Loans » Personal Loans » Best Personal Loans for Good Credit of 2021
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Best Personal Loans for Good Credit of 2021

Good credit loans are any type of loan offering fair terms and lower than average rates. Here are our top personal loans for good credit

We may receive compensation from companies that appear on this page. This may impact how and where products appear on a page (including, for example, the order in which they appear). It doesn’t affect our editors’ opinions. our opinions are our own.

One of the advantages of having a good credit score is access to favorable finance products. Good credit loans are any type of loan offering fair terms and lower than average rates. If you have a strong credit history and reliable source of income, you can access preferable rates for your loan.

Good credit loans can take the form of home equity loans, lines of credit, or home equity lines of credit. However, for the purposes of this article, we will be examining good credit personal loans. These personal loans are typical of any type of personal loan, typically requiring no security. This means that you don’t need to use your home, vehicle or other assets as collateral.

Here are The Smart Investor select’s picks of personal loans for good credit:

Upgrade

  • Overview
  • Details
  • Pros & Cons

Upgrade has a deep executive bench with the goal of providing an online lending platform at a lower cost and with a better customer experience than traditional banks. It combines its products with free credit monitoring, including alerts and even providing education about credit on their platform. Upgrade seeks to help borrowers understand their credit potential and secure cheaper credit, in the long run, using credit monitoring.

Upgrade looks for a credit score of at least 620. However, the company may consider other factors to establish your creditworthiness.

  • Interest Rate Range: 8.99% – 29.99%
  • Minimum credit score: 620
  • Terms: 36-60 months
  • Loan Amount: $1,000 – $50,000
  • Origination Fee: 1%-6%
  • Time to funding: Within a day of approval
  • Free Credit Monitoring
  • Soft Pull Inquiry
  • Competitive Rates
  • Simple Application Process
  • Quick Turnaround Times
  • No Prepayment Penalty
  • Higher low end rates for those with excellent credit
  • Origination Fee
  • Requires Free Cash Flow
  • Not Available in All States
  • Restrictions for Investments
Upgrade logo

Prosper

  • Overview
  • Details
  • Pros & Cons

Prosper is the first peer-to-peer lending marketplace, established in 2006 in San Francisco with $13 billion in loans. Peer-to-peer lending is a platform that matches lenders with borrowers.

Prosper marketplace is a great place to start in your personal loan search. Prosper focuses on the mass market of borrowers and their personal loans can be used for a wide range of reasons. They also have a lending arm for medical costs, Prosper Healthcare Lending. They offer personal loans for a wide variety of purposes and to a large market of borrowers. 

They do have a high origination fee while other providers do not have one. The process will take longer than with other platforms, so if you need funds quickly Prosper may not be the right place to start your search.

  • Interest Rate Range: 7.95% - 35.99%
  • Minimum credit score: 640
  • Terms: 36-60 Months
  • Loan Amount: 2,000 - $40,000
  • Origination Fee: 2.4%-5%
  • Funding:  Up to 14 days and then 1 to 3 days to deposit
  • Competitive Rates
  • Soft Pull Inquiry
  • Peer to Peer
  • Wide Range of Borrowers
  • Business Loan
  • More than One Loan
  • Potentially Long Turn Around times
  • No Joint Borrowers
  • Origination Fee
  • Potential to Go Unfunded
  • Not Available in All States
prosper logo

Discover

  • Overview
  • Details
  • Pros & Cons

Discover offers a variety of products including personal loans with competitive rates and no origination fees.

You can use a Discover personal loan for various reasons, from financing a large purpose, such as home repairs or a wedding to debt consolidation. You can also use your personal loan to cover unexpected expenses, remodeling your home or purchasing a new vehicle.

If you want to use a Discover loan for debt consolidation, Discover will send funds directly to your creditors. You will need to use at least 70% of your loan for your existing creditors, or your final APR may be impacted.

  • Interest Rate Range: 6.99% – 24.99%
  • Minimum credit score: 660
  • Terms:  36 to 84 months
  • Loan Amount: $2,500 – $35,000
  • Minimum Income: $25,000 annually
  • Time to funding: 1 to 7 days
  • Soft Pull Inquiry
  • No Origination Fee
  • Direct Payment to Creditors
  • Competitive Interest Rates
  • Available in All States
  • Longer Application Process
  • Smaller Max Amount
  • No Joint Borrowers
  • Large Late Payment Fee
discover_logo

LightStream

  • Overview
  • Details
  • Pros & Cons

LightStream is an online lender that offers very high loan amounts yet at low interest rates. LightStream is part of the Truist Bank group, formerly the SunTrust Bank. You can use the loan for any purpose, including home improvements, debt consolidation, etc.

LightStream does not charge fees. So, there are no late payment fees, processing fees, or pre payment fees. Most of the loans have a term of two to seven years, but this may be extended to 12 years for solar financing, home improvement loans, or swimming pool loans. 

  • Interest Rate Range: See website
  • Minimum credit score: Good to excellent
  • Terms: Flexible
  • Discount: 0.5% for auto pay
  • Time to funding: As soon as same day (conditions apply), within 30 days of approval (conditions apply)

 

  • No Fees
  • Flexible Term Options
  • Competitive Rates
  • Many Loan Uses
  • Joint Applicants
  • High Maximum Amount
  • Not For Bad Credit Borrowers
  • No Soft Pull
  • Restrictions for Business Use
  • Stipulations
Lightstream Personal Loan Review

Rocket Loans

  • Overview
  • Details
  • Pros & Cons

Rocket was founded to offer a rocket fast loan processing system to provide personal loans to eligible borrowers. Rocket is part of the Quicken group, which includes Rocket Mortgage and Rabid Advance.

Qualifying for a Rocket loan is contingent on creditworthiness rather than business type. You can use your loan for any purpose, including starting a business.

However, Rocket only qualifies people with a credit score minimum of 640 and a good credit history. You also need to have a permanent source of income and a low debt to income ratio.

Where Rocket stands apart is that loans are processed very quickly. 85% of borrowers receive loans within a day.

  • Interest Rate Range: 5.97%-29.99%
  • Minimum credit score: 640
  • Terms: 36-60 months
  • Loan Amount: $2,000 -$35,000
  • Origination Fee: 1% to 6%
  • Funding: As soon as same day
  • Minimum Annual Income: $24,000
  • Soft Pull Inquiry
  • Competitive Rates
  • Easy Application
  • Same day funding
  • Auto Discount
  • Business Loan
  • Limited Terms
  • Origination Fee
  • No Joint Borrowers
  • Restrictions on Use
  • Late Fees and Check Processing Fee
rocket loans

Get a Personal Loans For Good Credit

 If you have good credit, you’re likely to find that you have an abundance of options for personal loans. So, how do you determine which are the best personal loans for good credit? Here we’ll delve into this topic to help you to make an informed decision.

What is a Good Credit Score?

Lenders including banks, credit card companies and other financial institutions use credit scores to determine whether or not you're offered credit and under what terms. There are several types of credit scores, but the most common are VantageScore and FICO.

VantageScore was developed by Experian, TransUnion and Equifax, the three major credit bureaus. Your VantageScore can vary from 300 to 850. Scores below 600 are considered poor, while 601 to 660 is fair. You need to have a score of 661 or more to have a good or excellent credit score.

Credit Score Ranges Basics

FICO is perhaps the most well known type of credit score that is used by many lenders. Like VantageScore, FICO scores typically vary from 300 to 850. However, anything below 579 is poor and under 669 is fair. You need to have 670 to 739 to be classified as a good score. FICO also allows you to have a very good or exceptional score with 740 or more and 800 or more respectively.

How to Compare Good Credit Personal Loans?

With a good credit score, there is a likelihood that you’ll be able to access a number of different products from a variety of lenders. While this is a great way to obtain a superb deal, it can make choosing the best personal loan a little tricky. So, here are some considerations to compare products and find the best deal.

  • Obtain Quotes From Multiple Lenders

There are lots of lenders offering good credit personal loans, but each lender will offer different rates, terms and fees. So, it is important to obtain quotes from three or more lenders. This will allow you to make an accurate comparison of what is available to you in the current marketplace.

  • Choose Lenders That Don’t Use Hard Credit Inquiries for Loan Offers

Many people are wary about getting multiple loan quotes or offers as it may impact their credit score. However, this only occurs when the lender uses a hard credit inquiry. Fortunately, many lenders allow you to obtain an offer through a soft inquiry.

Soft inquiries allow the lender to find out what rate and terms you will qualify for without impacting your credit score. It is only if you decide to move forward that a hard inquiry will be placed on your credit report.

So, be sure to shop around with lenders that only use soft inquiries to protect your credit score.

  • Compare Apples to Apples

When you’re comparing loan quotes and offers, you need to ensure that you are comparing like for like products. If one lender offers a lower monthly payment, but the term is a year longer, you will end up paying more in the long term.

You also need to check that the lenders are offering the same type of rate. Most lenders offer fixed rate deals, but variable rate offers tend to have a lower starting rate. Just be aware that this rate can increase at any time, so you will need to factor this into your comparison.

  • Check the Small Print

You also need to check the small print for any additional fees or costs that may apply. A good example of this is prepayment penalties. If your circumstances change and you want to pay off the loan early, a percentage fee could apply.

It is important that you check all the possible fees and penalties, to ensure that you are comfortable and that one lender does not charge far more than the others.

  • Assess the Total Costs

While your primary concern may be how much you’ll be paying each month, it is important to look at the overall costs. Don’t just look at the basic interest rate, but rather compare the APR. This is the annual percentage rate that will show how much you will pay for borrowing the money per year.

Lender quotes and offers often include calculations on the total cost over the lifetime of the loan. This is a good way to see how the interest compounds and how much you will pay overall.

There are a number of reasons for taking out a loan, but this can also influence the average loan amount. In this chart with LendingTree customer data, you can see that credit card refinancing has the highest average loan amount followed by debt consolidation.

This shows that debt restructuring is one of the more costly reasons to take out a loan. On the other end of the scale, the average loan amount for vacations is the least costly reason. This may suggest that consumers may use other finance methods to cover the cost of vacations.

Personal Loan Average APR by Loan Type

Risks of A Personal Loan for Good Credit

Personal loans offer a number of advantages over other forms of credit. You’re likely to obtain a much more favorable rate than you would with a credit card, but without the need for providing collateral as you would with a home loan.

However, no financial product is without its possible drawbacks. There are potential risks associated with personal loans that you should be aware of before making your final decision. The risks include:

  • Interest Rate Changes: If you opt for a variable rate loan, you may obtain a low rate initially, but there is a risk that it can change at any moment. The rate you’re offered will depend on your specific credit score, but if you’re budgeting based on the current rate, then it dramatically changes, it could create problems for you.
  • Penalties and Fees: We have touched on this above, but it is worth reinforcing. Many lenders have fees and penalties written into the terms and conditions of the loan offer. This can include early payment penalties, origination fees, late fees or other charges, which can significantly impact the overall cost of your loan.
  • Additional Insurances: Some lenders will have a pre prepared sales pitch for additional insurance. This is designed to cover your loan payments if you have an unexpected event that impacts your ability to repay the loan.
    Unfortunately, many of these policies have very limited terms and while you’ve paid premiums, you may struggle to make a claim when you need the coverage. If you are concerned about covering your debt obligations, a general disability insurance policy is likely to offer better coverage and be cheaper.

What are the Expected Loan Rates for Good Credit?

Since personal loans are unsecured debt, the rates are typically higher than a mortgage or auto loan. One of the biggest considerations for the interest rate on your loan offers is your credit score. If you have good credit, you’ll have the best chances of lower rates.

However, lenders will also look at your debt to income ratio. This is your monthly income divided by your total debt monthly payments. If you have a low DTI, you will attract a lower interest rate.

Lenders will also look at your debt ratios, annual income and other factors to determine your score.

The current personal loan rates range from 3% to 36%. With a good credit score and low DTI, you are more likely to be at the lower end of this scale. However, to obtain the lowest possible rates, you would need an excellent or exceptional score.

What is the Difference Between Good Credit and Excellent Credit?

We’ve already touched on what scores you need for good credit and what makes an excellent credit score. In many cases, the difference between a good credit score and an excellent one is less than 100 points. Yet, an excellent score will help you to get the best possible rates, so how do you achieve an excellent score?

Fortunately, the key to getting an excellent credit score is to stick to some basic rules to boost your score. It can take up to six months of reported activity to increase your score, so if you start making some changes, you may be able to increase your score by the time you’re ready to apply for your personal loan.

  • Have a Budget in Place

While you may seem like you have all your finances in control, having a budget in place can help you to manage any unforeseen expenses. Getting caught off guard by an unexpected repair bill or unanticipated expense could cause a drop of a few points on your credit score. This could mean the difference between an excellent score and merely a good score.

  • Maintain a Spotless Payment Record

The most obvious way to increase your credit score is to ensure that you maintain a spotless payment record. Every single bill can affect your payment history, so you need to ensure that they are all paid on time every month. Even a simple postal delay could mean a payment is late on your account, so try to pay each bill as soon as it arrives.

  • Check Your Credit Utilization Ratio

Your credit utilization ratio is the amount of debt compared to your amount of available credit. So, if you have loans and credit cards offering a total line of credit of $10,000 and you have $3,000 of debt, your rate is 30%. Ideally, your ratio should be under 30 percent at all times.

How to Check Your Lender Rating on Trustpilot and BBB Rating

Trustpilot and the Better Business Bureau are excellent resources to check the reputation of a company or organization including loan companies. These platforms allow you to check the company contact details, see consumer reviews and other pertinent information.

These platforms also make it easy to get a snapshot view of the lenders. They use the reviews and other parameters to generate a score. So, you can check on the platform for specific lenders to see if they are rated as good, excellent or even poor.

This is important, as you need to have confidence that your chosen lender is reputable and trustworthy. You don’t want to risk putting your finances in the hands of a company with shoddy service or one who does not value its customers privacy and security.

Checking the lender ratings on either site is simple. All you need to do is enter the lender’s name in the search bar and the results for that company will come up. You’ll see an overall rating, but you can dig deeper into the reviews to see what previous customers have to say about using the lender.

J.D. Power U.S. Lending Consumer Satisfaction 2020

How Long Does it Take to Build Excellent Credit?

Lenders report information about you to the three main credit bureaus, TransUnion, Experian and Equifax. This information is used to generate your credit score. So, from making a credit card monthly payment on time to increasing your debt, each action can have an impact on your credit score.

The amount of time needed to raise your credit score will depend on a variety of factors. This includes your current score, your financial habits and any events that could have lowered your score. There are approximate recovery times for different financial events depending on their severity. These include:

  • Applying for a new card: 3 months
  • Maxing out a credit card account: 3 months
  • Closing a credit card account: 3 months
  • Late mortgage payment 30+ days: 9 months
  • Home foreclosure: 3 years
  • Bankruptcy: 6+ years

Even for every day activity, there is a slight delay in how your score alters. This is due to the reporting process and the communication between your credit issuer and the appropriate bureaus.

So, if you currently have a good credit score, it could take months or more to achieve an excellent score. The main thing is to focus on good financial habits and wait to see how they impact your score after three or six months.

How Much of a Loan Can I Get With a 620 Credit Score?

With both VantageScore and FICO, a score of 620 is classified as fair. This will limit your borrowing power and the rates you’re offered. Having a fair score is considered to be a higher possible risk for the lender, so not all lenders will offer you a loan.

However, it is still possible to obtain a loan, but how much you can borrow will depend on other factors.

You will need to demonstrate:

  • Reliable income
  • Low debt to income ratio
  • Low credit utilization ratio

 If you can meet this criteria you may still be able to borrow as much as you need. Some lenders offer fair score credit loans of up to $50,000 or more.

Of course, the lender will need to use the criteria above to determine the exact amount you can borrow. This applies regardless of your credit score. Even if you had an excellent score, a lender would be reluctant to authorize a loan if your debt to income ratio is too high.

So, think about what you need the loan for and realistically how much you need.

Average Loan Amount by Loan Type

What Credit Union is the Easiest to Get a Loan?

Credit unions have similarities to banks, but they are actually not for profit organizations that are owned by their customers. This means that credit unions tend to offer more flexible terms and lower loan rates compared to big banks.

To get a loan from a credit union, you need to be a member. However, this can be the sticking point, as credit unions have membership criteria to join. Credit unions typically operate on shared characteristics, which could be anything from a specific geographical area to an industry that you work in.

You can search for credit unions in your area using the National Credit Union Administration search tool. If you meet the membership requirements, you can join by making a small deposit. Each credit union will have different loan requirements.

So, while some may allow you to join and immediately apply for a loan, others may have a waiting period, where you would need to be a member for three months or more.

You will still need to complete an application and provide identifying information, such as your Social Security number. Some credit unions also require that you have been in your job for a specific amount of time. You will also need to disclose your income and any current debts.

However, there is nothing to stop you asking someone at your local credit union about their specific loan requirements before you apply. This will help you to save time and get an idea of whether you would qualify.

Is it Better to Get a Personal Loan or Balance Transfer?

If you’re trying to get your finances in order or are planning a large purchase, you may wonder whether it is better to get a personal loan or opt for a balance transfer credit card. There are both pros and cons to each product, so it will depend on your specific circumstances and preferences.

Personal loans allow you to make fixed payments each month on larger balances. You are also likely to get a lower rate on your financing. However, balance transfer cards can be a good option for smaller debts that can be completely paid off in a shorter period of time.

If you only need a small amount and are confident that you will be able to pay it off before the end of the 0% introductory rate, a balance transfer card may be a good option. Just be aware that if you fail to clear the balance before the end of the introductory period, you are likely to be hit with a far higher APR rate.

What are the Expected Fees for Good Credit Loans?

There are a number of fees that can apply to good credit loans. These include:

  • Origination Fees: This is also known as an establishment fee and it can vary between different lenders. In simple terms, this fee is an amount to cover processing your loan. Depending on your credit score and lender terms, the origination fee can cost 1% to 10% of the loan amount. This amount can be paid as part of your monthly loan payment or taken out of your funding.
  • Exit Fees: Otherwise known as prepayment fees, this applies if you pay off your loan before the end of the term. Exit fees are typically calculated according to the interest you would have paid on the loan. This is often a sliding scale, so the earlier you pay off the loan, the higher the fee.
  • Late Fees: These apply if you don’t make a monthly payment on time. You’ll have a payment schedule documented with your initial offer, so you need to ensure that you can meet this schedule each and every month to avoid penalties. Late fees can be calculated as a percentage of your monthly payment or as a flat fee. Some companies charge up to $50 for each late payment.

Requirements for a Loan Application When You Have Good Credit

Whether you have good or excellent credit, the requirements typically remain the same. You’ll need to be prepared to answer some questions about what you need to borrow the money for and how long you wish to borrow it. There are also more formal requirements and documentation that include:

  • Your loan application: Every lender has different application forms to begin the loan process. The initial application is typically quite basic. You’ll need to provide your personal contact information, the loan purpose and desired amount.
  • Proof of identity: Banks and financial institutions need to be very careful to avoid fraud and identity theft. So, they will need to see proof of your identity and confirmation that you are a permanent resident or citizen of the US. Appropriate proof includes driver’s license, birth certificate, passport, military ID, Certificate of citizenship or other state issued ID.
  • Income verification: Since there is no collateral to back your loan, the lender will need to verify that you have the ability to repay the loan with a steady source of income. If you are employed, you can show W2s, paystubs, bank statements or employer information. If you’re self employed, you will need to show income tax returns, bank statements and 1099s.
  • Proof of address: Finally, you will need to confirm your address. This is usually accomplished with a utility bill, but you can also show a lease or rental agreement, voter registration card or proof of home insurance.

How Does My Credit Score Affect My Loan Chances?

Your credit score is an indication of your financial stability. Lenders use your score to assess the risk involved in loaning you money. So, if you have a high score, there is less perceived risk and thereby, you’ll access lower rates and better terms. If you have a low credit score, you may only be offered higher rate loans or even struggle to qualify at all.

Your score is also used by lenders to calculate the loan terms. Again, if you are a higher risk, you’ll be offered a higher APR. This means that you will pay more for the total cost of your loan. Your score can even determine if you pay a higher origination cost.

So, it is important to try to boost your score before you apply for a loan.

How Many Points Does a Personal Loan Drop Your Credit Score?

The credit agencies take a note of all financial activity. Not only do the credit bureaus record the reports of payments you make on your credit cards and other bills, but also when you acquire new debt. This can impact your credit score and chances of approval for new finance.

So, if you’ve recently taken out a personal loan and then apply for a new car loan, your application may be rejected. However, your overall credit history has more impact than just one new loan. If you have a history of making payments on time and managing your debt, there is likely to be less impact on your credit score for taking out a new loan.

In fact, taking out a new personal loan on which you make payments on time each month, can actually increase your credit score. It will demonstrate that you responsibly handle debt.

While there is no hard and fast rule for how many points your credit score drops after obtaining a personal loan, it is a good idea to wait at least three months between credit applications.

Where Can I Get a Legitimate Personal Loan Online?

There are a number of legit companies offering personal loans online. In fact, online lenders can often offer more favorable rates and terms. You can use a personal loan comparison tool to compare between the different lender and find the right one for your needs.

You can find companies with a basic web search. Simply type in “online personal loan” into your preferred search engine and check out the results. You may recognize some company names, but others may be unfamiliar to you. So, it is important to double check that the company is legit.

You can check the Better Business Bureau and Trustpilot for lender ratings. You can also check federal registration, as all lenders have to register in states where they operate. This will give you some reassurance that the company is registered and legitimate, but you can confirm how they operate by reading some customer reviews.