What Credit Score Do You Need To Get A Loan?

Personal loans are becoming increasingly popular. In fact, it’s estimated that about 19 million people in the U.S. currently have a personal loan. If you are thinking about applying for a personal loan, it’s important to understand how your credit score could affect your eligibility. Here’s what you need to know:

What Credit Score is Required?

The credit score that is required to qualify for a loan may vary from lender-to-lender. But in general, the lower your credit score, the harder it is to obtain a loan. Most lenders prefer working with borrowers who have credit scores of 670 or higher, which is considered good or excellent. Lenders offer these borrowers the lowest interest rates.

Some lenders are willing to work with borrowers who have credit scores that are rated “fair,” which means they fall between 580-669. If your credit score falls within this range, you should expect to pay higher interest rates if you are approved for a traditional loan.

How Can You Check Your Credit Score?

It’s best to check your credit score before visiting a lender so you know what to expect. Fortunately, there are a number of ways to check your credit score for free. Download the CreditKarma app on your phone and create an account to view your credit score in a matter of minutes. You are also entitled to receive a free credit report from the three major credit reporting bureaus, Experian, Equifax, and Transunion. 

Don’t panic if your credit score is lower than expected. If you don’t need the loan right away, you may want to spend some time working on your credit score before applying. You can quickly raise your credit score by:

  • Disputing errors on your credit report
  • Making on-time payments
  • Keeping every account open
  • Avoiding opening new accounts
  • Becoming an authorized user on someone else’s credit card

Following these tips can help you improve your credit score and qualify for a personal loan.

Can I Get A Loan With Bad Credit?

You may assume that taking out a loan is out of the question if your credit score is low, but that’s not the case. It’s true that you may not qualify for a traditional loan with a low credit score, but there are other options available.

Consider applying for a secured loan, which is a loan that is supported by collateral. For example, borrowers must use the title to their vehicle as collateral in order to take out online title loans. Borrowers also have the option of using the money in their savings account as collateral to obtain a savings-secured loan. Because these loans are secured by collateral, the lenders won’t consider your credit score during the approval process. For this reason, secured loans are ideal for people who are in need of cash, but don’t qualify for a traditional loan.

If you are in need of cash, a personal loan might be the solution. Use the information in this guide to help you determine whether or not you should apply for a personal loan to solve your financial woes.

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