How Does Your Credit Score Impact Your Loan Options?

Apr 27, 2021 3:00:00 AM credit information, Budget, emergency loan

Written by Spotloan

Credit scores are important. They affect many different aspects of our finances, from interest rates to loan amounts and credit limits. Credit scores can even impact your housing options and insurance rates. When it comes to securing a loan, most lenders pull credit scores to help determine what the loan amount and interest rate will be. While it’s not the only thing considered, it can play a large part in the decision. 

Does My Credit Score Impact My Loan Options?

What Is The Range For Credit Scores?

Credit scores, in particular the FICO score, generally range from 300 to 850. Score ranges are as follows:

  • 800 to 850 = Exceptional
  • 740 to 799 = Very Good
  • 670 to 739 = Good
  • 580 to 669 = Fair
  • 300 to 579 = Very Poor

What Credit Score Do I Need to Get a Loan?

Most lenders offer the best rates and highest chances of approval to borrowers with a credit score of 740 or higher. But, if you haven’t hit a credit score of 740, don’t worry - you’re not alone. About 42% of the American population has a credit score under 700. And while you might face some additional hurdles in other areas, you can lock in a personal loan with a credit score that isn’t exactly stellar. Higher scores do tend to yield more favorable loan terms. 

But you can obtain a personal loan with a credit score of 600 in many places, and some even accept a credit score of 580. The credit score minimum varies from lender to lender. And your credit score isn’t the only factor that a lender will consider, so you can still apply for a loan if you’re not sure if your score is high enough. 

If your score happens to be what FICO considers “poor” credit, you may still be in luck. Spotloan uses more advanced methods and data sources than traditional lenders in an attempt to get you the money you need, while still ensuring your identity has been validated, you are not a victim of fraud, and they do not lend beyond your ability to repay. If we do pull your credit report, you will be able to see this request, or inquiry, with the credit reporting bureaus however the inquiry will not appear on your credit report to external parties.

What Goes Into a Credit Score?

The factors that impact your credit score can vary a bit depending on the credit reporting agency and the state that the consumer resides in. Generally, credit scores may be impacted by your: 

  • Payment history 
  • Credit usage
  • Length of credit history
  • Types of accounts (car loan, personal loan, mortgage, etc.)
  • Recent activity (whether you've recently applied for or opened new credit accounts).

Late payments, accounts in collections, and bankruptcy, among other negative events, may cause significant credit score drops. On the flip side, always paying on time and using less than 30% of your available credit can give your score an upward boost.

How Do Student Loans Affect Your Credit Score?

Because 43.2 million student borrowers have student loan debt, this question comes up quite a bit. Considering the country’s current debt crisis, it may seem counterintuitive that student loans often have a positive effect on your credit score. 

Student loans have long repayment periods, and an established credit history is a plus for your credit score. Many people falsely believe that they can’t get another loan because they have student loans already. Most of the time, that’s not the case. Plus, having loans mixed in with credit cards and other accounts can sometimes help to diversify your credit and may provide another little boost.

What Other Factors are Included in a Spotloan?

When you apply for a Spotloan, you authorize us to pull your credit. You will also need: 

  • A job or another regular source of income 
  • A checking or savings account that we can deposit your funds into
  • A valid email address and phone number 

You must also be at least 18 years old to obtain a Spotloan. Unlike other lenders, we do not require collateral. And unlike payday lenders, we do not require repayment by your next paycheck. With Spotloan, you choose the timeframe in which you’ll repay your loan. Your repayment period can be anywhere from one month to ten months.

How Do I Apply for a Spotloan?

Applying for a Spotloan is quick and easy with our online application process. Most customers report completing their application in about 10 minutes, making it fast enough to finish on a coffee break. And in most cases, you’ll know within a few minutes if you’re approved. 

Depending on what time you receive and accept your loan terms, you may find your funds in your bank account by the end of the same day. We strive to make the loan process as smooth and simple as possible. 

But we also recognize that Spotloan is not right for everyone. You may be able to obtain more favorable loan terms by applying through your primary bank, using a credit card, or borrowing from a friend or family member. We encourage you to do your research to determine what will best fit your needs before applying for any type of loan.