If you have good personal credit, the best personal lending options will be available to you and your business. If you don’t have a lot of experience with personal lending, however, it may be difficult to know that the loan you are offered is the best option available to you. We will include some techniques below, for finding the best personal loans for people with good credit.
What To Use Loans For
Before you learn how to prepare yourself to apply for loans, you should know that there are certain things that it is wise to leverage debt to purchase, like Cobalt mortgages. However, there are also things that you should definitely not use credit to buy. Here are the purchases you should consider using credit to purchase to help build good credit for your long-term financial health.
- Debt consolidation
- Buying a home or home improvements
- Buying a car or other auto expenses
- Medical expenses
- Paying off high-interest credit cards
- Small business expenses
- Large purchases, like furnishings or home appliances
If you just want to take a luxury vacation, taking out a loan to pay for it is one of the worst things you can do. However, if you take out a loan to pay for the purchases above, it could actually help you to build credit in the long run, as long as you make your payments on time. Just be sure to pick the right finance sources by following the advice below.
Good Credit vs Bad Credit
First of all, it’s important to understand what constitutes good credit and bad credit. To learn about your credit, you can access a free credit report annually from the U.S. government. This information will not only show you the all important credit score, it’ll show you all the positive and negative items on your credit report. It’s impossible to understand the former without the latter. For instance, you cannot understand why your credit score is mediocre without first understanding that you have a negative mark for an unpaid utility bill or other outstanding debt.
You may have a mediocre score for something as simple as not having enough credit behaviors to develop personal credit. If you’ve never had a business credit card, if you’ve never had utility payments in your name, if you’ve never financed a car loan, there is no way for credit reporting agencies to know if you have the means and personal responsibility to actually handle a new loan. In this case, it’s likely that a new loan will be inaccessible, or that it will cost a lot more money than if you had a high credit score after years of positive credit behaviors.
Develop Credit History
If you find yourself in this situation, you’ve got to do the work of developing your history and credit score. This is a cornerstone of personal finance. With the best credit score that you can achieve, you’ll save tens of thousands on your mortgage loan and any other business loan you take out in your life. Once you’ve laid the foundation of a great credit history, then it is time to seriously take a look at the personal loans available to you.
The obvious first place to look is with your bank. It’s possible to get quoted some good numbers without subjecting your credit history to a “Hard Check”. Anytime a lender seriously considers giving you a loan, they’ll look at your actual credit report. When this happens, your credit report knows it. This gives it a signal that you are seeking money to borrow, which means you might not be in the best financial state. Your credit score will lower a bit as a result. If you get hard checks from multiple institutions in a short period of time, your credit score could go down a lot.
Your bank should be able to tell you general numbers of what you could get, without actually having to check your underlying credit history. From here, you should check the advertised numbers of independent private lenders, as well as other banks. Some banks may offer you a very low interest rate if you are willing to move some or all of your banking business to them. Upstart alternative lenders are many today, and these can have introductory rates that are excellent. It’s important to check only with companies that won’t perform a hard check. When you finally commit to one (After exhausting all options), then they’ll perform the final hard check, and you can move forward with the best loan terms and the least negative impact on your credit score.
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