Did you know that more than half of all personal loan applicants have credit scores below 650? Which just goes to show that indeed there are loan options for people of all credit scores and income levels. The lending industry relies on being able to service all types of borrowers, regardless of credit score. That does not mean that someone with a credit score of say 620 will get the same interest rate as someone with a credit score of 720, indeed people with poorer credit scores will have a harder time finding a loan, and will pay higher interest when they do find a loan. Yet the options are out there for people of varying credit, which is important, as it opens the door up for everyone, regardless of credit history.
If you want the best options when it comes to personal loans, working on your credit score should be a priority for you. It is not to difficult to repair your credit, it just takes time and commitment. As your credit score rises, so will your interest rates improve. Did you know that a 1 percent interest rate savings can equate to thousands of dollars saved, depending on the loan amount? Even smaller loans you can save hundreds of dollars on.
If you have fair credit, more loan options start to appear for you. Lenders who previously would have turned you down might do business with you now. You can expect to pay a high interest rate since your credit is not perfect, and these loans by nature are unsecured, meaning no collateral is required. Yet you will now have an easier time finding a lender to work with you. If you take the time to further work on your credit, you can expect more lenders to work with you, and a much lower interest rate in the future, but with fair credit you are off to a good start.
If you do happen to have excellent credit, the door is wide open for you when it comes to any loan product on the market. You can expect lower interest rates, and fast approval times. One area people with excellent credit do run into is applying for loans larger than what they require. This can leads to financial problems should hardship ever strike, resulting in a lowered credit score. The reason is that if you over extend yourself and you have excellent credit, you take a harder hit on your credit score for any late payments or charge offs. Basically excellent credit gives you fantastic interest rates, but the expectations of lenders and credit reporting agencies and credit scoring models is much higher for you than for someone who already has poor credit.
If you are about to apply for a loan, regardless of where your credit lies, you should check over your credit report. This is important as you will be able to ensure that all the information that your potential lenders will see is correct and factual. More than 25 percent of all credit reports contain errors that negatively effect their credit score. You should also know what your credit score is with FICO which is the major credit scoring model out there. Several credit cards on the market today offer to give you your FICO score for free each month as a credit card perk.