Looking for a good deal on a personal loan? These tips will help you shop smart.
Know your credit standing
Before you start shopping for a personal loan, find out your credit score. To get the best deal and qualify for the lowest interest rate on a personal loan, you’ll need to have good or excellent credit.
You can check your credit scores using Credit.com’s free Credit Report Card, which will also give you tips on improving your credit. So if your credit score isn’t as high as you’d like it to be, you’ll know where to start.
And if your credit score is much lower than you expected, it’s a good idea to review your credit report and check for errors. You can get free copies of your credit reports from the three national credit reporting agencies once a year.
Ask about credit qualifications before you apply
Each personal loan application triggers an inquiry into your credit and each inquiry lowers your credit score a little bit. Applying for short-term personal loans from several different lenders at the same time could really hurt your credit scores.
To protect your credit, research plenty of personal loans but limit the number that you actually apply for.
Some lenders may list credit qualifications, such as minimum credit scores, on their websites. And you also may want to contact a lender directly. Will your credit score qualify you for the best loan rate? It’s worth a phone call or scheduling an appointment with a loan officer.
Start with financial institutions that you know
Check out personal loans available from your bank or credit union. Would your credit score qualify you for a low interest rate personal loan? What rates and terms are available? Credit card companies offer personal loans as well and if you are looking to consolidate credit card debt this may be an option to consider as well.
Shop online, but cautiously
You may be able to qualify for a personal loan with an attractive rate from an online lender, but be on the lookout for scams. Some online lenders are nothing more than scam artists. They target people with bad or damaged credit by promising them loans without checking credit history. Steer clear of sites that make such promises and any lender that charges big fees or requests loan payments in advance.