It takes time and financial effort to increase your credit score by the day. You will have to consider many factors and make good financial decisions to get you to a place where you can get a good credit score. But that is easier said and done. At the end of the day, if you get a fair credit and you need a loan, you will have to work with what you’ve got.
This doesn’t mean you’re out of luck. Getting loans for fair credit isn’t impossible. You have many great options ahead of you. You just need to get the best guide of what your options are. Be sure to read on and take your chances.
What Are Credit Scores
Credit scoring is a systematic way of lenders to gauge if you qualify to get a loan. Based on the score you get, a bank or lender will be able to weigh the risk and benefits of lending you money for the time. So getting a good score will greatly help you in securing a loan that can help you with any needs you have for the money. Many factors will go into the credit score evaluation, so always be in the know.
How To Get Your Credit Score
A very common scoring tool used is the FICO or the Fair Isaac Corporation score to gauge your credit score. VantageScore is a program developed by credit bureau Experian that gives your credit score based on various factors. Your credit score will vary with each of these scoring systems. The scoring goes through multiple criteria and checklists that will decide your overall score.
The common criteria used by FICO for scoring you are:
- History of payment: 35%
- Credit utilization: 30%
- Credit history length: 15%
- Current credit use: 10%
- Recent credit application: 10%
This set of criteria will not always apply in the same percentage for FICO and VantageScore.
When you finally get your score, this are the categories based on score:
- Excellent: 800-850
- Very Good: 740-799
- Good: 670-739
- Fair: 580-669
- Poor: 300-579
You should always aim for a higher score to get the best chance of getting a good amount of credit. Your score will also affect the rate of interest that a lender will put on your credit. Having a score lower than 640 makes you a subprime borrower. This affects your interest rates and credit limits in the long run.
Let’s Get A Loan
Having a fair credit score places you at a bit of a disadvantage when trying to get a loan. Your interest rate could be higher than people who have a higher credit score and this could be a great burden to you. But if you’re careful, you can get the perfect balance of loan sum and good interest rate. So be sure to follow this basic guide to get the best out of your credit score:
This is a great help when you go through an online route. It’s convenient to choose this route because when you do, the lenders will contact you directly and give you the best offer they have. There are hundreds of available lenders you can go through with offers you going through the roof. Pick and choose through the ones that offer you the best and with fewer risks.
Peer To Peer
Although this is not a very secure route, this is your best option for personal loans. P2P lenders can offer you up to $35,000 for any purpose you want to use that money for.
You can use this sum for medical expenses, school payments, even paying for a car or financing your business start-up. The best thing about P2P is, regardless of what credit score you might have, they will likely offer you financing.
Banks And Credit Unions
Banks and credit unions will strictly follow the guidelines when it comes to your credit score and what they can offer. If you score between 580 and 669, you will definitely be at a disadvantage when trying to get good credit. But a few banks will make a great offer for people who have scores that range from 650 down to 620. If you score lower than 620, you will have a slim chance of getting a loan when it comes to banks.
You might get a better chance when it comes to credit unions since they are member-owned and are nonprofit organizations. If you have a large amount of savings in those organizations, you will have an even greater chance of getting a better offer. If that isn’t the case, having a cosigner is your only bet of getting a good offer.
Getting a fair credit score is not the end of the world, or at least not of your financial world. Although it is harder, you still have many great options to choose from when you are trying to get credits from lenders. Be sure to get your credit scores from the options available and evaluate your standing then. Don’t worry too much and plan ahead so you will have an easier time going about getting your credits.