Need Some Cash? Here is the Minimum Credit Score Needed for a Personal Loan
We all have a need for money, don't we? And at different points in our lives, we take measures to ensure we never become cash-strapped. While some of us would turn to side gigs and hustles, others might turn to family and friends, and for people who don't really fancy any of these options, they turn to loans and credit cards.
Not because they fancy these options too, but because they believe it has the answers they seek. However, that is not to say that these types of people get funded each time they ask their credit card company or lender. In fact, there is always a minimum requirement for them to meet and if they ever fall short of this standard, well; there is only one possibility thereafter: no funds.
One such requirement is the minimum credit score, which is what a lender or Credit Card Company uses to determine the creditworthiness of a borrower. So what exactly is the minimum credit score needed to secure a personal loan? While the answer varies from lender to lender, from company to company, the lowest figure remains 580, which means people that have credit scores lower than this value may find it extremely difficult finding someone to lend them money.
What is considered good credit?
Before you are given money, most lenders prefer that you have good or decent credit. That way, they are certain that they aren't risking too much by lending you money. But what does it mean to have good or decent credit? Typically, good credit is something in the region of 680+.
- Excellent credit - 720+
- Good credit - 680 - 719
- Average - 640 - 679
- Bad credit - 580 - 639
- Extremely bad or terrible credit - below 580
With the above categorization, you can easily determine whether or not your loan application will be approved. For instance, if you approach a lender with your 680 credit score, the chances are that you will be approved, unlike someone presenting an extremely bad credit that is below 580.
So if you have a not-so-good credit score, does that mean an end of the road for you? Not at all! You simply need to address the issue and improve your score before tendering your application. So the question should be: how can you improve your credit score?
Tips to improve credit score
For starters, it is essential that you start improving your credit score once it goes below the 680 marks, not because no one will lend you if it goes below (of course some lenders will still consider an average credit), but because you want to improve your chances of securing any loan you apply for, and also to get the best rates. So once you finally decide it's time to improve your score, here are the steps to take.
Pay down credit card balances
Credit cards - although useful and helpful - are the ultimate weapon of credit destruction. The amount of available credit you're using is called a credit utilization ratio, and you want this ratio to be as low as possible. If you are using more than 30% of your net available credit, your score will be dragged down. However, when you pay the balances below 20% of the credit limits, your score will be raised gradually. Either way, you know what's best for you now!
Don't apply for new credit
At least for now, do not apply for new credits. Even though there appears to be no other way, turn to friends and family for help during this period of building your credit. The reason is that each time you apply for loans and credits such as auto loans, lines of credit and credit cards, the lender will do a quick background check on your credit score. While there appears to be no harm in this, the consequence lingers on your credit history and invariably credit score. Each inquiry will count against you and lower your score.
Dispute information
In other to work your credit score back up, you may need to reach out to the credit bureaus to dispute some, if not all, of the information about your score. Chances are there may be some inaccurate information on your report, which is negatively impacting and lowering your score.
How to secure loans when you need cash
Having discussed some of the crucial factors affecting loan applications, we believe you are now in good stead to apply for your next loan. However, before you proceed with your application, be ready to speak to at least 5-6 different lenders. This is another important aspect of a loan application. As vital as credit scores are, choosing the right lender from a pool of lenders is even more important. Although you may be tempted to stick with the first lender you speak to, do not! Chances are each lender you speak to will have different loan terms, interest rates, and lenders fees. And it is only when you sample different opinions that you can know which one is actually best for you. However, to save you the hassle, you can try submitting your information on the OpenCashAdvance website where you may be connected with a lender that fits your information (like a bad credit score; if you have one). Have no worries; it can take as little as one business day to get funded when you are applying for a loan online.
