A personal loan is a loan that can be used for almost anything you would like. Funds are often used to pay for large expenses, like debt consolidation, home projects, vacations or a wedding.  

Your credit score affects the rates and terms you qualify for in a personal loan. Having excellent credit gives you access to the best options when it comes to personal loans. Lenders see those with excellent credit as a good and reliable investment, so they are willing to offer the best deals.  

What is considered an excellent credit score? 

There are two main credit-scoring models: FICO and VantageScore. Each model comes up with credit scores differently. Both models use similar criteria to come up with scores, but the criteria aren’t weighed the same.  

That means an excellent credit score can differ depending on the scoring model used. Here are the credit scores that are considered excellent for each scoring model.  

FICO 

FICO has been around the longest and is the most commonly used credit scoring model. FICO scores are used by 90 percent of top lenders to determine the credit history and reliability of a consumer.  

The current FICO scoring model creates a different score for each of the three major credit reporting bureaus: Experian, Equifax and TransUnion. That means you will have three FICO credit scores that could differ slightly. The range for a FICO credit score is 300 to 850, and scores are better the higher they are. Any score above 800 is considered excellent.  

So, what makes an excellent FICO score? These determining factors are weighed by the credit scoring agency as follows: 

  • Payment history: 35 percent. 
  • Amounts owed: 30 percent. 
  • Length of credit history: 15 percent. 
  • Credit mix: 10 percent. 
  • New credit: 10 percent. 

VantageScore 

This credit scoring model isn’t quite as popular as the FICO one, but it is used almost as widely. VantageScore uses a tri-bureau scoring model where consumers have one score for all three of the major credit reporting agencies.  

The score range for Vantage is also 300 to 850. However, the scores can differ by up to 100 points. An excellent VatangeScore is anything between 750 and 850.  

VantageScore uses these factors to determine a score, in order from most to least important: 

  • Payment history. 
  • Credit usage. 
  • Length of credit history and types of accounts. 
  • Credit usage. 
  • Recent activity. 
  • Available credit. 

How excellent-credit loans differ from normal personal loans 

When you have excellent credit, lenders see you as more trustworthy and a reliable investment. This means they are more likely to extend you favorable terms and higher amounts than they would to consumers who don’t have as high of credit scores.  

Here’s how you can expect each part of the loan to be different if you have excellent credit. 

Rates 

Personal loan interest rates vary greatly based on the lender and your credit score. However, having excellent credit means you will get the best rates a lender has to offer. The average annual percentage rate (APR) for an excellent-credit personal loan ranges from 10.73 percent to 12.50 percent. On the contrary, those with lower credit scores may have average rates as high as 32 percent for a personal loan. 

Loan amounts 

Lenders decide the maximum amount they are willing to lend you by looking at your income, other debts, and credit history. While your income matters, if you have an excellent credit score, the lender will be more likely to lend you more. The exact loan amounts you receive can vary greatly but know that an excellent credit score can only help your case.  

Term lengths 

When you have excellent credit, a lender typically trusts you more and gives you more options. That also applies to term length. With excellent credit, you can decide how quickly you want to pay off the loan, which gives you more control over your monthly payment. If you have a lower credit score you may be forced to take whatever terms the bank gives you.  

Where to get an excellent-credit personal loan 

There are multiple places you can go to get a personal loan. No matter which lender you decide to use, it’s always a good idea to shop around and talk to multiple lenders. You may be able to get better rates by comparing several excellent-credit loan options. Check these places to find out what types of loans they offer consumers with excellent credit.  

Online lenders 

The most convenient lender option is an online lender. Typically, online lenders can offer you a loan package within minutes of you filling out some basic information. Plus, you can complete the entire loan process from the comfort of your own home.  

However, online lenders aren’t typically as personal. You likely won’t be able to visit an online lender in person or talk to a team member with any questions.  

Banks 

Banks are the more traditional option for finding personal loans. There are both small local banks and large national banks. Depending on the bank, you may also be able to complete the loan process online, but you typically also have the option of completing all or part of the process in person.  

Credit unions 

Credit unions are different from banks because they are owned by the members. They typically have better rates and less fees because they aren’t for profit. You must be a member to apply for a loan with a credit union, but qualifying is often easy. You may need to live in a certain area, work for a particular company or be related to another member.  

How to increase your credit score 

Even if you don’t have excellent credit, you can always work to improve your credit. An excellent credit score is within reach if you consistently do these things: 

  • Eliminate any errors in your credit report. Check your credit report. If you find any errors, contact the credit reporting agency to dispute any errors and get them removed.  
  • Make payments on time. A good payment history is the weightiest factor in your credit score for both FICO credit scores and VantageScores. Make payments to any loans or credit cards on time to build a good score.  
  • Reduce the amount of credit you are using. Your credit usage or utilization plays an important role in your credit score. The recommended utilization is 30 percent. That means if you have a credit limit of $8,000, it’s best to only use $2,400 at a time.  
  • Open multiple credit accounts responsibly. Having multiple types of credit accounts open helps build your credit score, but you don’t want to open too many accounts at once. A new account may temporarily lower your credit score. Open one account at a time, and don’t open more than one account within a few months if you can help it.  

If you want to focus on one thing to boost your credit score, focus on what matters most. Making timely payments will help maintain your credit and build it up over time. This is the most important factor for a good credit score.  

The bottom line 

You will find better loan options with excellent credit. However, if you don’t qualify for an excellent-credit loan, you can still find a good deal. Shop around with different lenders to find the best loan package. If you don’t find rates and terms that work for you, work to increase your credit score before looking again.