Are you considering taking out a personal loan? While you might not realize it, your credit history can directly affect which types of loans you qualify for, as well as the interest rate you’re offered. Coastal Finance Company has been providing their Savannah, GA, clientele quality financial products and loans since 1956. Below, they’ve outlined how your credit score might be affecting the loan offers you receive.
How Does My Credit Score Affect a Personal Loan?
Your score is compiled by three unions: TransUnion®, Equifax®, and Experian®. These companies cull data from your credit history, which includes all loans throughout your life, as well as how you paid them off. It’s based on the debt-to-credit ratio, payment history, number of late payments, and any bankruptcies that might be on file. The unions use this data to apply a score to you as a consumer. This is your credit score, and it’s used by lenders to assess how likely you are to pay back a loan. The higher your credit score, the lower an interest rate you will receive on any loans you take out.
What Can I Do to Receive Better Interest Rates?
You can actively raise your credit score, which will improve any offers you receive from lenders. Be sure to keep a low debt-to-credit ratio by having the amount of debt you hold below 30 percent of available credit. This shows lenders you don’t abuse credit. The highest scores come from consumers who continue to use their cards but pay them off completely each month.
Your credit score will also improve the longer you have accounts open. Lenders are more likely to trust a consumer who has twenty years of paying back debts to one with a single year of history. Be sure to make your payments on time each month and only apply for loans when necessary. Each time your score is pulled, it alerts the unions you might be applying for more credit than you can handle.
If you need a small loan, and you’re not sure where to start, the professionals at Coastal Finance Company are here to help. Whether you want a small personal loan for auto repairs or a home remodeling project, the professional team can help you get the process started. Call them today at (912) 303-9979 to schedule a consultation, or visit their website to learn more about their company.