A fixed-rate personal loan can be a useful tool for consolidating debt, like high interest credit cards, or paying for an upcoming expense.
To get the best deal and the lowest interest rate for your credit rating on a personal loan, follow these tips.
Check Your Credit Score
The first step to getting the best rate on a personal loan is checking your credit score. You can do just that with Credit.com’s free credit report card. You also will be pre-matched to personal loans for which you are more likely to be approved. Be aware that personal loans with the lowest interest rates may be reserved for people with very good or excellent credit.
Make Sure Your Credit Report is in Tip-Top Shape
Before applying for a personal loan, get free copies of your credit report from the three major credit reporting agencies by visiting AnnualCreditReport.com. Correct any errors before shopping for a personal loan. An error such as an unpaid account that you don’t recognize could be lowering your credit score and hurting your chances of landing the low-rate personal loan that you want.
Every loan application that you send to a lender triggers an inquiry into your credit. And this inquiry lowers your credit score a little bit. And if you apply for several personal loans at the same time, your credit score could really take a hit.
So be choosy about the personal loans that you apply for — and only apply for personal loans with credit standards that you are able to meet.
You can find out the minimum credit score needed to qualify for a personal loan by checking the lender’s website or by calling customer service and asking to speak with a loan specialist.
A financial institution where you already have checking and savings accounts is a good place to begin your personal loan shopping.
Some banks will offer discounts on loan interest rates to customers with additional banking relationships, such as deposit accounts or a first mortgage. And you may be able to land an additional discount by automating your loan payments each month from a checking or savings account at the bank.
Credit unions are known for their affordable loan rates. And if you are a member of a credit union or anyone in your family is a member, it may be worth checking out their rates on personal loans as well.