When it comes to taking out a personal loan, your credit score is an important factor. Generally, the minimum credit score for a personal loan is 600, although each lender has different eligibility requirements. Those with good credit scores of 670 or higher are more likely to qualify for a loan, while those with poor or fair credit may not qualify at all. It's important to evaluate the individual lender's requirements before applying.
Personal loans can be used for any purpose, but are most commonly used to consolidate debt and refinance credit cards. Your chances of passing increase the higher your score is above the minimum requirement. The APRs for personal loans through Prosper range from 6.99% to 35.99%, with the lowest rates for the most creditworthy borrowers. Your credit score is an essential element when it comes to qualifying for a personal loan, as is the interest rate you receive.
Prepayment charges aren't common for personal loans, but some lenders who offer fair credit charge opening fees. Your APR will be determined based on your credit, income, and other information provided in your loan application. Applying for a loan of any kind will have a slight immediate negative impact on your credit score because you're taking on more debt. Generally, the higher your credit score, the lower the interest rate on your personal loan and the lower the cost of the loan over time.
If you have a fair credit score, do your best to place it in the good credit range, as consumers in that range tend to have access to a wider range of personal loan options and often get lower rates. In general, the best personal loan is one with an APR low enough to keep your monthly payments manageable without charging too much interest. Now that Americans are recovering from the financial effects of COVID-19, credit ratings continue to rise. This means that more people are likely to qualify for personal loans with better terms and conditions.