Did you know that if your credit score falls within the range of 580 to 669, it is considered fair? Experian says a 600 FICO rating is below the average credit score. Some lenders see consumers with fair credit scores as having unfavorable credit situations and may deny their loan applications. How is that possible, and what can you do to improve your credit score?
ASAP Finance has the answers to your questions! Get ready to discover how your score is calculated and what you can do to get the best loan offers despite your FICO score.
Table of Contents
- Why Apply for a Personal Loan with a Credit Score of 600?
- Why Does Your Credit Score Matter for a Personal Loan?
- How Is Your Credit Score Calculated?
- Minimum Credit Score for Personal Loans
- Can I Get a Personal Loan With a 600 Credit Score?
- What are the Personal Loans for a 600 Credit Score?
- How To Get Loans for Credit Under 600?
- Bottom Line
- Frequently Asked Questions
Why Apply for a Personal Loan with a Credit Score of 600?
You may need a 600 credit score personal loan to cover many expenses for many reasons. Here is a list of reasons to get a personal loan with a fair credit score.
A Large Purchase
Personal loans are excellent if you need to make a significant purchase, like a house, car, furniture, or major home appliances. Consider a loan if your savings aren’t enough to cover such expenses.
You can get a personal loan to consolidate your credit card debt by paying it with one monthly payment instead of multiple installments. Even with a fair credit score, you can consolidate your debt with the help of many loan lenders ready to give you the needed loan amount.
Building Credit Score
Many lenders have minimum credit score requirements; you can meet them with a 600 FICO score and apply for credit builder loans. They are designed to help consumers improve their bad credit usage history over time.
Why Does Your Credit Score Matter for a Personal Loan?
Your credit score matters a lot when you borrow a personal loan because it shows lenders that you can manage your finances. Usually, fair credit scores are a sign that consumers can’t handle debts properly.
More than that, your credit history is the factor that affects the personal loan interest rate. The interest rate will be higher if you have a poor credit report. It happens because the lenders want to avoid the risk of your defaulting on the loan amount they lend you.
How Is Your Credit Score Calculated?
To understand how your credit score works and how you can improve it, first, you must know how it’s calculated and its components. Here is what matter the most when three major credit bureaus calculate your credit score:
Your payment history accounts for 35% of your credit score. It’s crucial to make monthly payments on time and avoid non-payment or late penalties.
Lenders may see how often you request personal loans and how high your credit utilization ratio is. It accounts for 30% of your credit score calculation. We recommend keeping this ratio low to show lenders you can manage your financial situation.
Length of Credit History
The length of your credit history represents 15% of your credit score. Loan providers will check the age of your oldest and the newest credit accounts. Also, the average age of your bank accounts will matter while your credit score is calculated. So, have an established credit history to prove you can repay personal loans on time.
A credit mix is the sum of loan products you have in your name. It’s accounting for 10% of your credit score. Instead of having five credit cards, try to mix your credit by paying a secured loan, payday loan, or auto loan.
New credit accounts and hard credit verifications in your credit history are 10% of your credit score. Financial specialists don’t recommend opening too many credit cards or taking out too many personal loans. It can result in a bad credit score. Loan applications that require hard inquiries are also included in this factor.
Minimum Credit Score for Personal Loans
Before applying for a personal loan, ask your lender about its minimum credit score requirement. As every loan provider has its eligibility criteria regarding credit scores, here are the standard scoring you need to know:
Excellent Credit - 740 and Above
An excellent credit score shows lenders that you can manage your financial standing perfectly and make a monthly payment on time. It’s all about your credit report that looks amazing in the eyes of lending companies. Such a credit score allows you to borrow the best personal loans with the most reasonable interest rates.
Good Credit - 670 to 739
A good credit score opens many financial opportunities for you. Multiple lenders will be ready to provide you with affordable interest rates and flexible repayment terms. You’ll get quick approval for most personal loans if you meet the basic eligibility criteria.
Fair Credit - 580 to 669
A decent personal loan amount will be available if you have such fair credit. You’ll qualify for the minimum credit score requirement. In this case, a 600 credit score may affect the interest rates. Fair credit borrowers must consider improving their rating.
Bad Credit - 579 and Below
All credit scores that are below 580 are considered bad. The loan amount you can get lowers but the interest rates increase because lenders must secure the debt you’re unlikely to cover on time. At this point, it’s challenging to get the best personal loans with bad credit.
Can I Get a Personal Loan With a 600 Credit Score?
Yes, you can get a loan with a 600 credit score, but you will have limited loan options. Most lenders will require you to have a checking account and a steady income.
What are the Personal Loans for a 600 Credit Score?
AEven if a 600 credit score puts some restrictions on loan products, you can get other bad credit loans that will help you cover your emergencies.
With a 600 credit score, you may get a cash till payday loan which is more expensive than a good credit loan. The loan term is limited to only 30 days. The minimum loan amounts vary by lender, but usually, you borrow money from $100. With payday loans, you can get $900 and even $1,000. Unlike bad credit installment loans, payday cash loans are repaid with one lump sum on your next payday.
Try secured loans if you can’t qualify for the best personal loans. According to the loan agreement, a secured cash loan requires you to bring collateral. If you have one and can’t qualify for personal loan funds, consider a secured cash loan that is cheaper than a payday cash loan.
Peer-to-Peer Personal loans
You can get a peer-to-peer personal loan by borrowing cash from an individual online. It's not as risky as it sounds. It’s an excellent way to get a loan directly from individuals without going through a traditional bank or credit union. You can find the best personal loans online, where people lend and borrow money from each other. The interest rates and loan terms vary, and you must also make timely payments to avoid late penalties.
How To Get Loans for Credit Under 600?
So, you're looking to apply for the best loans for a 600 credit score? Don't worry, and we will help you to do it properly. Here's what you must do to get a loan with credit under 600:
- Monitor your credit report and check if there are any mistakes.
- Try alternative lenders that provide affordable options for your FICO score.
- Get a co-signer to increase your chances for quick approval.
- Get ready to meet all eligibility criteria, and prepare the documents proving your income, employment history, and bank statements.
- Consider credit-building options to improve your credit rating.
We hope this short guide helped you understand how to get a personal loan with a 600 credit rating. Your financial literacy is our priority; that’s why we want you to get the best deal on such loans, even with bad credit. Apply online through ASAP Finance, and we will find available bad credit lenders in your state.
Frequently Asked Questions
Where to get a personal loan with a 600 credit score?
You can find many lenders in your state that provide personal loans for under 600 credit scores. If you don’t have time to search for them, apply on our website, and we will find you lenders that don’t have a minimum credit score requirement.
How big of a loan can I get with a 600 credit score?
Lenders are hesitant about borrowers with 600 credit scores because it shows they aren’t trustworthy. However, some lending companies may provide up to $5,000 personal loans even with bad credit. You’ll have affordable monthly payments thanks to this loan amount.
Is a debt consolidation loan with a 600 credit score available for me?
Sure! Many direct financial institutions are ready to lend you a fair credit personal loan to help you consolidate your debt on time and avoid additional fees.