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Best Good Credit Loans – March 2022

stevenwalters
Steven Walters Updated: June 27, 2023 • 8 min read
good credit loans

Personal loans can be helpful for a variety of purposes, but understanding where to go for these loans, and what terms to look for when borrowing can be a potential minefield for consumers. The following guide for good credit loans can help dispel some of the confusion and provide some direction when it comes to finding good personal loans.

Compare Top Personal Loans for Good Credit

Lender Details  
LENDING TREE Lending Tree
Best for Good Credit Loans
APR: 2.49%-35.99%
Loan Term: 3-180 Months
Min Credit Score: 300
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5K FUNDS 5K Funds
Best for Online Experience
APR: 5.99%-35.99%
Loan Term: 3-72 Months
Min Credit Score: 300
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LOANS UNDER 36% Loans Under 36%
Best for a Range of Repayment Options
APR: 5.99%-35.99%
Loan Term: 3-72 Months
Min Credit Score: 300
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The Best Personal Loans for Good Credit According to Lendstart

  • Best Overall for Good Credit Scores - Monevo
  • Best for a Range of Repayment Options - Loans Under 36%
  • Best for Online Experience - 5K Funds
  • Best for Longer Repayment Terms - Lending Tree

What does it Mean to Have Good Credit?

When we talk about having good credit, it refers to classifying the individual borrower’s credit history. That credit history is based on several factors used to generate a credit score by various credit reporting agencies. Those factors can include payment history, current debts, credit history, and new credit issued. A relatively high credit score indicates that the borrower is a reasonable credit risk to lenders and that they can be trusted to repay their debts.

The major credit rating agencies that report credit scores that lenders can use include the following:

Each of the credit rating agencies has its own scoring metrics. In general, the borrower’s payment history and any outstanding debts are most important in determining the credit score. While each credit agency has a different rating that constitutes good credit, the acceptable credit score range for good credit is a score in the mid-600s to mid-700s.

What are Typical APR Rates on Personal Loans for those with Good Credit?

The borrower’s credit score determines the expected annual percentage rate (APR) on personal loans. These interest rates can be as low as 2.49% for those with excellent credit to as high as 35.99% for those with poor credit.

Credit Range Credit Score Estimated APR%
Excellent 720-850 2.49% to 12.5%
Good 690-719 13.5% to 15.5%
Average 630-689 17.8% to 19.9%
Bad 300-629 28.5% to 35.99%

Credible
  • Fixed APR: 5.20-35.99%
  • Loan Term: 12-84 months
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sofi logo
SoFi
  • APR: 8.99-25.81%
  • Loan Term: 24-84 months
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5kfunds_l
5K Funds
  • APR: 5.99-35.99%
  • Loan Term: 2-72 months
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How to Get Approved for a Good Credit Loan

With so many lenders available for good credit loans, there’s no guaranteed formula for getting the best personal loan terms. Lender requirements for a good credit score vary by lender. Each lender might have specific requirements for income levels or even nontraditional data, such as free cash flow.

There is one constant among lenders: They all want to get paid on time, which means that they will only approve borrowers who can meet their terms. And those who have the best risk profile can often get the best repayment terms.

When looking at personal loan terms, you should consider the APR (lower is better), any upfront fees or potential late payment fees, repayment terms (including any prepayment penalties), minimum monthly payments, and how long it will take to receive the funds.

Below are six tips that can help in securing the best loan terms:

  1. Use an online marketplace to compare multiple lenders

Like any other purchase, it’s possible to shop around for a personal loan. Comparing multiple lenders can be one of the quickest ways to find the best personal loan terms without changing your finances.

  1. Try for pre-approval

After creating a shortlist of potential lenders, it’s possible to ask each to pre-approve a loan. This allows you to compare the estimated terms and APR of each loan, making it easier to decide which is the best for your circumstances.

  1. Improve debt-to-income ratio

Your debt-to-income ratio is how much debt you have relative to income. Knowing your debt to income ratio is relatively easy. Add up all your monthly debt payments (including rent payments or leases). Then add up all your gross monthly income. Divide your monthly debt total by your monthly gross income to receive a decimal ratio. Multiply by 100 to arrive at a percentage. Lower is better. To get the best personal loan terms, aim for a debt-to-income ratio below 20%.

  1. Make payments on time

One of the key considerations in determining a credit score is how reliable the borrower is in repaying outstanding loans. Making payments on time can go a long way towards improving personal loan terms.

  1. Secure the loan

A secured loan (as opposed to an unsecured loan) is one in which some valuable items are pledged as collateral for the loan. It might be an auto, a savings account, or something else of value. If the loan defaults, the lender can collect by taking whatever was offered as collateral. It reduces lender risk and can lead to better loan terms.

  1.     Keep credit utilization low

A lower utilization rate is generally best for your credit scores. And the better your credit score, the better the terms you’ll receive on any loan.

Improve Your Good Credit Score

Because your credit score is important to lenders when determining your loan approval and terms, one accepted method for improving loan terms is to bump up your credit score. There are several ways to do this. They include checking your credit report for errors, paying down revolving credit to improve your credit utilization and debt-to-income ratio, and avoiding requests for new credit that could generate hard inquiries and negatively impact your credit score for up to two years.

Comparing and Choosing Good Credit Loan Options

If you’re looking for a new personal loan, it only makes sense to shop around and find the best terms possible before committing yourself. Here are some things to consider when comparing the terms and offers of various lenders.

Determine the Amount Needed to Borrow

There’s no point in borrowing more than you need, so the first step is determining how much you’ll need. This can help in finding the best loan with the best terms. You will also want to know this amount before approaching lenders for pre-approval.

Determine the Optimal Length of Time to Carry the Debt

The length of the loan is an important consideration. You want to keep your monthly payments manageable, but you also add more interest payments for each extra month added to the loan. So strike a balance that keeps your monthly payments low without significantly increasing the amount you’re paying in interest.

Shop for the Lowest APR

The APR of your loan is the annual percentage rate, but it includes more than just the interest rate. It also includes any loan fees, such as origination fees. By comparing the APR rather than just the loan’s interest rate, you get a better idea of the total cost of borrowing.

Use Marketplace Lenders & Get Prequalified

Marketplace lenders have relationships with many lenders and can help you find the best terms for a personal loan. Marketplace lenders like LendingTree and Monevo match lenders with borrowers. They can potentially be a simple and effective way to find the best loan terms, given your circumstances. They can also help with the prequalification process that allows you to make the most accurate lender comparisons.

Be Aware of Repayment Terms and Fees

Understanding the loan repayment terms is vital if you don’t want to get hit with any upsetting surprises. One of the things to watch out for is prepayment penalties. This is when the lender charges you for paying off the loan balance ahead of time.

Gravitate towards Lenders that Allow for Co-Signers

A straightforward way to improve the loan terms is to get a co-signer with an excellent credit score. Lenders will consider the co-signer’s credit score when determining the terms of the loan, which could potentially lower your interest rate and APR significantly. This can lead to impressive savings over the life of the loan.

Other Options for Individuals with Good Credit

Individuals with good credit scores may qualify for other options outside of the typical personal loans. These include:

0% introductory APR credit cards: Those who feel confident they will be able to pay back the loan quickly might find a 0% introductory APR credit card as a good alternative. With terms that include no interest for up to 18 months, this can be a way to borrow money without paying interest for 1 to 18 months.

Home equity loan: Borrowers who are also homeowners can often draw on the equity in their home through a home equity loan. This type of loan often offers potentially lower interest rates. However, it does come with a downside. Because your home secures the loan, you risk foreclosure if you default on the loan.

A personal line of credit: This is similar to a credit card, but typically personal lines of credit are offered by banks. Those with good credit might get a better interest rate with a line of credit.

Home equity line of credit (HELOC): This is similar to a home equity loan, but rather than providing you with the loan funds upfront, a HELOC makes them available as a line of credit that can be drawn on as needed.

Does a Personal Loan Affect Credit Scores?

Personal loans come with an added benefit. They can also help improve credit scores. Building credit with a personal loan can be an option for some borrowers because it helps with many of the same factors that influence credit scores in the first place. For example, making monthly payments establishes credit history and can also help to show that you can manage credit well. If you don’t have much credit history, a personal loan can also improve your credit mix while also improving the length of your credit history, and both are factors in the calculation of credit scores.

Conclusion

Hopefully, after reading our personal loans guide, you have a better understanding of the lending landscape. Potential borrowers have several methods for obtaining good credit loans, from personal loans to lines of credit to secured loans such as a home equity loan. Plus, a personal loan can help improve your credit score when appropriately managed. Of course, not every option will be best for every borrower, so we recommend that you continue educating yourself regarding the best personal loans lenders options available.

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Steve has been writing in the financial products space for over a decade, with interests ranging from personal loans to investing. He is also deeply into the blockchain space. In his free time, you can find him in the kitchen preparing delicious meals, or outside hiking and biking.