A fair credit score is perceived as better than a poor credit score. You are likely to get a loan at affordable interest rates, but unfortunately, this is the plain assumption. Even a borrower with a fair credit score can struggle to find the best deals. A fair credit score is less than a good credit rating, which means it is the result of missed payments and defaults, although there are not many.
Loans with a fair credit score, none but personal loans. Do not forget that a payday loan is also a type of personal loan. If the amount is small, the debt will be settled on the due date once and for all, and if the borrowing sum is large, you will pay off the debt in fixed instalments.
You can certainly get fair credit score loans, but you need to bear in mind that finding the best interest rates can be hard. You will have to do a lot of research to ensure that you get a loan at the best deal. When your credit score is good, it shows that you managed to adhere to payments on time.
This helps you build trust in your lenders. They will likely be more flexible with the size of the loan as well as interest rates. A fair credit score is the result of past payment defaults. Though they will not be much, they show that you mismanaged your debts. This financial irresponsibility will take a toll on your credit rating and borrowing capacity.
How a fair credit score gets in your way of borrowing
If you are looking to borrow money and you have a fair credit score, it may affect your loan search due to the following factors:
- You will have difficulty finding a lender
Not all lenders will accept applications from you, especially if you are borrowing a larger sum. A few lenders will only be willing to sign off on it. Make sure you do proper research about it before applying to a lender.
- Interest rates will be higher
As your credit score is less-than-perfect, you cannot get the best deals exclusively available for excellent and good credit score borrowers. You will be charged higher interest rates. Do not forget that additional fees will also be charged. Some of them could be one-off, and the other fees will be paid along with scheduled payments.
- The borrowing sum will be restricted
As your credit score indicates your payment behaviour, a lender would like to look at your repaying capacity. It is likely that you are refused borrowing the sum you want to. Since lenders will be a bit strict, it is likely that they will restrict the borrowing sum.
Make sure the lender you apply to for the loan provides this facility, as some lenders straightaway reject your application, and this leads to a drop in credit points due to hard inquiries made by them. Restricting the borrowing sum is the only option when the borrowing sum is large. This facility is not available when you borrow a paltry sum like £1,000 money loans for young people.
- The longer option might not be an option
A good credit score is a must to avail of an extended repayment length. A lender will unlikely let you take advantage of a longer repayment length if your credit score is fair. It means your monthly payments will be bigger. It can be a bit difficult to clear your debts sooner and faster, especially if monthly instalments are high.
How to get a loan with a fair credit score
No doubt, it is challenging to get a fair deal with a fair credit score, but the following tricks can be helpful.
- Check your credit score
Get your credit report and see if any errors affected your credit rating. Make sure you get them fixed. If your credit score is fair or bad, you should try to do up your credit rating. A rule of thumb says that you should do up your credit rating by taking out a credit builder loan or instalment loan.
Credit cards can also help you if you buy something at a higher price and pay down monthly instalments. At the time of taking out loans, make sure you borrow money from reputed direct lenders in the UK.
- Decide how much you need
Decide on the amount you can actually borrow. In other words, afford to pay off. Use online loan calculators to assess the total amount to be repaid. This estimated cost will let you know how much it could cost you in total and see if your budget has the scope to pay that much amount. This removes your chances of being turned down.
- Try to avoid payday loans
Even if you have a fair credit score, you should try to avoid payday loans. These loans have riskier credit scores. They are approved without a check of your credit score and carry standard interest rates that are quite higher. They cannot help up your credit score but can lower your credit points.
- Get pre-approved
As personal loans provide you with the facility of getting a pre-approval from a lender, you should take advantage of it. This will let you understand the interest rates, APR and fees. However, the actual rates will likely be higher as your credit report and income sources are thoroughly checked.
To wrap up
Loans with a fair credit score may not carry as low-interest rates as a loan with a good credit score. You should try to make your credit score better first before you apply for a loan. Loans with a fair credit score could cost you slightly higher, but you can still try to get the best deal.
Leo Allende is a Senior Content Editor at Myfinancialloans. He is dedicated to give his readers the well-researched and fact oriented blogs with the in-depth study of the UK loan marketplace. He has won many prestigious awards in his long 13 years of experience while working with many reputed financial firms.
Leo Allende became the passionate of UK finance and loan market after joining Myfinancialloans where he parts in decision-making body. Leo has done Doctorate in Finance.
