans in as little as 24-hours. However, such application privileges are usually reserved for those with good credit.
You’ll need a minimum credit score of at least 580. Your interest rate could be anywhere between 7% to 29.99%.
You won’t be able to apply for a Rocket Loan with a cosigner or any secured loan options. Only apply if you’re certain you can pay it back.
You’ll have to make at least $24,000 to apply.
The minimum debt-to-income ratio for application, or the amount of money you dedicate your income towards paying debt, is 40%
You can borrow $2,000 to $45,000 on 3 to 5-year terms.
Rocket Loans charges an origination fee, or application processing fee, of 1% to 6%.
Lending Club
Lending Club is a peer-to-peer, or P2P, lending service.
Lending Club acts as online transaction facilitator between people in need of loans and individuals or businesses that act as personal lenders.
You won’t actually be borrowing money from Lending Tree. You’ll be borrowing from a private party.
Lending Club allows you to apply for joint loan options.
The debt-to-income ratio is the standard 40%. However, the DTI for joint loan applicants is 35%
You can borrow anywhere between $1,000 to $40,000, depending on your application qualifications. You’ll have 3 to 5-years to pay back the loan.
Lending Club Charges a 2% to 6% origination fee.
Upstart
Upstart specializes in offering loans to applicants with new and very short credit histories.
You’ll need a minimum credit score of at least 580 to apply.
Unlike other personal loan companies, Upstart will offer loans to applicants with salaries as little as $12,000.
Also, unlike other personal loan companies, Upstart accept applicants with debt-to-income ratios as high as 45%.
There is no minimum credit history required to apply either.
Even though applicants with a fait credit rating and a low salary can apply, it is advised that you borrow responsibly.
You can borrow anywhere between $1,000 to $50,000 form Upstart with 3 to 5-year terms.
Upstart charges origination fees ranging between 0% to 8%.
Just Because You can Take Out a Loan Now, Should You?
If you have a bad credit history or are unemployed, you may want to wait before trying to take out a loan.
Rehab you credit score over time to attain a fair credit rating.
People with a fair credit rating pay interest rates that are 20% higher than those with a good credit rating.
Times are rough. We must do what we have to do.
But it is undeniable that loan options improve incredibly for those with credit scores ratings of good or higher.
Read More
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Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.