There are a lot of reasons people decide to take out a personal loan, from debt consolidation to making a major purchase to taking a vacation to paying off medical bills. If you’re considering taking out a personal loan, you may be asking the question, “What credit score do I need to qualify for a personal loan?”
A Good Credit Score
Different lenders have different requirements for personal loans. FICO scores range from 300 to 850. If your score is 670-739, it’s considered a good score. Having a score of 670 or higher may help you to be approved for a personal loan at attractive interest rates, but your credit score isn’t the only factor that potential lenders look at when deciding whether to loan you money.
Things Considered for Personal Loan Approval
Potential lenders want to know that you’ll pay back what’s borrowed as agreed, so they’ll look for signs that you’re a reliable and responsible person and that you have the financial means to pay back the loan. They’ll consider your employment history, income, and evidence that you have some money in the bank. They’ll check your credit report to make sure you don’t have recent negative items such as collection accounts, bankruptcy, or foreclosure. They’ll also look at your debt-to-income ratio.
Bad Credit Loans
If you have a low credit score around 550-580, you may be able to find a company that is willing to lend you money, but you’ll pay a higher interest rate than other borrowers and you may be limited to a small loan amount. Before settling for the first company that you find, compare interest rates and terms. You can prequalify with several lenders without affecting your credit score. Unless you’re extremely desperate, don’t settle for payday loans or title loans because the interest rates are extremely high.
Getting Ready to Apply for a Personal Loan
If you know you’ve had some credit problems, you may want to work on improving your credit before applying for a loan. Work on paying off debt and always pay your bills on time. Keep the balances on your credit cards low and avoid applying for new credit. If you can find someone to co-sign for a loan, it may improve the rate and terms you’re offered.
Your Credit Report
Your credit reports are a source of information that potential lenders rely on, so it’s important that the information on them is completely accurate. Consumers can get a free credit report each year from AnnualCreditReport.com. Look over your credit report and make sure there aren’t any errors.
If you find any errors on your credit reports, Dovly can help you fix them. Look for things like inaccurate personal information, balances that are wrong, or payment statuses that are incorrect. Dovly is an automated credit repair engine that can help you track, manage, and fix your credit. Try it risk-free with our free membership tier. Get in touch with Dovly today.