Have a strategy in mind when considering personal loans
See how a personal loan could affect your credit score.
Learn how your credit score might impact interest rates.
Planning major purchases
Prepare your finances for major milestones like buying a home or car.
Correcting report errors
Identify credit report errors and correct them before applying for a personal loan.
What is a Personal Loan?
Understanding your options
Personal loans are a type of installment loan borrowed from a financial institution. There are multiple loan types available. Some, like secured loans, require collateral in exchange for borrowing while unsecured loans usually do not. Some personal loans may have fixed interest rates while others are variable.
Higher credit scores are often required to lock in the best personal loan terms and rates. You may access your free credit report with CreditWise to know where you stand while you evaluate your personal loan needs.
Understanding how loans can affect credit
Whether you’re managing a personal loan currently or are ready to borrow, you may be concerned with how your credit could be impacted. CreditWise can help you simulate how financial decisions may affect your credit score and provide improvement tips.
Applying for loans
Personal loan applications typically trigger credit inquiries, which may temporarily ding your score by a few points.
Making payments on time
Making personal loan payments on time could improve your payment history and your credit score.
Missing payments may lower your score and notices could potentially stay on your credit report for an extended period of time.
Do personal loans build credit?
A personal loan can help build your credit in a number of ways, over time. Making on-time payments enhances your payment history, which can show lenders you are responsible with credit. A well-managed personal loan and other credit types—like a credit card payment—may also help bump up your score by improving your credit mix.
What credit score is needed for a personal loan?
Each lender may determine their own credit score requirements for personal loan terms and interest rates. Generally, a score of between 670 and 739 may qualify you for personal loans, while higher scores may provide more and better personal loan options—like lower interest rates and fees.
Can you get a personal loan with bad credit?
It may be possible to get a personal loan with bad credit, but you could potentially pay more to borrow that money than if your credit score were higher. Before you apply, know what your credit report includes and understand your credit score. Correct any errors on your credit report. This may help you as you begin to research different financial institutions to find the best terms.
Are personal loans installment loans?
A personal loan is a type of installment loan that you pay back in specific monthly amounts over a specific time period. Unlike other installment loans—like a car loan, student loan or mortgage—a personal loan is often used in many ways, like paying for home repairs, paying down debt or meeting emergency expenses.