When it comes to personal loans, credit rating requirements vary from lender to lender. Generally, lenders prefer borrowers with good or excellent credit scores (690 or higher), but some may accept applicants with bad credit (scores lower than 630). For example, Upstart's website states that applicants must have a minimum credit score of 300 (although they also accept applicants without a credit history). It's possible that someone may have a low credit score due to limited lending activity, or because they don't have any credit scores due to a lack of credit history.
If you are approved for the loan with a lower (or no) credit score, you may be subject to a higher interest rate. OneMain Financial generally accepts applicants with a low or fair credit score (the exact score is not revealed, but for reference, a bad credit score is between 300 and 579 and a fair credit score is between 580 and 669). Online lenders usually offer lower interest rates because they don't have the expenses of physical branches. Some also have lower minimum credit rating requirements, but keep in mind that in order to qualify for the best interest rates for personal loans, you'll likely need a very good to excellent credit score. If you don't qualify for an unsecured personal loan from OneMain Financial, you may be offered a secured loan. Personal loans are attractive because they usually don't require collateral and offer low interest rates.
However, some lenders don't allow you to apply with a co-applicant, which can be concerning if your credit score is low. If you have bad credit, you're more likely to be offered a smaller amount. Interest rates and monthly payments can vary significantly from one borrower to another depending on the lender, the term of the loan and your personal credit. Before applying for a personal loan, it's important to confirm with the lender that your credit won't be affected. Personal loan funds can be used for debt consolidation or home improvements, which can improve your life and perhaps your credit as well.
To get an idea of how bad your credit situation may or may not be, review your credit report. If you already have an account at a bank, you could qualify for a loyalty discount if you apply for a personal loan there. If your credit score is in the range of 300-579, you can work on improving it to 580-669 to move into the fair credit range. Credit unions such as Alliant Credit Union, Navy Federal Credit Union and PenFed Credit Union are worth considering. Some lenders may require a relatively high minimum credit score while others will accept a lower secured credit score.
Once approved, most lenders finance personal loans as a lump sum of money that can be repaid within a specified period with interest.
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