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second chance payday loans

Amounts owed: Ideally, you want to have as little debt as possible while still showing evidence of credit usage

Amounts owed: Ideally, you want to have as little debt as possible while still showing evidence of credit usage

A major factor in this calculation is the credit utilization ratio, which looks at your current debt vs. your overall credit limit. The lower this ratio, the better.

Length of credit history: Older credit accounts tend to contribute to a good credit score, and active old accounts are even better.

New credit: Hard credit checks that pull up your credit history and new credit accounts can hurt your credit score. It implies that you need credit and may be in financial trouble.

Credit mix: Having a diverse credit portfolio, such as retail accounts, mortgage loans, credit cards, and short-term loans, can provide a small bump to your credit score.

Credit scores range between 300 and 850, with higher numbers being better. Most personal loans require a minimum credit score of about 600 to qualify. Some lenders may offer loans to people with bad credit scores, under 600, but these loans tend to have high interest rates to mitigate the risk of not having a minimum credit score.

Having a good credit history can make a huge difference in the quality of your personal loan, from the amount you can borrow to your repayment terms and interest rate.

Income

Lenders want to know that you can pay your personal loan back and will often have minimum income requirements. These vary dramatically from lender to lender. For instance, SoFi has a minimum income threshold of $45,000 per year, while Avant needs a household income of only $20,000.

Overall, loans that have a steep income threshold tend to have better interest rates because the lender doesn’t have to mitigate as much risk. Individuals with higher incomes are more likely to pay off their loans than those with lower incomes and don’t represent as much of a default threat.

Even when lenders don’t disclose their minimum income threshold, you will have to provide evidence of your income.