The higher the credit rating score, the more chances a person can get the best loan on favorable terms. Nevertheless, credit bureaus note that the personal rating is informational. Therefore, even an excellent score does not guarantee a personal loan with good credit approval. The creditor makes the final decision on issuing a loan and its conditions.
A credit score can be used not only by financial institutions but also by the individual himself. Knowing your rating is helpful before taking out a mortgage or any other personal loan to understand how a lender might rate you. In case of a low rating, the borrower will have time to correct it.
In addition, by regularly checking own loan history, a person can find out if there are any mistakes in it and, accordingly, send an application to the credit history bureau about the need to correct them.
Read more about loans for good credit in this article and get answers to all the questions that concern you.
Personal Loans for Good Scores: Best
What is a good credit loan?
A good credit loan is issued to applicants with a good credit score. Today, the most common worldwide is the FICO credit rating. This is an integral score calculated based on the borrower’s loan history. The FICO Score is between 300 to 850 and consists of the following:
- Quality of loan history;
- Duration of loan history;
- The volume of repaid loans;
- The volume of current loans;
- Type of repaid and current loans.
According to FICO, a good credit score is 670-739. This rating makes it easier to receive a personal loan and helps to qualify for more favorable terms and rates. A person with a FICO score below 660 may still be eligible for an unsecured loan but will have to pay a higher interest rate than a borrower with a better rating.
Can You Get the Best Personal Loan for Good Credit?
If you are interested in loans but are not sure if you can get approved by Best Egg, you should conduct a hard credit inquiry and assess your chances. Contact the bureau and carefully study your history. But just keep in mind that such a service is free only once a year.
Credit history is a dossier of the borrower’s current and paid loans. It contains information about how conscientiously and timely the debt was repaid. Credit history assessment is one of the primary factors in deciding whether to issue money, even if we are talking about the best personal loans for good ratings. Having analyzed it, the lender understands how responsibly the borrower will fulfill the obligations under the loan agreement.
A bad credit history can lead to credit personal loan refusal even if a person has a regular income and a fair fico credit score (580-669).
When deciding to check the loan history yourself to see whether you can qualify for a personal loan, consider the following:
- Current credit debts. Even a small current debt can lead to loan rejection. Therefore, it is very important to ensure there is no delinquency on a loan before submitting a new secured loan application. If a loan was repaid recently, data about this would certainly go to the credit report;
- The number of open credits. A borrower’s large credit burden is a risky indicator from the lender’s point of view;
- The correctness of data. If the report contains mistakes, the statistics should be appealed according to the requirements of the law.
Carry out a credit check following the indicated recommendations, and you will certainly be able to find out if good or excellent credit will be available to you.
What are rates on good-credit loans?
The annual percentage rate (APR) is one of the main parameters by which a credit institution is usually chosen. This is because it shows what percentage of the loan amount the borrower will pay the lender for using personal loan funds per year.
Various factors influence the formation of personal loan rates. Here are the main ones:
- Central bank rate;
- Unemployment rate;
- Borrower’s credit rating;
- The amount and term of the loan;
- Type and purpose of the loan;
- The history of the relationship between the borrower and the lender;
- State support programs.
Check out the table to find out what rates borrowers with different credit scores typically receive.
|FICO Score Ranges||APR|
|740-799 (very good)||13.50%-15.50%|
|800 and up (excellent)||10.73%-12.50%|
As we can see, the most favorable rates are available for people with excellent scores. A loan with good credit is usually issued at 17.80%-19.90% per annum. It should be noted that rates do not always remain unchanged. There are fixed and floating rates. The fixed rate is valid for the entire loan period and can only be changed upon the conclusion of an additional agreement between the client and the lender.
The floating rate is calculated according to the formula fixed in the contract. It is usually pegged to interbank market rates. Then, the percentage of the lender is added to this rate. According to the terms of the agreement, the floating rate is reviewed after a certain period of time. This is called the interest period.
Where to get a good credit personal loan
Loans for borrowers are issued by various financial organizations today, for example, banks, Internet lenders, etc. Their credit score requirements are different. Thus, for example, a bank requires a minimum credit score of 600. But online lenders offer loans even for those with limited credit histories.
Look around to find the best credit offer for yourself!
Borrowers with a credit score of 670-739 often contact online lenders. Borrowers with lower credit scores also choose them since there is a soft credit check and no minimum credit score requirement.
Lenders are non-bank institutions that provide loans online. Amounts available typically range from $500 to $30,000. But there are also lenders like LightStream and SoFi willing to lend out larger amounts (up to $50,000 or even $100,000). Payment terms usually vary from 12 months to 60 months. Best Egg offers personal loans at the best rates. Be sure to contact it for more information.
To get a good-credit personal loan, you need to go through just a few simple steps:
- Fill out an application on the company’s website;
- Wait for verification and get approved for a personal loan;
- Receive money to a bank card within 1 day after approval.
Personal loans can be used for any purpose, whether buying a car, renovating a house, or paying utility bills. You can also receive a personal loan to pay for unexpected expenses.
Check out loan options from multiple lenders, and be sure that you will find what you are looking for!
Many people qualify for loans from specialized unions. Borrowers with good to excellent credit ratings are approved quickly. But even if you have poor credit, high-interest credit card debt, and a mix of credit debt, you can still try to borrow money this way.
Credit union loan offer works like this: some members deposit their own funds, and others take out loans. These are usually small loans (for education, home repairs, bills, purchase of equipment, etc.), but they help to cover urgent expenses.
You may think that credit unions are like banks and lend for profit. But in fact, credit unions aim to provide financial support and improve the welfare of their members. Accordingly, the activity of such institutions is based on the principles of transparency, self-governance, and equality of all participants. Therefore, the person who picks for the best personal loan should definitely consider this option.
Bank offers are also popular today. But it may depend on your credit score whether or not you’ll be approved by applying there. Banks require a minimum credit score of 610-640. A personal loan with a lower score may also be available, but you are unlikely to be able to get the best personal loans for bad credit there.
Banks conduct a strict credit check, and not all applicants pass it:
- The first stage is a visual assessment. When a person comes to the bank and submits an application, the manager immediately forms his opinion about the potential borrower. And if it is negative, the chances of obtaining a loan are reduced to zero;
- The second stage is a scoring assessment. The scoring program automatically evaluates the application submitted for consideration. For each item (gender, age, marital status, real estate, education, field of activity, years of good credit history, income, etc.), a certain score is given. The point is to get the required number of points in total;
- The third stage is manual verification. At this stage, the documents provided by the applicant are checked.
So, you need to meet a number of important requirements to qualify for an unsecured personal credit from a bank. But the most important thing is that you must have a credit score that is good or excellent.
How Personal Loans Impact Your Credit
You may be wondering about the impact on your credit score when you use a personal loan. Read the information below for more details on this.
All financial institutions submit information about borrowers to the credit bureau. Therefore, by using a personal loan, you can not only improve your rating but also lower it. The following negatively affect your credit score:
- A large number of applications;
- The presence of loan arrears;
- Irresponsible participation in credit obligations of the third parties as a co-borrower or guarantor, etc.
Please note that the loan history reflects all applications you have ever sent to financial institutions. From the viewpoint of the lender, too frequent loan requests signal an unstable financial situation and an inability to manage the budget. Your credit history can be damaged even if you apply out of curiosity, just to find out the lender offering.
The positive impact of personal loans on the borrower’s credit score is ensured when all loan obligations are performed in accordance with the contract. That is, if you make monthly payments on time and do not have any credit delinquencies, then be sure you can increase your rating this way.
Tips to improve your credit score
If your credit score required to apply for a loan is low, use the following tips to improve it:
- Make sure there are no mistakes. Additional loans and delinquencies sometimes appear on the credit report. In this case, you can submit an application to the credit bureau with a request to remove this information. Removing false data will make it possible to quickly raise the credit rating;
- Apply for a credit card with a revolving line of credit. A lack of loan history and a zero rating greatly reduce the chances of getting a loan. Taking out a credit card with even a small limit can improve the situation;
- Realistically assess your financial capabilities. When applying for personal loans, you need to get amounts that you can actually repay;
- Reorganize your debt. The essence of the service is to change the loan’s current terms (for example, to reduce the interest rate) to facilitate debt servicing. After lowering the credit burden, a person stops making delays and can subsequently correct the credit rating;
- Use payday loans. One effective way to quickly improve your credit score is to get and pay off a payday loan on time. This allows you to prove yourself as a conscientious borrower and contributes to the growth of the score.
How Can You Compare the Best Personal Loans for Good Credit?
To get the best unsecured personal loan, you need to carefully compare the options available today. You should pay attention to APR, fees, loan terms, discounts, and customer service, and only then make a decision.
APR: Personal Loan Rates
As mentioned above, APR is the main loan fee. This is a percentage of the borrowed amount, which the borrower is obliged to pay annually. Different lenders provide personal loans with different APRs. Therefore, it is worth paying attention to this before agreeing to the lending terms.
The APR for good credit usually varies between 17.80% and 19.90%. Having received such a rate, know that it is not inflated. You may even be able to get a lower interest rate as offers from multiple lenders differ significantly. Carefully consider various options and you will definitely succeed.
Get a Personal Loan with the Best Fees
In addition to the annual interest rates, taking out a personal loan involves charging some fees. Rates and fees vary from lender to lender. For example, some financial institutions charge an application fee, origination fee, prepayment penalty, late payment fee, returned check fee, payment protection insurance fee, etc., whereas others do not have any fees at all. Take out a personal loan without overpayments. This will help save you money.
Unsecured Loan Terms
The loan term is when you need to repay the borrowed money to the lender. It is recommended to choose a loan term based on the minimum loan amount. It is better to choose a longer repayment period (for example, 60 months) for larger amounts.
To get the lowest interest rate, you should choose a financial company offering different discounts.
Customer service also plays an important role. It is great if the lender is ready to answer your questions and help solve difficult situations.
Many financial companies offer personal loans to borrowers. However, the choice should be taken responsibly. If you have a high credit score, you can contact online lenders, credit unions, or banks to get an unsecured personal loan.
Working with an online lender is very easy. You don’t even need to leave your home for this. You simply apply for a personal loan online and receive money on your credit card. The minimum loan amounts usually start at $500.
Banks check your credit more scrupulously. Their borrowing requirements are broad, but the offerings are varied (student loan, business loan, car loan, etc.). Credit unions do not impose any strict conditions on borrowers. However, they require a person to participate in such a community.
Consider the annual interest rates, fees, loan terms, discounts, customer service, etc., and you will find the best personal loan lender without any hassle.