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Best personal loans for good credit in January 2022

As of January 29, 2022
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Answer a few questions in two minutes or less to see which personal loans you pre-qualify for. It's free and will not impact your credit score.

4.6

Bankrate Score
APR from

4.98%*

with AutoPay
Loan Amount

$5k- $100k*

Term: 2-7 yr*
Min. Credit

700

Apply on partner site

4.8

Bankrate Score
APR from

5.94- 35.97%

with AutoPay
Loan Amount

$1k- $50k

Term: 3-5 yr
Min. Credit

560

Check rate with Bankrate

4.7

Bankrate Score
APR from

5.99%

3 or 5 year term
Loan Amount

$2k- $50k

Term: 3-5 yr
Min. Credit

660

Check rate with Bankrate

4.5

Bankrate Score
APR from

4.99- 17.99%

Loan Amount

$500- $50k

Term: 1-5 yr
Min. Credit

700

Apply on partner site

4.6

Bankrate Score
APR from

5.74- 20.28%

with AutoPay
Loan Amount

$5k- $100k

Term: 2-7 yr
Min. Credit

680

Check rate with Bankrate

4.6

Bankrate Score
APR from

5.99%

Loan Amount

$5k- $35k

Term: 2-5 yr
Min. Credit

600

Check rate with Bankrate

4.8

Bankrate Score
APR from

6.99- 19.99%

Loan Amount

$4k- $40k

Term: 3-6 yr
Min. Credit

660

Check rate with Bankrate

4.5

Bankrate Score
APR from

7.04- 35.89%

Loan Amount

$1k- $40k

Term: 3-5 yr
Min. Credit

600

Check rate with Bankrate

4.6

Bankrate Score
APR from

7.95- 35.99%

Loan Amount

$2k- $40k

Term: 3-5 yr
Min. Credit

560

Check rate with Bankrate

4.5

Bankrate Score
APR from

9.95- 35.99%

Loan Amount

$2k- $35k

Term: 2-5 yr
Min. Credit

550

Check rate with Bankrate

4.4

Bankrate Score
APR from

15.49- 34.99%

Loan Amount

$2k- $25k

Term: 2-5 yr
Min. Credit

580

Check rate with Bankrate

3.9

Bankrate Score
APR from

18.00- 35.99%

Loan Amount

$2k- $20k

Term: 2-5 yr
Min. Credit

None

Check rate with Bankrate

4.6

Bankrate Score
APR from

5.75- 15.75%

with AutoPay
Loan Amount

$5k- $50k

Term: 3-5 yr
Min. Credit

680

Check rate with Bankrate
APR from

7.99- 35.99%

Loan Amount

$1k- $35k

Term: 1-3 yr
Min. Credit

None

Check rate with Bankrate

4.3

Bankrate Score
APR from

34.00%

Loan Amount

$1k- $10k

Term: 0.5-5 yr
Min. Credit

None

Check rate with Bankrate

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The Bankrate guide to choosing the right personal loan with good credit

Why trust Bankrate?

At Bankrate, our mission is to empower you to make smarter financial decisions. We’ve been comparing and surveying financial institutions for more than 40 years to help you find the right products for your situation. Our award-winning editorial team follows strict guidelines to ensure the content is not influenced by advertisers. Additionally, our content is thoroughly reported and vigorously edited to ensure accuracy.

If you have good credit, you should be able to find a loan offer with competitive interest rates and fair terms. While you likely won’t receive the absolute lowest APR, shopping around will help you find a lender that meets your needs.

Loan details presented here are current as of the publication date. Check the lenders’ websites for more current information. The lenders listed here are selected based on factors such as credit requirements, APR, loan amounts and fees. If you’re on the hunt for a good-credit personal loan, start your research here. To learn more, read our methodology section.

Best personal loans for good credit in January 2022

BEST FOR LENDER APR RANGE MIN CREDIT SOCRE LOAN AMOUNT
High borrowing limits SoFi 5.74%–20.28% (with autopay) 680 $5,000–$100,000
Personal loans without any fees Marcus by Goldman Sachs 6.99%–19.99% (with autopay) Not specified $3,500–$40,000
Borrowing money from other investors LendingClub 7.04%–35.89% 600 $1,000–$40,000
Borrowers who can qualify for the best rates LightStream 4.98%–19.99% (with autopay) Not specified $5,000–$100,000
Joint loans Prosper 7.95%–35.99% 640 $2,000–$40,000
Fast funding Rocket Loans 5.97%–29.99% (with autopay) Not specified $2,000–$45,000
Borrowers with “okay” credit Best Egg 5.99%–35.99% 600 $2,000–$50,000
A range of repayment terms Discover 5.99%–24.99% 660 $2,500–$35,000
Borrowers who want to price shop Credible 2.49%–35.99% (with autopay) Varies $600–$100,000
Borrowers who want other factors considered in their applications Earnest Starting at 2.49% Varies $1,000–$100,000
Rate discounts Citizens Bank Varies by location Not specified $5,000–$15,000
Borrowers who want to consolidate credit card debt Payoff 5.99%–24.99% 640 $5,000–$40,000

Average personal loan interest rates by credit rating

Average personal loan interest rates depend on the borrower's credit score, ranging from as low as 10.3 percent for a borrower with excellent credit to as high as 32 percent for a borrower with poor credit.
CREDIT BAND CREDIT SCORE RANGE AVERAGE PERSONAL LOAN INTEREST RATE
Excellent Credit 720–850 10.3%–12.5%
Good Credit 690–719 13.5%–15.5%
Average Credit 630–689 17.8%–19.9%
Bad Credit 300–629 28.5%–32%

Details: 12 best personal loans for good credit

SoFi: Best for high borrowing limits

Overview: SoFi may be best known for its popular student loan refinancing products, but this lender also offers personal loans for good credit. Interest rates start at just 5.74 percent APR.

Perks: If you lose your job while you’re repaying your loan, SoFi offers a program that can temporarily pause your payments for up to 12 months. (Interest will still accrue during that time and be added to your principal balance, so you can choose to make interest-only payments). SoFi loans also come with no origination fees and no prepayment fees.

What to watch out for: SoFi loans may be slightly slower to arrive than loans from other companies. SoFi claims that you can receive the funds "within a few days," while other lenders boast next-day funding.

Why SoFi is the best for high borrowing limits: You may be able to borrow up to $100,000 if you qualify; many lenders cap personal loans around $40,000 or $50,000.

Impact on good-credit borrowers: Both SoFi's minimum and maximum rates are on the low end for personal loans, so you're likely to find a competitive interest rate regardless of where you fall on the good-credit spectrum.

LENDER:
SoFi
BANKRATE RATING:
4.6 / 5.0
MIN. CREDIT SCORE:
680
EST. APR:
5.74% to 20.28% (with autopay)
LOAN AMOUNT:
$5,000 to $100,000
TERM LENGTHS:
2 to 7 years
MIN. ANNUAL INCOME:
Not specified
FEES:
None

Marcus by Goldman Sachs: Best loan for personal loans without any fees

Overview: Marcus by Goldman Sachs is an online lender that offers personal loans to consumers with good credit. Interest rates start at 6.99 percent APR for those who can qualify.

Perks: Marcus by Goldman Sachs offers a 0.25 percent discount when you enroll in autopay, and you can receive your loan funds in as few as three days once you’re approved. Another unique benefit is Marcus' on-time-payment reward, which allows you to skip one payment if needed for every 12 months of consecutive payments.

What to watch out for: Borrowing limits top out at $40,000, relatively low compared to some lenders in these rankings.

Why Marcus by Goldman Sachs is the best for personal loans without fees: These loans come without any fees, so you won't have to worry about origination fees or even late fees.

Impact on good-credit borrowers: If you want to keep the overall costs of your loan low, Marcus could be a good fit; good-credit borrowers may qualify for competitive rates.

LENDER:
Marcus by Goldman Sachs
BANKRATE RATING:
4.8 / 5.0
MIN. CREDIT SCORE:
Not specified
EST. APR:
6.99% to 19.99% (with autopay)
LOAN AMOUNT:
$3,500 to $40,000
TERM LENGTHS:
36 to 72 months
MIN. ANNUAL INCOME:
Not specified
FEES:
None

LendingClub: Best for borrowing money from other investors

Overview: LendingClub is a peer-to-peer lending platform, meaning you’ll borrow money from individual investors instead of from a traditional bank. However, the borrowing process is very much the same. You can borrow up to $40,000 for any reason through LendingClub.

Perks: LendingClub may be a particularly good option if your credit score is slightly below average. You can also check your rate online and without a hard inquiry on your credit report.

What to watch out for: Interest rates are higher for good-credit personal loans when compared to some other lenders on our list, with rates starting at 7.04 percent APR. Also note that you’ll pay an origination fee on your loan that is equal to 3 percent to 6 percent of your loan amount.

Why LendingClub is the best for borrowing money from other investors: LendingClub operates differently from banks, pooling money from investors to fund loans. This gives the company far more flexibility in evaluating potential borrowers’ credit.

Impact on good-credit borrowers: LendingClub doesn't have the lowest interest rates available, but it could be a viable option if your credit score is on the lower end of the good-credit band, since it also allows joint applications. Applying with another person who has excellent credit could help you qualify for LendingClub's lowest rates.

LENDER:
LendingClub
BANKRATE RATING:
4.3 / 5.0
MIN. CREDIT SCORE:
600
EST. APR:
7.04% to 35.89%
LOAN AMOUNT:
$1,000 to $40,000
TERM LENGTHS:
3 or 5 years
MIN. ANNUAL INCOME:
Not specified
FEES:
Origination fee: 3% to 6%; Late fee: 5% or $15

LightStream: Best for borrowers who can qualify for the best rates

Overview: LightStream offers personal loans for good credit that can be used for nearly any purpose, and it makes the online application process a breeze. You can borrow up to $100,000, and APRs start at 4.98 percent for those who qualify.

Perks: LightStream offers one of the broadest ranges of loan terms out there, with repayment periods from two to 12 years. It also offers to beat the rate of a competing lender by 0.1 percentage points.

What to watch out for: LightStream's minimum loan amount is $5,000. If you're looking for a loan below that amount, you'll have to find a different lender.

Why LightStream is the best for borrowers who can qualify for the best rates: LightStream not only has a low starting rate, but also promises to beat the rate of a competing lender by 0.1 percentage points.

Impact on good-credit borrowers: If you have extremely good credit, LightStream is likely the best lender out there in terms of low interest rates.

LENDER:
LightStream
BANKRATE RATING:
4.6 / 5.0
MIN. CREDIT SCORE:
Not specified
EST. APR:
4.98% to 19.99% (with autopay)
LOAN AMOUNT:
$5,000 to $100,000
TERM LENGTHS:
2 to 12 years
MIN. ANNUAL INCOME:
Not specified
FEES:
None

Prosper: Best for joint loans

Overview: Prosper is a peer-to-peer lender that lets you borrow money for nearly any reason, and then pay it back with a fixed interest rate and fixed monthly payment. Interest rates start at 7.95 percent APR, and you can borrow up to $40,000 if you qualify.

Perks: Prosper lets you check your rate online and without a hard inquiry on your credit report. It also provides loan funds as soon as the next business day after you accept the loan offer and complete the verification process.

What to watch out for: Prosper charges an origination fee that can be as high as 5 percent of your loan amount, depending on your creditworthiness. Prosper also lists several eligibility requirements that may make it tough for some people to qualify: You must have a debt-to-income ratio of no more than 50 percent, at least three open trades reported on your credit report and fewer than five credit bureau inquiries within the last six months.

Why Prosper is the best for joint loans: Unlike many other personal loan lenders, Prosper allows co-borrowers on its loans, which could help your odds at approval if you're having trouble qualifying on your own.

Impact on good-credit borrowers: Even if you have good credit, some lenders impose minimum income requirements on their personal loans that could make it hard for you to qualify. While Prosper does have fairly strict eligibility requirements, it will accept any income over $0.

LENDER:
Prosper
BANKRATE RATING:
4.4 / 5.0
MIN. CREDIT SCORE:
640
EST. APR:
7.95% to 35.99%
LOAN AMOUNT:
$2,000 to $40,000
TERM LENGTHS:
3 or 5 years
MIN. ANNUAL INCOME:
None
FEES:
Origination fee: 2.41% to 5%; Late fee: greater of $15 or 5%; Insufficient funds fee: $15; Check fee: lesser of $5 or 5%

Rocket Loans: Best for fast funding

Overview: You can borrow up to $45,000, and interest rates start at 5.97 percent APR with autopay. Rocket Loans expedites the online application process through preapproved offers that take mere seconds.

Perks: You can get prequalified online without a hard inquiry on your credit report. While Rocket Loans doesn't specify a minimum credit score requirement on its website, borrowers report eligibility in the low to mid-600s.

What to watch out for: Rocket Loans' origination fee can be as high as 6 percent of your loan amount.

Why Rocket Loans is the best for fast funding: Rocket Loans boasts speedy personal loans, with preapproved offers within seconds and funding by the next business day, or on the same day in some cases.

Impact on good-credit borrowers: The main draw of Rocket Loans is its speed; if your credit is good enough to qualify you for one of Rocket Loans' products, you likely won't find a faster way to receive funds.

LENDER:
Rocket Loans
BANKRATE RATING:
4.5 / 5.0
MIN. CREDIT SCORE:
Not specified
EST. APR:
5.97% to 29.99% (with autopay)
LOAN AMOUNT:
$2,000 to $45,000
TERM LENGTHS:
36 or 60 months
MIN. ANNUAL INCOME:
Not specified
FEES:
Origination fee: 1% to 6%; Late fee: $15; Returned check fee: $15

Best Egg: Best for borrowers with "okay" credit

Overview: Best Egg lets you borrow up to $50,000 and has competitive rates starting at just 5.99 percent APR.

Perks: Qualified borrowers can receive funds from Best Egg in as little as one day after approval. Best Egg also doesn't charge prepayment fees, meaning you can make additional payments whenever you'd like in order to pay your loan off faster.

What to watch out for: This company charges an origination fee that can be as high as 5.99 percent of your loan amount.

Why Best Egg is the best for borrowers with “okay” credit: Best Egg’s minimum credit score is 600, which is considerably lower than the minimums for lenders that disclose their credit requirements. Other lenders on this page require credit scores of at least 640 to 680.

Impact on good-credit borrowers: High-income earners with good credit will most benefit from Best Egg's loans; the best rates go to borrowers with a minimum individual annual income of $100,000 and a minimum credit score of 700.

LENDER:
Best Egg
BANKRATE RATING:
4.6 / 5.0
MIN. CREDIT SCORE:
600
EST. APR:
5.99% to 35.99%
LOAN AMOUNT:
$2,000 to $50,000
TERM LENGTHS:
3 to 5 years
MIN. ANNUAL INCOME:
Not specified
FEES:
Origination fee: 0.99% to 5.99%; Late fee: $15; Returned payment fee: $15

Discover: Best for a range of repayment terms

Overview: Discover personal loans come without any origination fees. You can apply online and qualify for fixed interest rates starting at just 5.99 percent APR. Discover personal loans also come in amounts up to $35,000.

Perks: You won’t pay any up-front fees with Discover, and. Funds disbursement is also quick; you may receive your loan as soon as the next business day. If you decide that you no longer need your loan, Discover allows you to cancel the loan within 30 days without charging interest. The lender also provides its free Credit Scorecard that includes your FICO credit score and the number of recent inquiries on your credit.

What to watch out for: Discover has a lower maximum borrowing limit than some competing lenders, which means it won’t be a good option for people who need large sums of money.

Why Discover is the best for a range of repayment terms: While many lenders have only two or three options for a repayment term, Discover offers five. It lets you choose a repayment term of 36, 48, 60, 72 or 84 months if you qualify.

Impact on good-credit borrowers: Borrowers with good credit could qualify for Discover's wide range of repayment options. Because of this, you can choose the term that best suits your budget.

LENDER:
Discover
BANKRATE RATING:
4.8 / 5.0
MIN. CREDIT SCORE:
660
EST. APR:
5.99% to 24.99%
LOAN AMOUNT:
$2,500 to $35,000
TERM LENGTHS:
36 to 84 months
MIN. ANNUAL INCOME:
$25,000
FEES:
Late fee: $39

Credible: Best for borrowers who want to price shop

Overview: Credible is a loan aggregation website that lets you compare personal loans from multiple providers all in one place. Interest rates can start at low as 2.49 percent APR, and you may be able to borrow up to $100,000.

Perks: Credible allows you to compare multiple loan rates in one place, and you can find your rate without a hard inquiry on your credit report. It could be a good option if you are looking to save time in your process of rate shopping.

What to watch out for: Credible is a loan comparison site, so it won’t be your actual lender. As such, fees, terms and available loan amounts will vary based on the lenders you're matched with.

Why Credible is the best for borrowers who want to price shop: Credible aggregates loan providers into a list available for you to review. On this platform, you can compare the best rates and terms that work with your needs, financial situation and credit.

Impact on good-credit borrowers: With good credit, you're likely eligible for some of the lowest rates on the market. Credible can help you find the lenders that will offer you those rates, saving you time in your research.

LENDER:
Discover
BANKRATE RATING:
N/A
MIN. CREDIT SCORE:
Varies
EST. APR:
2.49% to 35.99% (with autopay)
LOAN AMOUNT:
$600 to $100,000
TERM LENGTHS:
12 to 84 months
MIN. ANNUAL INCOME:
Not specified
FEES:
Origination fee: 0% to 8%

Earnest: Best for people who want other factors considered in their applications

Overview: Earnest partners with Fiona, a personal loan search engine also used by several other lenders profiled on this page, in order to match you with loan offers from multiple lenders. This is an easy way to compare offers without impacting your credit score.

Perks: Earnest has always advertised the fact that it looks at more than your credit score when you apply for a personal loan. For example, it examines data such as your education level and your future earning potential. Now that Earnest works with a loan marketplace, it's possible that you'll have even more options available if you have dings in your credit history.

What to watch out for: Earnest doesn't offer loans itself; through Fiona, it matches you with lenders. This means that your available terms, loan amounts and APRs will vary by lender.

Why Earnest is the best for borrowers who want other factors considered in their applications: Instead of making an approval decision based only on your credit history and income, Earnest will consider other aspects of your financial situation, such as a consistent contribution to a savings account.

Impact on good-credit borrowers: Like Credible, Earnest is a good way to compare offers from multiple providers. A good credit score will help you qualify for the broadest loan repayment options and the highest loan amounts.

LENDER:
Earnest
BANKRATE RATING:
N/A
MIN. CREDIT SCORE:
680
EST. APR:
Starting at 2.49%
LOAN AMOUNT:
$1,000 to $100,000
TERM LENGTHS:
24 to 84 months
MIN. ANNUAL INCOME:
Not specified
FEES:
Varies by lender

Citizens Bank: Best for rate discounts

Overview: You can borrow between $5,000 and $15,000 if you qualify, and APRs vary by location.

Perks: Citizens Bank personal loans don’t have any fees, which helps keep the cost of borrowing down.

What to watch out for: Citizens Bank's loan amounts are extremely limited; you can borrow only $5,000 to $15,000, which may not be enough for some projects. Additionally, you currently cannot apply for a loan online.

Why Citizens Bank is the best for rate discounts: Citizens Bank loans may be particularly attractive for borrowers who already have a relationship with the bank. In addition to a 0.25 percentage point discount for automatic payments, borrowers are eligible for a 0.25 percentage point discount if they have a qualifying account with Citizens Bank.

Impact on good-credit borrowers: If you have good credit and you already have a relationship with Citizens Bank, it could be a lender worth pursuing. Not only will having a relationship with the bank earn you discounts, but it may also help to manage all of your finances in one place.

LENDER:
Citizens Bank
BANKRATE RATING:
N/A
MIN. CREDIT SCORE:
Not specified
EST. APR:
Varies by location
LOAN AMOUNT:
$5,000 to $15,000
TERM LENGTHS:
3 to 5 years
MIN. ANNUAL INCOME:
Not specified
FEES:
None

Payoff: Best for borrowers who want to consolidate credit card debt

Overview: Payoff offers personal loans that are specifically for consumers who want to consolidate and pay off high-interest credit card debt. These loans offer fixed rates that start at 5.99 percent APR, and you can borrow up to $40,000.

Perks: These loans don’t charge any prepayment fees, application fees or late fees. Payoff is also committed to the empowerment of its members; it provides free monthly FICO score updates and personalized quarterly check-ins during the first year of your loan.

What to watch out for: An origination fee of up to 5 percent can apply, which includes closing costs and maintenance fees. Additionally, Payoff personal loans can only be used to consolidate or pay off credit card debt, so their utility is slightly limited.

Why Payoff is the best for borrowers who want to consolidate credit card debt: Loan amounts range from  $5,000 to $40,000, enough to cover large amounts of credit card debt. Payoff doesn’t charge a prepayment penalty, and the company’s member benefits are meant to encourage borrowers to pay extra on their loans to get out of debt faster.

Impact on good-credit borrowers: Even borrowers with good credit likely have room to improve their credit scores. Payoff's free monthly FICO score update is a great perk to help you track your score as you pay your loan off.

LENDER:
Payoff
BANKRATE RATING:
4.5 / 5.0
MIN. CREDIT SCORE:
640
EST. APR:
5.99% to 24.99%
LOAN AMOUNT:
$5,000 to $40,000
TERM LENGTHS:
2 to 5 years
MIN. ANNUAL INCOME:
Not specified
FEES:
Origination fee: 0% to 5%

What you need to know about loans for good credit

What is a good-credit loan?

A personal loan for good credit is a low-interest loan that offers fair terms. Qualifying for one of these loans typically requires a strong credit history and a reliable source of income, although lenders may list additional requirements.
 

What is a good credit score to get a loan?

In general, lenders consider anything above a 670 FICO credit score to be "good" credit, although "very good" credit scores are above 740 and "excellent" credit scores are above 800. You're likely to be approved for a loan with a good credit score, and the higher your score, the lower your rates will be.
 

How to get a good-credit loan

Loans with low APRs and fair terms are attainable if you keep your finances and credit score in good shape. For the best chances at qualifying for a good-credit loan, keep these tips in mind:
 
  • Shop around with multiple lenders: All lenders use your personal information differently to calculate your APR. They may also have different definitions of "good" credit, so a score of 680 may net you a lower rate with one lender than with another.
  • Apply for preapproval whenever possible: Many lenders give you the option to apply for preapproval online. This process allows you to see if you qualify for a loan with a lender without that lender doing a hard credit check — meaning your credit score won't be hurt in the process.
  • Pay down debt: One of the best ways to improve your credit score in order to get a good-credit loan is to start paying off debt. Having a low debt-to-income (DTI) ratio boosts your credit score, and lenders may also calculate your DTI ratio to determine which APRs and loan terms you qualify for.
  • Check your credit score: Some lenders disclose their minimum credit scores or the average scores of their borrowers, and knowing your credit score can help you determine if a lender is the right fit for you.  You can purchase your credit score from one of the three major credit bureaus — TransUnion, Experian and Equifax — or check with your existing financial institutions to see if any provide scores for free.

How to choose a good-credit lender

As you compare the lenders we’ve outlined in our rankings, there are several factors you should consider. For example:
 
  • How much you need to borrow: Whether you’re looking to pay for a car repair or a kitchen remodel, make sure the lender offers the loan amount you need. Some offer loans as small as $600, and some offer as much as $100,000.
  • How long you need to repay your loan: Choosing a lender with loan terms as short as one year could help you get out of debt faster, but choosing one that offers terms of five year or longer could help you get low monthly payments.
  • Whether your credit score qualifies you for the lowest APR: The best advertised rates go to borrowers with excellent credit and sufficient income. Unless you fit that profile, you’re unlikely to secure the minimum APR and the loan will cost you more in interest.
  • Whether you can check your rate online before applying: Prequalification uses a soft pull on your credit, which doesn’t hurt your credit. Lenders that offer prequalification will show you the loan rates and terms you might qualify for without requiring a completed application.
Any of the lenders on this page could provide the best personal loan for your needs. However, you should compare all of your options to ensure that you wind up with the right loan amount and the lowest interest rate you can qualify for. Also make sure you check for fees like origination fees, prepayment fees, late fees and application fees.
 
Using a personal loan calculator also lets you estimate your monthly payment, which can help you figure out how to fit your new loan into your existing monthly budget. The best loans for good credit provide the cash you need at a price you can afford.
 

How much will it cost to take out a loan?

As soon as you receive funds from your personal loan, you'll enter the repayment period, during which you'll make regular payments that include both the principal (the amount of your loan) and interest (an additional amount calculated based on your APR).
 
Your APR is determined based on things like your credit score and income. Generally, the higher your credit score, the lower your APR and the less interest you'll pay over the life of your loan.
 

Other loans you can get with good credit

A personal loan isn't the right fit for everyone. A few other loans for good credit include:
 
  • Home equity loan: Using the equity in your home, you can take out a sizable loan with a potentially lower interest rate. The downside is that the loan is secured by your home, putting you at risk of foreclosure if you fail to keep up with payments.
  • Home equity line of credit (HELOC): Like a home equity loan, a HELOC lets you use your home to secure a loan based on your home equity. The difference is that a HELOC does not give you loan funds up front; instead, you can draw from your credit line as needed.
  • Personal line of credit: A personal line of credit is similar to a credit card, but you may be able to get a lower interest rate if you have good credit. These are a good alternative to a personal loan if you need to manage ongoing expenses rather than one large expense.
  • Zero-interest credit card: If you feel confident that you can pay back your expenses quickly, a credit card with a 0 percent introductory rate may be a good option. This way, you can borrow money and pay it back over 12 to 18 months without having to pay additional interest.

Can a personal loan help build your credit?

A personal loan may improve your credit score if you manage it responsibly. If you make on-time payments, it can help your credit score in a few ways:
 
  1. Payment history: Your credit score takes into account how often you make timely payments on credit accounts.
  2. Credit utilization ratio: If you use your personal loan to pay off other types of debt, you may be able to decrease the overall amount of credit you're using, which helps your score.
  3. Credit mix: One way to improve your credit score is to hold a diverse mix of credit types, such as credit cards, auto loans and personal loans.

Tips to improve your credit score

Even if you have good credit, putting in a little work to raise your credit score could save you money on your loan. Use these tips to boost your score:
 
  • Look for errors on your reports. You can access one free annual credit report each from Experian, TransUnion and Equifax (weekly reports are free through April 2022). Regularly examining your reports can help you catch any errors and make sure you aren't being penalized for a financial misstep you didn't make.
  • Make on-time payments. One of the best ways to improve your credit score is to make timely payments on all of your bills. If you're having trouble remembering to make payments, see if any of your lenders offer autopay.
  • Pay down debt. Pay off as much debt as you can before applying for a loan. This will not only improve your credit score, but also lower your debt-to-income ratio, which many lenders take into account.
  • Avoid opening new accounts. It's good to have a diverse credit mix, but it's best to avoid opening too many new accounts within a short time frame, as each application will run a hard check on your credit, lowering your score slightly.
  • Don't close old accounts. Credit scoring agencies take a close look at the age of your existing accounts. Even if you have an old credit card that you no longer use, keeping it open could be beneficial for your score.