Even if you have a low credit score, you may still qualify for a personal loan – but “if you’re in this situation, you should be prepared to pay a higher interest rate and potentially other fees such as an origination fee, late fees or early payoff penalties,” says Kaitlin Walsh-Epstein, senior vice president of growth and marketing at Laurel Road. Here’s what you need to know if your credit score isn’t stellar and you’re considering a personal loan.
What is a personal loan, and what should those with credit issues use one for?
A personal loan is a loan issued by an online lender, bank, or credit union, usually in a lump sum amount ranging from about $1,000 to $100,000 that you often repay at regular intervals, such as each month, over anywhere from one to seven years. For those with credit issues, a personal loan might make sense to consolidate high-interest debt, for example, but only if the rate you get on that loan is lower than the rates you’re paying. “The best personal loans help you achieve a financial goal, like getting rid personal loans in Arizona of credit card debt, but be sure to compare them with other financing options to find the right fit,” says Annie Millerbernd, personal loan expert at NerdWallet. Experts say it may also make sense to use personal loans to pay off medical debt or an emergency that arises. But don’t use a personal loan to fund discretionary expenses like weddings and vacations, experts say.
What interest rate might I get on a personal loan if I have fair or bad credit?
The average rate on a personal loan for someone with a fair credit score (601-660) is going to be about 26-27%, according to Bankrate data, while average rates for someone with a poor credit score (below 600) are even higher at 29-30%. Continue reading “Getting a personal loan if you have bad credit: Should you do it, and how do you do it?”