- How to Get a Loan from a Bank
- Why it matters
- How to get your credit report and credit score
- What your credit score means
- Wells Fargo credit score standards
- Why it matters
- How to calculate your debt-to-income (DTI)
- Our standards for Debt-to-Income (DTI) ratio
- Using collateral
- Best Personal Loans For Good Credit (Credit Score 670-739)
- The best lending sources for people with good credit
- Loan aggregators
- Personal loan lenders
- Banks and credit unions
- Peer-to-Peer (P2P) lenders
- Home equity loans
- Getting a personal auto loan with good credit
- Your credit score still matters with personal auto loans even if you have good credit
- Getting a mortgage with good credit
- Credit cards for people with good credit
- Here are the best personal loans for bad credit of March 2021
- FICO Score
- Personal Loans: What to Know Before You Apply
- What is a Personal Loan?
- How to Apply for a Personal Loan
- Minimize the Impact of Inquiries
- Pros and Cons of Personal Loans
- Personal Loans and Your Credit
- Personal Loans for Excellent Credit: Best of March 2021
- What is an excellent-credit loan?
- How much will an excellent-credit personal loan cost?
- Will a personal loan hurt my excellent credit score?
- How to choose the best personal loan for excellent credit
- How to pre-qualify for an excellent-credit personal loan
How to Get a Loan from a Bank
Your credit history is a record of how you’ve managed your credit over time. It includes credit accounts you’ve opened or closed, as well as your repayment history over the past 7-10 years. This information is provided by your lenders, as well as collection and government agencies, to then be scored and reported.
The difference between your credit score and credit report
Why it matters
A good credit score shows that you’ve responsibly managed your debts and consistently made on-time payments every month.
Your credit score matters because it may impact your interest rate, term, and credit limit. The higher your credit score, the more you may be able to borrow and the lower the interest rate you could receive.
For example, with a good or excellent credit score, you might qualify for a lower interest rate and monthly payment on a loan of $15,000. The example below explains how your credit rating may impact your annual percentage rate (APR) and monthly payment. Rates shown are for illustrative purposes only.
How to get your credit report and credit score
You can request your credit report at no cost once a year from the top 3 credit reporting agencies ― Equifax®, Experian®, and TransUnion®. When you get your report, review it carefully to make sure your credit history is accurate and free from errors.
Note: A free annual credit report may not include your credit score, and a reporting agency may charge a fee to see a credit score. Request your free annual credit report at annualcreditreport.com.
Did you know? Eligible Wells Fargo customers can easily access their FICO® Credit Score through Wells Fargo Online® – plus tools tips, and much more. Learn how to access your FICO Credit Score. Don't worry, requesting your score or reports in these ways won't affect your score.
What your credit score means
Your credit score reflects how well you’ve managed your credit. The 3-digit score, sometimes referred to as a FICO® Score, typically ranges from 300-850. Each of the 3 credit reporting agencies use different scoring systems, so the score you receive from each agency may differ. To understand how scores may vary, see how to understand credit scores.
Wells Fargo credit score standards
You generally qualify for the best rates, depending on debt-to-income (DTI) ratio and collateral value.
You typically qualify for credit, depending on DTI and collateral value, but may not get the best rates.
You may have more difficulty obtaining credit, and will ly pay higher rates for it.
620 & below, Poor
You may have difficulty obtaining unsecured credit.
No credit score
You may not have built up enough credit to calculate a score, or your credit has been inactive for some time.
Capacity is an indicator of the probability and consistency that you’ll be able to make payments on a new credit account.
Lenders use different factors to determine your ability to repay, including your monthly income and financial obligations loan payments, rent, and other bills.
This calculation is your debt-to-income (DTI) ratio, which is the percentage of your monthly income that goes toward expenses rent, and loan or credit card payments.
Why it matters
Lenders look at your debt-to-income (DTI) ratio when they’re evaluating your credit application to assess whether you’re able to take on new debt. A low DTI ratio is a good indicator that you have enough income to meet your current monthly obligations, take care of additional or unexpected expenses, and make the additional payment each month on the new credit account.
How to calculate your debt-to-income (DTI)
Learn how DTI is calculated, see our standards for DTI ratios, and find out how you may improve your DTI.
Understand your debt-to-income ratio
Our standards for Debt-to-Income (DTI) ratio
Once you’ve calculated your DTI ratio, you’ll want to understand how lenders review it when they’re considering your application. Take a look at the guidelines we use:
35% or less: Looking Good – Relative to your income, your debt is at a manageable level.
You most ly have money left over for saving or spending after you’ve paid your bills. Lenders generally view a lower DTI as favorable.
36% to 49%: Opportunity to improve.
You’re managing your debt adequately, but you may want to consider lowering your DTI. This may put you in a better position to handle unforeseen expenses. If you’re looking to borrow, keep in mind that lenders may ask for additional eligibility criteria.
50% or more: Take Action – You may have limited funds to save or spend.
With more than half your income going toward debt payments, you may not have much money left to save, spend, or handle unforeseen expenses. With this DTI ratio, lenders may limit your borrowing options.
Collateral is a personal asset you own such as a car, a savings account, or a home.
If you have assets equity in your home, you could potentially use your home equity as collateral to secure a loan ― this may allow you to take advantage of a higher credit limit, better terms, and a lower rate. But, remember, when you use an asset as collateral, the lender may have the right to repossess it if the loan is not paid back.
Lenders evaluate the capital you have when you apply for large credit accounts a mortgage, home equity, or personal loan account. Capital represents the assets you could use to repay a loan if you lost your job or experienced a financial setback.
Capital is typically your savings, investments, or retirement accounts, but it may also include the amount of the down payment you make when you purchase a home.
Best Personal Loans For Good Credit (Credit Score 670-739)
Good credit is the credit level where good things start to happen. Not only are you very ly to be approved for any personal loan you apply for, but you’ll get a good rate as well!
Beyond credit, a good credit score is an advantage when applying for a job or for life insurance. Employees with good credit are considered to be more stable (and employable), while insurance companies see them as lower risk than those in the fair or poor credit risk categories.
We’re going to discuss some of the different personal loan opportunities available to you if you have good credit. And we’re even going spend a bit of time touching on moving your good credit to the excellent credit range.
The best lending sources for people with good credit
When you have good credit, you have a lot of loan options. That’s particularly true if your credit score is over 700. Even though that may not be considered excellent credit, it’s good enough that the majority of lenders will want to do business with you. But some lenders will be more anxious than others, while others are best avoided.
These aren’t direct lenders, but web platforms giving you access to potentially hundreds of different lenders. The big advantage is that they save you from having to shop around with individual lenders. You complete a loan summary request, and lenders will come to you with offers. You can select the one that will work best for you.
I want to point out an excellent option here for getting personal loans – Fiona.
You may want to give them a try and see if you can get a better deal than what you can at your bank or credit union as you can get a loan for anywhere between 1K and 100K, for between 24 and 48 months.
Fiona has many different lenders, and you can find the ones that work best for you by completing a single application. So Even cuts out a lot of the leg work for you and helps you figure out what is the single best option for you.
Another company to check out is Credible. Credible operates much Even. You’ll fill out a single form and you’ll be led to all of your loan options in one place. The good thing about Credible is that requesting interest rates with them will not affect your credit score whatsoever. And Money Under 30 readers who refinance their student loans with Credible can get a $100 bonus.
To get a sense of what loans you qualify for, check out some lenders below:
Personal loan lenders
If you have good credit, there are plenty of personal loan lenders that will approve your loan. SoFi uses a variety of factors to approve loans, including your financial history, credit score, and monthly income vs. expenses.
If you have a good debt-to-income ratio, this could qualify you for a better rate than you’d get with a lender that uses credit scores alone.
Banks and credit unions
These will be your preferred loan sources, since you’re practically guaranteed a loan approval with a credit score of 670 or higher. But what will be affected by your credit score is the rate you will pay on the loan. For example, you ly get a lower interest rate with the 720 credit score than 680. But in either case, you’ll get a loan.
Between the two, credit unions are usually the better source. That’s because they’re non-profit, and owned by their members – which includes you. For that reason, it’s very ly you’ll get a lower interest rate than you will at a bank. Credit unions are particularly beneficial when it comes to auto loans.
Peer-to-Peer (P2P) lenders
The loans you get from these sources will often have higher interest rates and fees than what you’ll pay at a bank or credit union. But they still have certain advantages. For example, you can get a personal loan of up to $40,000 for any purpose. In addition, the loans are completely unsecured.
They can be particularly beneficial with large medical debts. But one area of special consideration is business financing. It can be difficult to get a loan for a business of any type.
But if you’re trying to launch a new business, it will be virtually impossible to get one from a bank or credit union.
Since P2P personal loans are made for any and all purposes, they can be a perfect source for new business financing.
P2P lenders to investigate include LendingTree and Prosper.
Home equity loans
With good credit, these can be excellent loan sources. They include both actual home equity loans, and home equity lines of credit (HELOCs). You’ll generally get better interest rates than other types of loans, since they’re secured by your home. They also provide larger loan amounts than other loan sources.
Figure is a great option if you’re looking for a low-interest HELOC option. You’ll pay fixed monthly payments and they offer rates starting as low as 3.49% APR¹, which includes a .75% discount for opting into a Quorum membership (.50%) and enrolling in autopay (.25%). This rate also includes payment of an origination fee of 4.99%, for those who qualify.
What we love about Figure, though, is its fast turnaround. Funding can be initiated in as few as five business days*. The entire application process, start to finish, took place online and was fast and convenient.
*Terms and conditions apply. Visit Figure for details. Figure Lending LLC is an equal opportunity lender. NMLS #1717824
Getting a personal auto loan with good credit
If you have good credit, getting a personal auto loan is almost certain. The only time you might have trouble is if your credit history shows specific problems with a current auto loan, or if your income is insufficient to qualify for the loan.
Apart from those two issues, not only are you ly to be approved, but you’ll probably have plenty of options. Or, you can check out Fiona, a loan matching service that will find you the best rates – so it’s really just more of a convenience for folks with good credit.
It’s important to remember that auto lending is not as uniform as other types of lending, particularly mortgages. This is because auto lending is a diverse industry. There are banks, credit unions, and subprime lenders, and each have their own criteria.
If you have good credit, you should be able to get an auto loan from your bank or credit union at a very reasonable rate. At a minimum, get a pre-approval, then make the car dealer beat it with a better offer.
Your credit score still matters with personal auto loans even if you have good credit
Even though you have good credit, your specific credit score will largely determine the interest rate you’ll pay on your auto loan.
Check out our auto loan calculator to get an idea of what kind of personal loan rate you’ll get.
Whatever your credit score is, be sure to shop around. You can often do better with credit unions than banks, and certainly than dealer financing. For example, DCU Credit Union – which lends nationally – is offering auto loans as low as 2.74% APR. The minimum credit score they’ll accept is 650, which is actually a little bit below the 670 to 739 range normally considered to be good credit.
Getting a mortgage with good credit
Most mortgage lenders will give you a loan if your credit score is at least 620, and there are a few that’ll go down to 600 or even 580. The catch is you’ll pay a higher interest rate with a credit score that low. And those are all considered to be fair credit, which is in the 580 to 669 credit score range.
If you’re in the good credit score range – 670 or higher – your lihood of approval is much greater. And while you may not get the lowest mortgage rates available, the one you will get will be a lot better than if you were in the fair credit score range.
What’s more, if you have good credit, you’re less ly to have to get a cosigner, or to make a large down payment. Your credit will be good enough that it won’t need to be offset by a major compensating factor.
As far as which mortgage lender to use, there are no particular recommendations here. Virtually all mortgage lenders originate loans through either the FHA, VA, Fannie Mae, or Freddie Mac. That means that while there’s some flexibility between lenders, they’re all following essentially the same guidelines.
Once again, you can use our mortgage calculator, you can determine the effect of credit score ranges on your interest rate and monthly payment for a mortgage.
Credit cards for people with good credit
While personal loans may work better for some, using a credit card to pay off your debt could be a better option.
Many balance transfer credit cards offer 0% interest for anywhere between 12-18 months. That gives you a year or more to pay off your debt with ZERO interest.
So if you decide to make a big purchase – whatever it is – balance credit cards buy you time and therefore money.
Also, if you have debt that you know you can pay off in that amount of time, going with a balance transfer card over a personal loan is usually a better choice.
Here are two of my favorite balance transfer cards to check out:
Here are the best personal loans for bad credit of March 2021
Select’s editorial team works independently to review financial products and write articles we think our readers will find useful. We may receive a commission when you click on links for products from our affiliate partners.
Getting a loan when you have bad credit or no credit history can be tough.
most financial products, borrowers have to submit an application listing their income information and agree to a credit check before getting approved for a loan.
Lenders prefer to work with customers who have a proven track record of paying their bills on time and earning enough money to stay on top of their debt while honoring all terms and agreements.
A good credit score starts at 670 on the FICO scale (661 for VantageScore). Anything over 740 is considered very good, and above a 800 FICO score (or 781 VantageScore) is considered excellent.
If your credit score is less than 670, you may feel your score is a roadblock to getting access to good financial products. However, there are a few lenders that work with such candidates, helping them to borrow money for emergency expenses including medical bills and auto repairs, refinancing high-interest debt or even consolidating debt payments.
But proceed with caution: Lenders may charge higher interest rates or tack on origination fees, early payoff penalties and late fees to borrowers they consider to be “riskier.” Therefore, if you have less-than-perfect credit, it's important to do your homework before signing on the dotted line to make sure you're comfortable with the terms of the loan.
Select rounded up the top personal loans for bad credit, looking at fees, interest rates and flexible repayment options for different credit scores. We tried to prioritize loans with no origination or sign-up fees, but since this list is for borrowers with lower credit scores, many of the loans you see below come with added costs.(Read more about our methodology below.)
For loans with no origination fees, check out our best personal loan list.
Here is how lenders classify “fair” and “poor” credit scores:
- Very poor: 300 to 579
- Fair: 580 to 669
- Good: 670 to 739
- Very good: 740 to 799
- Excellent: 800 to 850
- Very poor: 300 to 499
- Poor: 500 to 600
- Fair: 601 to 660
- Good: 661 to 780
- Excellent: 781 to 850
Scores lower than 670, and certainly scores lower than 600, will most ly disqualify you for the most affordable personal loans. But if you're in a pinch, it's not all-out impossible to get a loan with a credit score in the high 500s or low 600s.
Yes. Do some research before you apply for a personal loan. Read reviews and learn what to consider before agreeing to take on a loan. When you're ready to apply, follow these steps to make sure you don't ding your score too much.
- Shop around for the best rate. Avoid hard inquiries by knowing your credit score before you submit a formal application so you know what you might qualify for. Many lenders will allow you to submit a prequalification form. Or you consider using a lender marketplace service (such as Upstart or LendingTree) to view multiple offers at once.
- Decide on the best offer. Choose the loan with the best monthly payment and interest rate for your budget. Be sure to look at how much the loan will cost you over the full length of the term and decide if the cost is worth it.
- Submit a formal application. Have your social security number on hand, as well as supporting documents such as bank statements and paystubs.
- Wait for final approval. This could take just a few minutes, an hour or up to 10 days. To facilitate a speedier approval, apply during normal business hours and submit the required documents right away.
- Get your funds. Once your loan is approved, you'll be asked to input your bank account information so the funds are deposited into your account. You may also be able to request a paper check from your lender, or in the case of a consolidation loan, you may be able to have funds sent right to your creditors.
Personal loans are a form of installment credit, which affect both your credit report and your credit score. Having both installment and revolving credit in your profile will strengthen your credit mix.
Having a diverse credit mix is helpful — but it's not everything. Some say that adding a new installment loan, a car loan or a mortgage, can boost your score, but there's no sense in taking on debt (plus interest) unless you actually need it.
While a new installment loan might boost your score by strengthening your credit mix, a personal loan will only improve your credit over time if you can afford to make on-time payments. Late and missed payments show up as negative marks on your credit report.
While taking on an installment loan won't boost your score a whole lot, using a personal loan to pay off credit card debt could increase in your credit score. Paying off a card will have a big impact on your credit utilization rate, which is a major factor in determining your credit score.
Once your cards are paid off, aim to keep your spending under 10% of your available credit. If you don't take on more credit card debt and you pay your personal loan on time each month, you'll see a noticeable improvement to your credit score.
A secured loan is a loan backed by collateral. The most common types of secured loans are mortgages and car loans, where the collateral is your home or car. But really, collateral can be any kind of financial asset you own. And if you don't pay back your loan, the bank can seize your collateral as payment. A repossession stays on your credit report for up to seven years.
An unsecured loan requires no collateral, though you're still charged interest and sometimes fees. Student loans, personal loans and credit cards are all example of unsecured loans.
Since there's no collateral, financial institutions give out unsecured loans based in large part on your credit score, income and history of repaying past debts. For this reason, unsecured loans may have higher interest rates (but not always) than a secured loan.
To determine which personal loans are the best for consumers with bad credit, Select analyzed dozens of U.S.
personal loans offered by both online and brick-and-mortar banks, including large credit unions.
When possible, we chose loans with no origination or sign-up fees, but we also included options for borrowers with lower credit scores on this list. Some of those options have origination fees.
When narrowing down and ranking the best personal loans, we focused on the following features:
- Fixed-rate APR: Variable rates can go up and down over the lifetime of your loan. With a fixed rate APR, you lock in an interest rate for the duration of the loan's term, which means your monthly payment won't vary, making your budget easier to plan.
- Flexible minimum and maximum loan amounts/terms: Each lender provides more than one financing option that you can customize your monthly budget and how long you need to pay back your loan.
- No early payoff penalties: The lenders on our list do not charge borrowers for paying off loans early.
- Streamlined application process: We considered whether lenders offered same-day approval decisions and a fast online application process.
- Customer support: Every loan on our list provides customer service available via telephone, email or secure online messaging. We also opted for lenders with an online resource hub or advice center to help you educate yourself about the personal loan process and your finances.
- Fund disbursement: The loans on our list deliver funds promptly through either electronic wire transfer to your checking account or in the form of a paper check. Some lenders (which we noted) offer the ability to pay your creditors directly.
- Autopay discounts: We noted the lenders that reward you for enrolling in autopay by lowering your APR by 0.25% to 0.5%.
- Creditor payment limits and loan sizes: The above lenders provide loans in an array of sizes, from $1,000 to $100,000. Each lender advertises its respective payment limits and loan sizes, and completing a preapproval process can give you an idea of what your interest rate and monthly payment would be for such an amount.
The rates and fee structures advertised for personal loans are subject to fluctuate in accordance with the Fed rate.
However, once you accept your loan agreement, a fixed-rate APR will guarantee your interest rate and monthly payment will remain consistent throughout the entire term of the loan. Your APR, monthly payment and loan amount depend on your credit history and creditworthiness.
To take out a loan, many lenders will conduct a hard credit inquiry and request a full application, which could require proof of income, identity verification, proof of address and more.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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Personal Loans: What to Know Before You Apply
Credit comes in many forms, including credit cards, mortgages, automobile loans, purchase financing over time and personal loans. Each type of credit serves a certain purpose for a goal you may have, whether it's to buy a house or car, or to allow you to break up a big expense into more manageable monthly payments.
A personal loan is a form of credit that can help you make a big purchase or consolidate high-interest debts. Because personal loans typically have lower interest rates than credit cards, they can be used to consolidate multiple credit card debts into a single, lower-cost monthly payment.
Credit can be a powerful financial tool, but taking out any type of loan is a serious responsibility. Before you decide to apply for a personal loan, it's important to carefully consider the advantages and disadvantages that can affect your unique credit picture.
What is a Personal Loan?
When you apply for a personal loan, you ask to borrow a specific amount of money from a lending institution a bank or credit union.
While funds from a mortgage must be used to pay for a house and you'd get an auto loan to finance a car purchase, a personal loan can be used for a variety of purposes.
You may seek a personal loan to help pay education or medical expenses, to purchase a major household item such as a new furnace or appliance, or to consolidate debt.
Repaying a personal loan is different from repaying credit card debt. With a personal loan, you pay fixed-amount installments over a set period of time until the debt is completely repaid.
Before you apply for a personal loan, you should know some common loan terms, including:
- Principal — This is the amount you borrow. For example, if you apply for a personal loan of $10,000, that amount is the principal. When the lender calculates the interest they'll charge you, they base their calculation on the principal you owe. As you continue to repay a personal loan, the principal amount decreases.
- Interest — When you take out a personal loan, you agree to repay your debt with interest, which is essentially the lender's “charge” for allowing you to use their money, and repay it over time. You'll pay a monthly interest charge in addition to the portion of your payment that goes toward reducing the principal. Interest is usually expressed as a percentage rate.
- APR — APR stands for “annual percentage rate.” When you take out any kind of loan, in addition to the interest, the lender will typically charge fees for making the loan. APR incorporates both your interest rate and any lender fees to give you a better picture of the actual cost of your loan. Comparing APRs is a good way to compare the affordability and value of different personal loans.
- Term — The number of months you have to repay the loan is called the term. When a lender approves your personal loan application, they'll inform you of the interest rate and term they're offering.
- Monthly payment — Every month during the term, you'll owe a monthly payment to the lender. This payment will include money toward paying down the principal of the amount you owe, as well as a portion of the total interest you'll owe over the life of the loan.
- Unsecured loan — Personal loans are often unsecured loans, meaning you don't have to put up collateral for them. With a home or auto loan, the real property you're buying serves as collateral to the lender. A personal loan is typically only backed by the good credit standing of the borrower or cosigner. However, some lenders offer secured personal loans, which will require collateral, and could provide better rates than an unsecured loan.
How to Apply for a Personal Loan
Whenever you ask a lender for any kind of credit, you'll have to go through the application process.
However, before you submit a personal loan application, it's important to review your credit report and your credit score, so you'll understand what lenders might see when they pull your credit report and scores.
Remember, checking your own credit report never affects your credit scores, so you can check as often as you need.
Once you've reviewed your credit and taken any necessary steps what you see, you can apply for a personal loan through any financial institution such as a bank, credit union or online lender. Every lender you apply to will check your credit report and scores.
Lenders will usually consider your credit scores when reviewing your application, and a higher score generally qualifies you for better interest rates and loan terms on any loans you seek. The lender will also ly look at your debt-to-income ratio (DTI), a number that compares the total amount you owe every month with the total amount you earn.
To find your DTI, tally up your recurring monthly debt (including credit cards, mortgage, auto loan, student loan, etc.), and divide by your total gross monthly income (what you earn before taxes, withholdings and expenses). You'll get a decimal result that you convert into a percentage to arrive at your DTI.
Lenders to see DTIs under 36%, but many may provide loans to borrowers with higher ratios.
Minimize the Impact of Inquiries
When you apply for credit and a lender reviews your credit report, a hard inquiry is noted on your report. Hard inquiries remain on credit reports for two years, and their impact diminishes over time. However, in the short term, too many hard inquiries on your report can have a negative effect on your credit score.
If you'll be comparison shopping by applying to more than one lender, be sure to do so in a short time frame to minimize the impact of hard inquiries.
Generally, credit scoring models will count multiple hard inquiries for the same type of credit product as a single event as long as they occur in a short window of a few weeks.
Don't stretch your comparison shopping and applications over a period of months.
Another option is to ask if a lender can prescreen or preapprove you for a loan offer. Preapproval often counts as a soft inquiry, which doesn't affect credit scoring.
Pros and Cons of Personal Loans
any other type of credit, a personal loan has advantages and disadvantages, depending on your specific financial situation. Whether a loan is good for you will largely depend on how wisely you're managing your borrowing over time.
On the plus side, a personal loan can help you make a big purchase. Breaking a large expense into smaller payments over time can help make that cost more manageable when you have stable income.
Personal loans typically have interest rates that are lower than what you would pay for a credit card purchase.
A personal loan can also be a good way to consolidate multiple high-interest credit card debts into a single, lower-interest payment.
When you take out a personal loan and make on-time payments, you're helping to build a positive credit history for yourself, which contributes positively to many credit scoring calculations. Your responsible use of credit can positively impact many factors that credit scoring considers, including payment history, credit utilization ratio, and mix of credit types.
However, if you pay late or miss a payment altogether, that can negatively affect your credit. Late or missed payments can lower credit scores, and a lower credit score can limit your ability to get credit at better rates.
If you fall far behind on making loan payments, your personal loan may go into collections or be charged off — and both negative events appear on your credit reports and can also lower your credit scores.
Ultimately, if a personal loan makes it harder for you to pay all your bills on time, you may want to consider other options.
While not ideal, bankruptcy might be something to look into, but know it can appear on your credit report and negatively affect your credit for seven to ten years.
Personal Loans and Your Credit
It's important to manage any type of credit you use wisely, including a personal loan. Personal loans can be helpful when managed well, but taking on debt should never be something you do lightly – or without looking carefully at your overall financial picture before you pull the trigger.
Before you make any kind of important credit decision, it's best to check your credit report so you understand your current credit standing. Plus, reviewing your report can help you better understand how your decision may affect your credit in the future.
Personal Loans for Excellent Credit: Best of March 2021
Banks that offer personal loans tend to cater to borrowers with excellent credit, and most offer low interest rates compared with other lenders. If you have an existing account with the bank, you could also benefit from an easier application process and discounted rates. The downside is some banks require you to visit a branch to complete the loan application process.
HSBC offers higher loan amounts to some existing customers, and your first payment is due in 50 days, rather than the typical 30 days.
PNC also offers its banking customers a 0.25% discount on a personal loan if they choose to make repayments through their checking account.
TD Bank offers fast funding of personal loans primarily to customers on the East Coast. New customers must have excellent credit to qualify.
Wells Fargo allows existing customers to apply for personal loans online and offers comparatively high borrowing amounts that make it an option for funding home improvements.
» MORE: Top banks offering personal loans
What is an excellent-credit loan?
Personal loans are unsecured loans, which means you don’t have to put up any collateral such as your car or house to get the loan. Instead, lenders evaluate your ability to repay by considering factors credit score, debt and income.
Having excellent credit can get you access to the lowest annual percentage rates and most favorable terms available to borrowers. Personal loans are offered to excellent-credit borrowers by banks, online lenders and credit unions. Compare offers from multiple lenders to get the right loan for you.
How much will an excellent-credit personal loan cost?
As with most credit products, the rate you receive on a personal loan depends a lot on your credit score. Borrowers with excellent credit will pay less interest over the life of the loan than borrowers with lower credit scores. The interest rate also affects your total monthly payment, as does the term length; a longer term means lower monthly payments, but more interest.
Here is what interest rates on personal loans look , on average:
28.7% (Lowest scores unly to qualify.)
Source: Average rates are aggregate, anonymized offer data from users who pre-qualified in NerdWallet’s lender marketplace between Jan. 1, 2020, and Dec. 31, 2020. Rates are estimates only and not specific to any lender.
Will a personal loan hurt my excellent credit score?
Most online lenders perform a soft inquiry on your credit when you pre-qualify, followed by a hard check during the approval process that can knock some points off your credit score.
The setback to your score should be temporary, and making on-time payments helps build credit if the lender reports your borrowing activity to one or more of the credit bureaus: Equifax, Experian and TransUnion.
A personal loan also diversifies your debt. According to FICO, credit mix contributes 10% toward the calculation of your total credit score. (However, you shouldn’t get a personal loan just to improve your credit.)
» MORE: How personal loans affect credit scores
How to choose the best personal loan for excellent credit
Having excellent credit is an advantage, but it can make choosing among multiple loan offers more difficult. Factor the overall cost of the loan and monthly payments against your budget, and carefully weigh the different features offered by each lender.
Here are three considerations to keep in mind:
Compare loans. Shop multiple lenders to compare rates and terms. The loan with the lowest APR is the least expensive and usually the best choice. Use this comparison tool to check rates at multiple online lenders without affecting your credit score.
Loan features. Some lenders will send loan proceeds directly to your creditors if you’re consolidating debt, allow flexible payment schedules or offer rate discounts if you agree to automatic payments.
Perks. Take advantage of resources offered by lenders such as free credit score monitoring, financial education or hardship assistance plans.
How to pre-qualify for an excellent-credit personal loan
» MORE: 4 steps to pre-qualify for a personal loan