There are many reasons why you might need to borrow money through a personal loan. Maybe you want to renovate your house. Or maybe you have some medical bills that you want to consolidate.

If you are considering taking out a loan, keep in mind that the better your credit score, the lower your loan interest rate is likely to be. And, of course, the stronger your credit, the more likely you are to be approved for a personal loan in the first place.

But that doesn’t mean you’re unlucky if your credit isn’t great. In fact, there are personal loans for fair credit that are particularly suitable for borrowers with an average credit score. To get the best possible rate when you have fair credit, you may want to take additional steps, such as:

But what exactly does “fair credit” mean? Here’s what you need to know.

How credit scores are ranked

FICO credit scores (the most commonly used scoring model) range from 300 to 850, but most people don’t have 300 or 850. Rather, their scores fall somewhere in the middle.

Here’s how those numbers break down, according to FICO itself:

• 300 to 579 = bad credit
• 580 to 669 = fair credit
• 670 to 739 = good credit
• 740 to 799 = very good credit
• 800 to 850 = exceptional credit

Meanwhile, some lenders are using VantageScore, another scoring model. Here’s how the different credit scores break down in this system:

• 300 to 499 = very low
• 500 to 600 = poor
• 601 to 660 = fair
• 661 to 780 = good
• 781 to 850 = excellent

As you can see, there is a slight difference between what FICO and VantageScore consider fair credit. FICO gives borrowers a bit more leeway as scores in the top 500 are considered “fair” rather than “poor”. VantageScore, meanwhile, has a slightly lower threshold for “good” compared to “fair”.

Ultimately, however, the two scoring models are similar, and if your credit score is between the low and mid-600s, you will be considered a candidate with fair credit. This does not mean that you will not be approved for a loan. What this does mean, however, is that it won’t be as easy to get a good interest rate on a personal loan as it will for someone with good, very good, excellent, or exceptional credit.

How to increase your credit score

If your credit score is already in the mid-600s, you may be on your way to good credit instead of fair credit. And it could work to your advantage via a lower interest rate when you borrow money. If you want to increase your credit score in this category, you can do so by:

• Pay incoming invoices on time to improve your payment history
• Pay off some of your existing credit card debt to lower your credit utilization rate
• Check your credit report for errors and correct any errors that could affect your score, such as unpaid debts associated with your account that are not actually yours

The good news is that there are many loan options available for borrowers with fair credit. But you don’t have to get stuck in this category either. With time and effort, you have the power to increase your credit score and make borrowing more affordable for yourself in the future.