What Credit Score Do I Need for a Personal Loan?
Taking out a loan requires some preparation and consideration, particularly about your credit score. If you’re planning to take out a small personal loan in Birmingham, AL, having the right credit score can get you a long way in your application. You don’t want to begin shopping for personal loans if you think you won’t qualify because of your credit. So before you start trying to look for a lender, learn what your credit score is and what score you need to hit first.
What Are the Usual Credit Score Requirements for Loans?
Credit score requirements for personal loans basically vary across lenders. Many lenders prefer borrowers with good or excellent credit scores like those with a 690 FICO and above. On the other hand, some lenders still accept borrowers with a FICO of below 630. To get an idea of what score would be ideal for a personal loan, here’s a breakdown of how your credits score impacts your loan application:
579 or Below: Bad Credit - having a score of 579 below is already considered bad credit. While it is still possible to find lenders who will approve you for a personal loan despite that score, lenders will have to be more strict in terms of the other requirements. You’ll likely pay a higher interest rate, and the loan amounts will be completely limited. Consider raising your score first before applying for a loan.
580 to 669: Fair Credit - Having a score within the 600s will open up more loan amounts for you, and you’ll have better chances of getting approved. You’ll also get much more reasonable interest rates, but there’s still a limit to the loan amounts available in this bracket.
670 to 339: Good Credit - Now, this is the range you’d want to stay on if you want to have more options for your loan. Having good credit allows you to borrow larger amounts, and you’ll be approved faster for a lower interest rate.
740 and Above: Excellent Credit - With excellent credit, you basically have every possible loan option open to you. You won’t have any trouble finding a personal loan with a credit score in this range, as you basically qualify for most, if not all, of them.
While having good and excellent credit is a great advantage, you should still try to shop around and don’t settle with the first offer you get from a lender. There might be another lender out there willing to give you a much lower interest rate. Remember, a 1% change in your interest rate could save you hundreds of dollars in the long run.
What About No-Credit-Check Loans?
There are certain types of personal loans out there that don’t require a credit check. Payday loans and car title loans are great examples of this as they both accept borrowers regardless of their credit scores. However, these are more short-term loans that are easy to get, but they come with very high interest rates. Sometimes, they even go as high as 400% interest depending on the lender. If you can work on your credit scores, you’re better off getting other loan products that give much more reasonable interest rates.
There are personal loans available to almost any credit score out there. While those with better scores have a clear advantage over those with bad credit, you’ll find something that suits your needs, one way or another. As such, maintaining good scores should always be your goal if you want to make the most out of taking a loan.
Finding a lender offering personal loans in Birmingham, AL, with expert knowledge of finance has never been easier. First Finance is here to help you get the loan product suitable for your needs. We offer a variety of personal loan sizes, giving you several options to choose from. Whether you want to buy a new house or make a big purchase, our experienced loan officers are here to help. Apply now and get pre-approved today!