10 Simple Steps To Get a Personal Loan With a 600 Credit Score
Written by
Travis Woods
Edited by
Rebekah Evans
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Do you need to take out a personal loan? To secure the financing for a personal loan, you need a solid credit score. Why? Your credit score indicates to lenders how reliable a borrower you are based on your credit history and how likely you are to repay your debt.
What can you do, though, when you have less-than-optimal credit score?
A score of around 800 is considered rather excellent. A score of 700 or above is deemed pretty good. Below 650, though, is considered fair to poor — and according to SkyPoint Federal Credit Union, approximately 40 million Americans have a credit score of 600 or lower. If you are one of those 40 million and are worried about securing loan approval, don’t panic yet — there are still ways to get a personal loan with a 600 credit score.
Recently, the credit advisory website Credible laid out the following 10 simple steps for would-be borrowers with credit scores near 600 to secure a personal loan.
First, Confirm Your Credit Score
Before you even apply for a new loan, be sure to assess your credit. You can check your credit score for free via sites like Credible or via the three primary credit bureaus: Experian, Equifax and TransUnion. Knowing your exact credit score will help you know where you stand and what to prepare for. Also, you might even find an error on your report (the removal of which can actually increase your score).
Calculate How Much Your Loan Needs To Be
Always know exactly how much you need to borrow. You don’t want to over-borrow and extend your debt, nor do you want to under-borrow and be stuck with a loan that wasn’t enough to begin with. Knowing the exact dollar amount you need will allow you to be confident and up-front with your lender and make it clear you know what you’re doing.
Know Your Budget To Determine Your Monthly Payment
Before you apply for a loan, be confident and sure that you can include its monthly payments in your budget. Calculate the maximum you can afford to pay monthly, as well as your preferred goal of a monthly payment. Knowing these amounts can protect you (and your wallet) from committing to a loan you cannot pay off.
Have All Your Financial and Personal Documents Ready
Lenders will expect you to have your forms of ID (driver’s license, Social Security card), proof of income (W-2s, pay stubs) and proof of residence (bills, rental agreement, mortgage statement). Having these at the ready can both prove your preparedness and also prevent delays.
Research Potential Lenders
This step is crucial. There are many lenders specifically established to help those with credit in the “fair” range of 600. Doing your research and knowing which lenders to look for (and just as important, which to avoid) can make or break your chances of getting a loan.
Secure Pre-Qualification
After you’ve completed your lender research and selected your candidates, be sure to go to each lender’s website for their pre-qualification process. This process is usually a very brisk one, in which the lender learns your basic information, your credit rating via a soft credit check and the loan you desire. While this is not an official credit offer, pre-qualification does estimate your likelihood of getting a loan and the potential APR on that loan.
Compare Potential Loan Offers
After going through the pre-qualification process, don’t just leap at any one offer. Compare the offers you’ve received to one another. Be sure to compare monthly payments, interest rates, APRs, repayment terms and overall loan amounts. Crucially, Credible recommended opting for the loan with a lower monthly payment, as it will be easier to make those payments and keep your credit score healthy.
Apply With Your Favored Lender
Now that you’ve found the lender with the best array of rates and terms, it’s time to complete the actual application for the loan. This will likely require a “hard” credit check, meaning your credit rating will temporarily drop as a result.
Provide Requested Documents
Another reason to have all your pertinent documents ready? The lender may ask you to submit documentation of your housing status, income level, employment and more. Having these ready and providing them when asked, can help expedite the application and approval process.
Accept the Offered Loan and Begin Paying It Off
Once you’ve secured the loan and signed the acceptance contract, it’s now time to begin making your monthly payments. Making your payments on time can help improve your credit score; after managing to secure the loan with a 600 credit score, paying it off on time (or earlier) will actually help increase your overall credit score as a bonus.
More From GOBankingRates
