Personal Loans: What Kind of Credit Score Do You Need?
Life can be both wonderfully and horrifyingly unpredictable. You never know where it might lead you until you get there. That said, there are plenty of situations in life where you might find yourself in need of personal loans. A personal loan is a form of credit you can use to pay for big purchases and the like.
If you have the mind to renovate your home and you need more funds for it? Get a personal loan. What if there’s suddenly a medical emergency? Get a personal loan. And if you are looking to consolidate your debt...you get the picture. A personal loan can be used to pay for just about any type of purchase, for whatever reason.
While that can make your life amazingly more convenient, you also must consider that not all loans are equal. You should know that some offers are better than others. If you want to solve problems, you also have to be the ideal borrower instead of creating them. Who is the perfect borrower? For starters, it’s someone with a good credit score.
Today, we’ll be discussing credit scores—what it is and what kind of score you need to get a loan.
Here’s everything you need to know:
What is a Credit Score?
The term credit score is commonly used and most adults, working or otherwise, have probably heard it before. But does everyone understand what it is? Essentially, a credit score is a number between 300-850 that determines your creditworthiness. Creditworthiness is a lender’s willingness to trust you to pay your debts on time.
So, a low credit score tells lenders that you might be a bit of a risky borrower. Although it’s not impossible to get a personal loan with a lower than average credit score, it does make things so much harder for you. Credit scores that range from 690 and above are good enough to get you the loan you need.
What Kind of Credit Score Do I Need for a Personal Loan?
Now, before you apply for a personal loan, you’ll have to check your credit score. As mentioned above, any score of 690 and above will get you the loan you need. Once you know your credit score, you can start shopping around for personal loans. When getting your score, you might be inclined to use the free tools available online.
The problem with those tools is that it provides only one out of two types of credit score. There’s FICO® Score and VantageScore. In general, 90 percent of lending decisions made in the US rely on the FICO® Score. These two systems also provide wildly different scores. Your FICO® Score will usually be 30 to 40 points lower than your VantageScore.
When using free online tools, ensure that it provides your FICO® Score so that you don’t run into any problems during the process.
The Bottom Line
For the most part, the minimum credit score required for a personal loan will vary depending on the lender. This is why it’s essential to shop around before deciding on anything. Of course, that said, it’s always better to just maintain a good credit score. 690 and above will ensure that you don’t run into any inconveniences.
At the same time, make it a point to ask various lenders their credit score requirements before you let a bunch of different lenders run your credit. Personal loans are the perfect solution for large expenses, and with a score of 690 or higher, you’re in an excellent position to get approved.
If you are looking for the best offers for personal loans, we can help you. At Opelika Finance we understand the time-sensitive need for help when short on funds. Located on Pepperell Pkwy, Opelika, AL, we strive to make same-day loans ranging from $202.00 to $1491.00 with clear, straightforward repayment plans. Our goal is to make the borrowing process quick and simple. Apply for a loan with us today!