Personal loans can be an effective way to dig out of a credit crisis, but the irony is that the more difficult your credit situation is, the harder it is to get a personal loan and make that debt a bit more manageable. That’s where LendingPoint comes in. LendingPoint specifically focuses on consumers that have credit scores in the 600s, also known as “fair credit consumers.” Many other lenders that claim to focus on lower-income markets have higher credit and income minimums than LendingPoint does, making this company something of a refuge for people who may have trouble getting ahead in the financial world.
In order to obtain a LendingPoint personal loan, which is available in amounts from $3,500 to $20,000 with either a 24 , 32, 34, or 36 month duration, you need to meet a few criteria:
>Have a minimum credit score of 600
>Have an income of at least $20,000 per year
>Have a debt-to-income ratio of 45% or less
Prospective users can apply online at LendingPoint’s site; the company does a soft pull on an applicant’s credit report and provides loan offers, if applicable. Once an applicant selects an offer, LendingPoint performs a hard pull to verify his or her information. Upon approval, the company initiates the funds-transfer process within 24 business hours. Applicants should keep in mind that LendingPoint charges $30 late-payment fees and also requires an origination fee of up to 5% of the loan, but applicants can choose to pay this amount up front or spread it out across their monthly payments.
You don’t have to use your LendingPoint loan for debt consolidation; the company lets you choose from a number of other popular uses for personal loans, from paying for a wedding or vacation to funding a move or medical procedure. The company offers payback terms ranging from 24 through 36 months and has interest rates with a minimum fixed APR (Annual Percentage Rate) of 15.49% and a maximum fixed APR of 34.99%. This is quite high for a personal loan introductory rate, and many borrowers with credit scores in the 600s, particularly those on the high end of that number range, can possibly find an option that suits their needs with other lenders.
LendingPoint has made a niche for itself by targeting underserved borrowers, but it’s one of many new online lenders that have cropped up in the past decade. Take a look at how LendingPoint’s personal loan compares to the competition.
SoFi and LendingPoint have target customer bases that are almost diametrically opposite. While LendingPoint focuses on consumers at the bottom end of the creditworthiness spectrum, SoFi tends to focus on those at the top. Although SoFi doesn’t have a minimum credit score or income requirement, it’s worth noting that the company has a reputation for being highly selective.
SoFi also stands out among personal lenders because it offers loans in amounts ranging from $5,000 to $100,000 with 3, 5 or 7 year terms. Interest rates vary from 5.70%–14.24% fixed APR to 4.79%–10.89% variable APR, and applicants need to use autopay to qualify for the lowest interest rates.
Earnest is another company that, like LendingPoint, takes different factors into account aside from credit score alone. Other criteria Earnest considers include an applicant’s education, payment history, savings volume and income. If LendingPoint is appealing to you because you have bad credit and low income with little savings, these additional criteria from Earnest may not provide any assistance.
If you can qualify for an Earnest personal loan, you may be better off choosing that company over LendingPoint thanks to its more favorable fixed rate APRs that start at 5.25% and end at 12%. The available loan amounts vary between $2,000 and $50,000, and Earnest also offers payment terms of 1, 2 or 3 years. With a longer term, your monthly payments can be much lower, and the lower APR can also help make Earnest’s personal loan much more comfortable to carry.
Prosper is a peer-to-peer lending service, which provides a different type of funding for loans than those that traditional financial institutions offer. The Prosper personal loan requirements stipulate a minimum credit score of 640 for approval, so if you’re below this, it’s a moot point whether Prosper offers a better deal than LendingPoint.
If your score sits at or above 640, Prosper’s fixed rate interest APRs range from 5.99%–36%. Given that the company doesn’t consider applicants with credit scores lower than 640, if you’re right over the mark with a score of 640 or higher, you can expect to pay interest that’s on the higher end of this scale.
BorrowersFirst personal loans don’t have a stated credit minimum eligibility requirement, and the company does have customer testimonials prominently featured on its site that indicate a willingness to grant loans to applicants in the fair credit range. This means you might want to look into what BorrowersFirst can offer and fill out its soft inquiry form rather than formally submit an application.
BorrowersFirst’s personal loans come with 3 or 5 year terms and fixed interest APRs between 7.22%–29.99%. That upper range may be all that’s available to a borrower with a credit score in the 600s. BorrowersFirst does provide higher loan amounts than LendingPoint, ranging from $2,500–$35,000.
If you’re a fair credit consumer, LendingPoint’s personal loan should certainly be on your list of potential solutions, whether you’re trying to finance a major purchase or event or you want to consolidate your debt for faster payoff. If you can thread the needle just right, LendingPoint may be able to offer you a better rate than you can find elsewhere, and under much more favorable terms than a payday lender or 0% APR credit card that requires collateral to secure. There are many lenders out there that offer lower interest rates, but if your credit is in the low-to-mid 600s, LendingPoint may be more interested in having you as a customer and therefore more willing to offer you acceptable terms.