All reputable online lenders will review the applicants’ credit reports to check information such as payment history and debt to income ratio. They will also check your income to find out if you have the means to repay the loan. Personal loans are unsecured loans not that do not require collateral such as house. This is why the lender put emphasis on your credit score when deciding whether or not to approve the application.
Most online loans require you to have at least a good credit score which is a score range in between 690 – 719. If you possess an excellent credit in the range of 720-850, you will be qualified for the lowest APR rate. people with average score of 630 – 689 do have a chance of getting approved although the APR rate will be higher. If you have a bad credit, it is still possible to get a loan but the interest rate is going to be very high. The group of applicants who are unlikely to qualify for loans they apply online are those with poor credit score of 579 and below.
There are some online lenders that claim they don’t have any minimum credit score requirement but they will actually take a look at your credit report. Loans that do not have minimum credit score requirement usually have a high interest rate of in between 36% – 300%. There is only a small number of lenders that will approve an online loan if you have a poor credit score as long as you can prove that you have a stable income and not have many existing debts. The benefit of getting a personal loan is that you can build up your credit score when you consistently make repayment promptly. However, there is also the risk that your credit rating will be damaged if you are behind on payment.
The rates of the APR that you are charged will vary across different online lenders. A difference of a few percentages in the APR rate can be a big deal in the long run so you are advised to always pick the offer with the lowest APR. You can make use of the online loan search engine to perform comparisons on the rates of various loans.
Besides the APR fees, you also have to take into account the loan fees such as origination and check processing fees. You can apply for the online loan if you need to cover an important expenses such as medical expenses. You must calculate your income and deduct all your expenses to see if you have enough money left to pay back the loan amount every month. You can also use personal loans to consolidate your existing debts if the interest rate is lower after the calculation.