Credit is an important aspect of your overall financial health. The average FICO credit score in the US is 710, while in Oklahoma, it checks in at 690. Why is this important? A credit score plays a role in several financial decisions, from credit cards to mortgages. The higher the credit score, the better your chances are of being on the positive end of a lending decision.
However, if you have a credit score on the lower end, it doesn’t eliminate you from receiving needed funds for emergencies or home repairs. One option to consider if you are considering a loan to get out of debt or simply need a quick infusion of cash is a personal loan. If you’re in need of a lump sum of money, a personal loan is often a financially sound option.
Credit cards and payday loans have high-interest rates and can further push you into debt. A personal loan from a trusted lender can offer better rates and a payback timeline that suits your needs. Find out more about personal loans and credit scores with this guide.
You don’t need a set credit score to get a personal loan – each lender has different criteria it considers when approving potential candidates. Credit history is taken into account, but many financial institutions and lenders offer options to people whose credit history is lacking or has fallen below an easily qualifiable threshold. Some lenders have even developed their own in-house scoring systems using collected data to approve individuals.
By checking with local lenders, you might discover an installment loan option that offers amenable terms and access to the funding you need to improve your financial stability. If you’re concerned about how your credit might affect access to financing, consult your local lender to determine if your credit score and financial history qualifies you for lending options targeted to borrowers facing credit challenges.
The best way to find out what your score is by contacting the three major credit bureaus – Equifax, Experian, and TransUnion – and requesting a copy of your report. Each bureau is legally bound to give you one free copy of your report per year. Check them closely for errors – if you spot anything wrong, you can respond to the credit bureau and they may boost your score.
Anytime your credit is checked by a business, it does result in a slight dip of the final score. If you have the ability to try and pre-qualify for a personal loan, you can see potential offers and not hurt your credit score.
If a financial institution does do a credit check as part of your personal loan application, it will cause slight harm to your score. If you’re wondering, do personal loans affect credit scores in a positive way, the answer is yes. If you are approved for a personal loan, and you pay the installments back on time, your credit score will begin to increase at a steady rate. A personal loan is a solid way to receive the critical funds you need and begin to rebuild your credit score.
Personal loans count as installment debt. You are borrowing a fixed amount of money in one lump sum and can’t keep borrowing while you pay the balance. Installment loans have set end dates, so you have an idea of when you’ll be finishing paying off the loan. Some other examples of installment loans include mortgages, student loans, and auto loans. In addition, personal loans are a type of unsecured debt, which means you don’t have to put up collateral in order to qualify.
Credit cards are a type of revolving debt. You borrow against an established limit and continue to pay interest if you pay less than the full balance. For those with credit challenges, adding another credit card can come at a high cost – with astronomical interest rates that make paying off the debt a daunting proposition.
