Fair Credit Loans

What is a fair credit score?

Your credit score is based on your financial history and how well you’ve managed credit in the past. Lenders will look at your credit report to get an idea of how much of a risk you pose as a borrower before they decide to lend to you.

In the UK there are three major credit reference agencies; Experian, Equifax and TransUnion.

Credit reference agencies are independent companies that collect and hold data about you and your financial history; this data usually comes from public records and other companies you’re associated with, such as banks, credit card providers, utility companies and mobile phone networks.

Some of the information a credit reference agency will hold about you includes:

Your name and address
Any previous addresses you’ve lived at in the past six years
Whether or not you’re registered on the electoral roll
Any bank or credit accounts you’ve held in the past six years
Loan defaults
County Court Judgements (CCJ’s)
Individual voluntary arrangements (IVA’s)
Filed bankruptcy in the past six years
Your current credit limits and utilisation

Each credit reference agency provides your credit score on a different scale: Experian ratings are out of 999, TransUnion ratings are out of 710 and Equifax are out of 1000. They use the same four ways of categorising your credit score: Excellent, Good, Fair and Bad.

A fair credit score demonstrates you’re a reasonably reliable borrower, but you may have run into some financial difficulties in the past, or you’ve simply not used credit products enough to build a clear picture of the type of borrower you are yet.

Here’s what each of the three major credit reference agencies consider to be a fair credit score:

Experian - 721-880
TransUnion - 566-603
Equifax - 439-530

Can I get a loan with fair credit?

My Community Finance is a credit broker not a lender, working with credit unions whose loans are designed for those with fair credit scores or better.

Credit unions are not-for-profit organisations, where any profit made from lending is returned to its members through better interest rates or reinvested back into the credit union so it can improve its services and reach more people.

In order to get a fair credit loan from one of the credit unions we work with, you’d need to become a member.

Membership criteria can vary between credit unions, however, our partner credit unions accept people in almost every field of employment.

When you apply for a fair credit loan via our website, we’ll match you with the credit union that best suits your circumstances.

Am I eligible for a fair credit loan?

As well as meeting the membership requirements for one of our partner credit unions, to qualify for a loan, you’ll also need to:

Be aged between 21 and 65
Be employed and earn more than £18,000 a year
Live in the UK (excluding Northern Ireland, the Channel Islands and the Isle of Man)

Your eligibility for a fair credit loan will also depend on your creditworthiness and affordability, which the credit union will check when you apply.

What can I use a fair credit loan for?

You might be considering a loan for several reasons - here are some of the most common motives for needing a fair credit loan:

Consolidate high-interest-bearing debts - If you have a number of high-interest debts, such as credit cards or overdrafts, you can pay them off using a fair credit loan and pay back what you owe in one more affordable monthly repayment, saving you money and streamlining your outgoings.
Spread the cost of large purchases - Sometimes there isn’t always the time to save up for large purchases that you need immediately - like new furniture for a new house or a car to replace the one that’s just been written off.
Finance home improvements - You could be looking to redecorate your home, add an extension or conservatory, or replace a dated kitchen or bathroom.
Fund major life events - A fair credit loan could help you cover the costs of significant life events such as a wedding or funeral.
Cover unexpected expenses - If your car breaks down or you need a new boiler, a fair credit loan could help you cover the cost of life’s unexpected events.

How much will a fair credit loan cost?

The overall cost of a fair credit loan depends on three factors: Your interest rate, how much you borrow and your loan term (which means how long it will take you to repay your loan).

You can use our loan calculator to get an idea of how much borrowing will cost and what your monthly payment will be. It’s important to note that the loan calculator uses a representative APR (interest rate).

Representative APRs are used as an indication of the amount of interest a typical borrower will pay. There’s no guarantee that this is the interest rate you’ll receive, and your monthly repayments and the overall cost of your loan could be higher or lower than the example given by the calculator.

When you apply for a loan with one of our partner credit unions, you’ll tell us how much you want to borrow and how long for. If you pass the initial eligibility checks, you’ll be given a personalised APR which will be the exact rate you will be offered should you go onto take out the loan (the APR offer you receive is valid for 30 days).

How long will it take me to pay back a fair credit loan?

The credit unions we work with offer loans over 12 to 60 months. When you apply for a loan with one of our partner credit unions via our website, you tell us how long you want to borrow over.

The longer it takes you to repay your loan, the lower your monthly repayment will be.

However, longer loan terms also typically mean the overall cost of your loan will increase because you pay interest over a longer time period, so it’s important to think carefully about what’s best for you.

How do I apply for a fair credit loan?

Applying for a fair credit loan with one of the credit unions we work with is straightforward. Here’s a guide to applying via our website:

First, you need to decide over what time period you want to pay your fair credit loan back. The credit unions we work with offer payback periods from 12-60 months.
You’ll then request a personalised quote. To provide you with this, we’ll perform a soft credit check which won’t affect your credit score, and only you’ll be able to see a record of it on your credit report.
If you pass the eligibility criteria set by our partner credit unions, we will let you know the APR you will be offered on your loan - your personalised quote is valid for 30 days.
We will then send you a loan agreement, coupled with terms and conditions of the loan contract, for you to review to ensure this is the right product for you. Once you have read and are happy with the terms of the loan you’ll sign your loan agreement.
To complete our final checks, we will then conduct a hard credit search on your credit report, which other lenders or any organisation with access to your report will be able to see.
The credit union will aim to make a final decision about your personal loan within two working days. If successful, you should receive your money within approximately four working days of your application.
Fair credit loan FAQs

How can I improve my credit score?

Your credit score impacts your ability to borrow. If you think you’re likely to get turned down for a fair credit loan or just want to take steps to improve your credit score, there are a few things you can do:

Make sure you pay your bills and credit repayments on time and in full.
Check that all the information on your credit report is correct, and if you do spot mistakes, contact the credit reference agency ASAP.
Aim to keep your credit card utilisation below 25% of your credit limit - borrowing too much may look like you’re struggling financially.
Avoid withdrawing cash from a credit card, as doing this can make it look like you’re having financial problems.
Try not to make multiple credit applications within a short period; aim for a maximum of two within six months. Too many in a short period of time suggests you’re overstretching yourself financially.
Make sure you’re registered to vote. Being on the electoral roll helps to prove where your permanent address is.

It’s a good idea to check your credit score regularly; there are plenty of apps and websites where you can check your credit rating for free, such as Credit Karma, Clearscore and Experian. Many banking and credit card apps now allow you to check your credit score for free too.

Can I get a personal loan with fair credit?

The credit unions we work with offer personal loans for fair credit between £1,500 and £25,000 over 12-60 months. Providing you meet the relevant eligibility criteria, you’ll be able to get a personal loan with fair credit.

Can I repay my fair credit loan early?

If you decide to take out a fair credit loan with one of our credit unions, you will be able to settle your loan before the end of your loan term.

However, the credit unions we work with may charge an additional fee if you pay back what you owe before the end of your term agreement, so it’s important to consider whether repaying your loan early will end up costing you more overall.

If you borrow from one of our partner credit unions but change your mind about borrowing, you can repay your loan in full without incurring any fees during up to 14 days after you received your loan agreement.

Will a fair credit loan impact my credit score?

As long as you make all your repayments in full and on time, a fair credit loan shouldn’t negatively impact your credit score; it could, in fact, improve it as you’ll be helping to demonstrate that you are a reliable borrower.

When you apply for a fair credit loan, the credit union will perform a hard credit check, which is recorded on your credit report.

If you have too many hard credit checks within a short period of time, it can look like you’re desperate for credit and in financial difficulty. Try to limit the number of credit applications you make to no more than two within a six-month period. You can also see if you’re likely to be accepted by one of our credit unions before a hard search is conducted, by requesting a personalised quote.

Additionally, if you make late payments or default on your loan, your credit score is likely to be negatively affected.