Obtaining a personal loan may be as straightforward as it seems. To become an eligible borrower, you must have an average credit score (630 to 689 FICO). And because the majority of individuals do not have great credit, it is possible that they will be unable to borrow at all.
However, there are still ways to avoid this situation. When it comes to creditworthiness, lenders consider a number of criteria before approving personal loans. Read on as we briefly answer frequently asked questions (FAQs) about credit scores and how one may qualify for personal loans.
FAQ #1: What is a fair credit score?
On the FICO scale, a decent credit score ranges from 630 to 689. A lower credit score may indicate a history of payment discrepancies and debts, which may tag you as a risky client or a liability. Naturally, lenders will easily approve a client with a flawless financial history.
FAQ #2: How much will a minimal personal loan cost me?
Borrowers with an acceptable credit score might expect an APR of more than 20 percent on a personal loan. The monthly payments for these personal loans are determined by interest rates and term lengths.
FAQ #3: Do personal loans affect my credit score?
Among the most important things that can contribute to your credit score is payment history. Lenders record your loan payments with involved credit agencies, so making on-time payments over the term of your loan can help you demonstrate a favorable payment history.
FAQ #4: How can I qualify for fair-credit loans?
It may be intimidating to achieve a successful application without good credit. But as we’ve said, there are ways to get around fair-credit loans that may be beneficial for your and your lifestyle.
1. Focus on your credit score. Establish and maintain good credit. All you need to do is get started! Your credit score is a crucial aspect for lenders as they examine other criteria. And if you have decent credit, your chances of qualifying improve!
2. Add a co-signer to your application. Although there are dangers associated with co-signing, it allows low-income households to qualify for fair-credit loans. Furthermore, there are a growing number of online lenders and institutions that provide joint and co-signed loans, so there are many alternatives to select from.
3. Consider a credit union. Applying for credit unions may be a smart option if you want more flexible payment periods and lower rates. However, with an interest ceiling maximum of 18 percent, keep in mind that you will be required to disclose your financial history in full.
4. Aim for pre-qualification. Making an effort to pre-qualify yourself may save you a lot of time and worry in the long run. Many online lenders will let you compare the rates and terms offered to you. This may entail a light credit check, which has no effect on your credit score.
With all your frequently asked questions answered, you have fewer things to worry about. Remember that the first step to achieving good and stable credit is to reassess your financial standing. And when it comes down to it, don’t hesitate to call professional services that can make your life and financial management easier.
Are you looking to apply for a ,personal loan? For more than 20 years, Mid-Town Finance has offered straightforward, fair, honest loans to the residents of Huntsville that have made managing finances easy. No matter your credit history, there is something on the table for you. Call and inquire with us today!