Your credit history is often considered a barometer for your financial health. Based on the FICO number, your risk is determined by the lender. The lender will then decide the amount of a personal loan a person may qualify for; lenders take into consideration the length of time and the amount of money they will loan out; this may be reflected in the interest rates.
For example, those with bad credit will qualify for personal loans that are smaller, have a higher interest rates, and a very concrete payment schedule. Those with a good credit history will be able to get the best rates, the highest loan amounts, and the most flexible repayment schedules available.
Based on your credit history and income, personal loan amounts can vary from around $1000 to $150,000. These advances are truly personal and differ greatly from consumer to consumer. Those with a very bad credit history may only qualify for a maximum of $1500, but of course this amount varies from lender to lender and person to person.
The differences exist because personal loans are some of the riskiest activities for banks to offer, as they are unsecured loans. Other loans require some type of collateral (such as a house or a car) to be approved by the lender. However, personal loans are granted on an unsecured basis, purely on good faith determined by your credit history, income, length of employment, years at your current job, and other contributing factors.
Regardless of the amount you have on your personal loan, even having some type of loan can be an excellent way to rebuild a scarred credit history. If you have a bad credit history and is only approved for the smallest loan amount, but you show amazing responsibility in paying off the loan, this can add valuable points to your credit score. And next time around it would be easier to get a larger loan at a smaller interest rate.
