If you’re new to personal loans, you might wonder what their point is. Especially compared to the ease of applying for and using credit cards. There are, in fact, quite a few uses for this type of credit, and the typically lower interest rates makes them an interesting product for many. But how does one get a personal loan? Easy. The rise of online lenders has made it easier than ever to get a personal loan, as well as to shop around. The upside is that there are more personal loan options than ever. The downside is that it’s not always easy to see if what you’re applying for is a typical personal loan or a high-interest short-term loan. Regardless of the downside, the popularity of online, unsecured loans being offered by FinTech companies can’t be denied. Here’s a few reasons why they’ve become so popular:
- They allow you to pay off high-interest credit card debt
- They enable you to finance a large purchase
- You can pay for home improvement projects or wedding expenses
- Or you can finance your dream vacation
However, applying for a personal loan can have its impacts on your credit score.For starters, every credit application you submit can result in a hard credit inquiry and can take a few points off your credit scores. When it happens occasionally, those few points hardly make a difference. Done regularly, they can add up.You simply need to follow the rules of rate shopping to strike a balance between shopping around for the best loan you can get and not taking a large hit on your credit scores. Here are three keys to rate shopping:
- Apply for all personal loans you’re interested in within a short timeframe, preferably within two weeks
- Always apply for the same amount
- Don’t apply for any other types of credit while you’re doing this
These steps indicate that you don’t intend to take every loan you’re approved for, but rather that you’re trying to see who approves you with the best terms. There are many other ways to minimize the effects a personal loan can have on your credit score. And the best one yet is using a tool like Dovly to monitor and improve your credit can be highly beneficial. You get higher credit scores and in turn – lower interest rates when buying your car, home or using your credit card. Sounds interesting? Then join us now!
