So you’ve thought it over, and after crunching the numbers decided you’re ready to get a personal loan. Perhaps you want to consolidate credit card debt or put the money toward home repairs. Whatever it is, a cash injection is just the ticket. But how much can you possibly take out?
The answer depends on several factors but is mainly based upon your creditworthiness and where you choose to take out the loan. Here, we’ll take a closer look.
Your Credit Is Key
“Maximum loan amounts vary based on types of loan programs,” Kim Weaver, director of product strategy for Lending Solutions at Fiserv, a banking solutions provider said via email, so there’s no hard-and-fast rule for how much a borrower can take out. That said, lenders do have minimum score requirements that you may or may not be able to meet.
Your credit doesn’t have to be perfect per se, but having a bad credit score could create some issues. So if you haven’t done so lately, it’s a good idea to find out where your credit stands. (One place to start: Credit.com, where you can view two free credit scores, updated each month.) If your score is lower than what you expected, you can request free copies of your credit reports from the three national credit agencies — Experian, Equifax and TransUnion — (if you haven’t already received them for free in the last 12 months) to take a closer look at what you need to improve — or have removed if you happen to notice an error.
Shop Like a Pro
As mentioned previously, how much you’ll be able to borrow will also depend on where you choose to take out the loan. A bank may offer a discount on loan interest rates to current customers with a mortgage or checking account, for example, while credit unions are known for offering more affordable loan rates. You’ll need to contact a lender directly to find out their criteria.
Whatever route you decide on, steer clear of sites that promise to make a deal without checking your credit history, especially if they charge hefty fees or ask for loan payments in advance. These are likely scams, which are typically found online and target people with bad or fair credit, and can end up costing you a lot more. Shopping around to find the best loan for you is really worth the time you invest.
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Image: Miodrag Gajic