What Credit Score Do You Need for a Personal Loan?
“Oh no! I’m so worried…..what credit score for a personal loan do I need?“
“Is my credit score good enough?“
“How can I know what credit score I need for a personal?“
Need a personal loan with good credit, fair credit or bad credit? There are options for any credit type. We’ve researched the question “What Credit Score for a Personal Loan do I need” in depth. The best way to answer the question is to read below and determine what Credit Score you fall under. Then click to related articles we’ve written based on your specific credit score. First, get your credit score if you are unsure of your credit type.
If you fret about any of this, fret no more! Our short guide below should, at the very least, “open your eyes“ on all that and more. And though we’re not a personal lender, in any sense of the term, we still are knowledgeable industry experts who can help by offering proven advice that has worked for many others with similar financial questions. Let us help you as you read our insights. Check out what we have to say…..
Your Credit Has an Impact on Your Personal Loan Interest and Fees
The simple matter of it all is this : Actions carry consequences, and in the way of your finances, it’s no different. So, what ever credit type (Good, Fair or Bad) you fall under: the lower your credit score the more you will pay in Interest and possible fees. What you can do is know what to do before getting a personal loan and focus on fixing up your credit portfolio, past delinquencies, overall score, and anything else you think might impact the future APR’s you attain. So, what credit score for a personal loan depends on the credit type you fall under. The type of lender you will need to work with and the rates you pay will depend on that credit score type.
Personal loan fees and interest, from all kinds of past lenders, can either help or hurt the cost of your next loan — pay responsibly, and in time, so these may also get lowered. Be responsible with your current credit cards or lines, as well, paying off the interest year after year, and in good time, you can ask for the interest fees to get lowered, as a small “thank you for being a loyal customer all these years“ from the agency responsible — that is, if they haven’t lowered it for you already. Check often to make sure.
Improving your credit score is important. Your credit score for a personal loan is important before you take action because it will lower the amount you pay in interest.
Interest Rate Examples
I’ve seen people that started off having insane interest rates —- usually because it was their first time ever applying for or using any form of credit, at all —- at about 34% APR or even higher, upon approval. But then, over time and faithful use, trust has been established. And that same APR has gotten knocked down to 7%, sometimes even less. Your credit score for a personal loan is one key factor in the APR you’ll pay. But don’t expect this overnight ; like all good things, it comes with time.
Give it a few years, and continue to be persistently be responsible! And of course, since your credit affects these other areas of your finances, and even some other areas of your life, know that it is “a big deal“ and one you ought to take seriously, checking up on it frequently. On that point, note any discrepancies and report them to the bureaus — since anything can taint your credit, why take the risk for something that’s illegitimate or that shouldn’t be on your record, right? Report it, and have it potentially come off your file. It makes perfect sense to do so…..
Good Credit Score for a Personal Loan
Take heart : There’s boatloads of great ways to get this done, and the first of these might just be to work on the timing of it all ; what we mean is this…..say, for instance, if you know just what needs to get done in order to ‘boost that score’ just a little more, right before putting in anapplication for a personal loan with good credit you’ve already decided on, then why not do so first and blast that score up as much as you can? Then apply. There’s no such thing as having “too good of a score“, anyways, right?
Just make sure you’re not putting in a whole bunch of new hard credit inquiries, applying for other credit forms at the same time.
And also be sure that you’re not falling behind on any bills or other payments that need to get paid. Stay on top of it all. In addition, make sure to keep your current accounts open. Closed accounts look terrible, especially recent closed ones, which get ‘frowned upon’ by lenders all the time.
You’ll get far more attractive offers with better credit and putting these suggestions into practice. ‘stick with it’….
Fair Credit Score for a Personal Loan
“Finding out that you have a low credit score can be downright discouraging. Trying to get a personal loan with fair credit may make you feel like it’s not even worth your time and effort. And not being able to borrow money when you desperately need it or want to use it to improveyour life, i.e. and a new home for your family, can make you wonder why you even try.“
Read that source link – article above, in full detail, when you get a chance. It’s got lots of great further insight into this, and can steer you where you need to go, especially if ‘fair credit’ tends to be your predicament, and more often than not. This can point you in the right direction, to say the least…..
Read it, in fact, as many times as you want to. Study it. Memorize it. Master it. It can make you a half – decent expert on the topic, since it’s loaded with lots of great facts and personal detail…..
Bad Credit Score for a Personal Loan
Usually, getting a personal loan with bad credit can literally make it a thousand times harder (albeit not impossible, though) for you to take out a personal loan, unless you can find someone responsible who can vouch for you, recommending your credentials and more.
This is usually a co – signer, someone who signs with you and takes full responsibility for the repayment process, should you fail to be able to repay. Keep that in mind, too. Have someone you trust, or should we say, someone who trusts you and wants to help you.
Usually, if you have bad credit, not even small banks or local credit unions looking for more business will be likely to take you on. It’s a risk for them, to loan you more money, as it is for you and your co – signer. Here’s a few other things to consider, of which I honestly could not have re – stated better myself…..
“Another option is to consider personal loan shopping online for a lender. This is one of the easiest ways regarding how to get a personal loan with bad credit. That is where doing your research is extremely important. Some of these lenders charge such a high-interest rate that you will find yourself hard-pressed to repay the loan on time. This will end up hurting your credit score further. Take time to do your research and look for the best one possible.“
Bad Credit Score for a Personal Loan – Things to Ask yourself:
- Is it worth having my interest skyrocket just to take out more money I’ll have to pay back?
- It it going to sink me into murkier waters, of which I will find it harder to get out of, and get eaten alive by the sharks?
- Is the repayment time going to be shorter (and it usually is)?
- Will the amount that I can borrow be little, a very small amount (usually is as well….)?
- Will taking out this loan be a step toward improving my score, at the end of it all? (If not, then why bother taking on more risk, in the first place?)
What Even Makes Up a Credit Score?
There are a few things. It’s a great question to ask. Many experts themselves have even asked it, in times past. Let’s have a look at a few factors to help you understand how to improve your credit score…..
1. New Credit Accounts (10%)
How passionately have you been pursuing new credit —- like a romantic lover on the first day of your honeymoon? You get the point. But furthermore, of these recent credit or loan applications, how many have been approved or denied? And why? All these questions will come to the spotlight, now ; know the answers to these before the other party does, the one whom you want to get a loan from…..
2. Credit Mix or Types of Account (10%)
Revolving credit, installment – based credit, what are the varied mixtures of credit and financial accounts you’ve taken out before, as well as the ones you’ve got now? How are you doing with this mix, all things considered? Do you know how to borrow and repay from different ongoing sources, with varying terms, etc? Have these mixed accounts been opened impulsively (which, believe us, they will try to find out by assessing any behavioral application patterns)?
3. Credit History (15%)
How long is your credit history? And during this length of time, have you had opportunities to prove yourself responsible, disciplined and committed? If so, how have you fared? Have you proven yourself well? Yay or nay?
4. Balance Owed (30%)
Your debt – to – income ratio is definitely one aspect that will be further investigated here. These ‘credit police’ just basically want to make sure you’re not owing more than you’re making, you’re not using more than 30% of all the credit in your favor, and a few other things. That’s why it’s so life – or – death urgent that you pay off those balances, disarming the principle after you’ve gotten through the interest.
5. Payment history (35%)
Public records will be looked through, most likely, so this is no time to hide anything or lie. It likely will be combed over every time your score is updated. As will past or present delinquencies, as well as other account payment information.
Reasons Personal Loans are Rejected
There are many reasons personal loans are rejected, in fact, you can turn your happy day into a pity party. It could involve past credit reporting errors, too much recycling debt, too many revolving forms of credit, instability with jobs or income sources, lack of sufficient revenue amounts, your credit score staying too low for too long, too many outstanding loans, or even too many recent or near – recent rejections based on past applications.
See what it can be in your case, and if unsure, just ask. Get your free credit report yearly from the 3 major agencies that offer it. It’s free, once per year only, so keep that in mind when requesting it…..
Improve Your Chances of Getting a Personal Loan
Loanry mentions a few great ways to improve your chances of getting a personal loan. One is to not open or close new lines or cards, as we mentioned earlier (but well worth repeating, for emphasis!), and constantly check back on that score. Another way would be to pay down all that debt that still exists, even if you’re not accruing interest on it (if it’s a new credit card, etc). Pay it off, and then take a deep, long breathe of relief.
You could also get a little more specific. Take out only that amount you know you’ll need. Don’t opt for more, and avoid asking for less. Stay within a range.
Get a Personal Loan Using These Simple Steps
Great additional steps to get a personal loan are listed here. Read through them when you’ve got plenty of time to read thoroughly. Bookmark that link and come back to it as often as you need to. Keep the information fresh in your memory — who knows when it’ll prove handy?
In a nutshell, step one is to go out and get that lender. How? By means of personal loan shopping tools, which the article goes further into detail on. The next step would be to have all your supporting documents together. Finally, understand all agreements in the contract, and when ready, apply!
Your credit score for a personal loan matters because of the rates you will pay. So, use our tools to put yourself in the best credit shape possible to save on your loan. We definitely know this will help: Follow all our advice given freely in this article. Re – read, if needed. Make sure to put it all into action, and make wise decisions that will change the future course of your life, all for the better. Take care!
About the Author: Efrain S
Efrain is a contributor and writing professionally creating palatable, actionable content in the realm of finance. He obtained his BA in Communication with a minor in Mass Media studies. He also writes academic content in APA, MLA, CHICAGO, HARVARD & TURABIAN styles. Plus, he’s 100% fluent in English and Spanish.
Ethan founded OfferEDGE in Dec 2013 with the mission to unify the financial quadrants through a system that allows businesses to be seen when consumers use a Single Sign On across Lending, Credit, Money and Real Estate. Taub invents the offers and IP, while overseeing all aspects of the company. He also has orchestrated the company’s earned media across the brands Loanry®, Cashry®, Debtry®, Budgetry®, Billry®, Taxry® and more. This includes over 500 publications that have been featured across the web.
He has more than 18 years of experience in C-level Management, Sales, Marketing and Product Development across billion-dollar brands to innovative technology start-ups. Taub holds a degree in Economics from the University of California, Berkeley.