Getting a Personal Loan with a 600 Credit Score: the Ultimate Guide

Types of Personal Loans for a 600 Credit Score

If you are looking to apply for a personal loan with a 600 credit score, you have more than one option to choose from. In addition to researching various alternative lenders, consider applying for one of the following loan types:

• Unsecured loans. An unsecured loan doesn’t require the use of property or other assets as collateral. Instead, your eligibility will be evaluated based on your creditworthiness
• Secured loans. In a secured loan, the borrower is required to put one of their assets as collateral. In return, you might receive a higher loan amount or more favorable interest rates.
• Installment loans. An installment loan for 600 credit score can be any type of loan that is repaid through regularly scheduled payments or installments.
• Peer-to-peer loans. With peer-to-peer lending, an individual can obtain a loan directly from another individual, not using a financial institution as an intermediary.
• Payday loans. This is a small short-term loan that is usually due on your next payday. Such loans are typically easy to obtain but come with high fees.

How to Choose the Best Personal Loan with a 600 Credit Score

When choosing the right personal loan for your needs, you need to not only make sure that you will qualify for the loan, but carefully review all the loan features and additional costs. 

While some loans come with low qualification requirements and attractive interest rates, they might require collateral or charge high late and origination fees. At the end of the day, a personal loan should change your financial situation for the better, not the other way around. So, make sure to carefully review the following parameters of each loan option:

• Loan features. Examine loan minimums and maximums, loan term lengths available, and any limitations on the loan use.
• Interest rates and fees. Carefully review different types of fees associated with the loan. This includes minimum and maximum interest rates, borrowing or origination fees, late payment fees, maintenance fees, and other miscellaneous charges.
• Qualification requirements. Next, review the qualification requirements to make sure you have a chance to be approved for the loan. Take a look at the minimum credit score, required income, joint application or co-signer functionality, and membership requirements.
• Application process. Read about the lender’s application process, including the invasiveness of the application information requirements and whether your credit score will be impacted by a “hard pull.” Additionally, find out about the typical application processing and funding times with the lender.
• Online user reviews. Visit independent review sites like Trustpilot to see the overall customer sentiment about the lender.
• Customer support. Check how accessible the lender’s customer support is and whether supplemental tools and information are readily available.
• Additional perks and bonuses. Finally, consider additional service offerings like advanced technology, advertising transparency, and payment flexibility.

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“A personal loan should change your financial situation for the better, not the other way around.”

How to Apply for a Personal Loan with a 600 Credit Score

While the exact loan application process might differ from lender to lender, you can expect to follow the same general steps when applying for a personal loan with a 600 credit score.

• Do the math. First and foremost, run the numbers to make sure that taking out a personal loan is the right course of action for you. Determine how much money you will need, take into account the origination fees if any, and find out whether you will be able to afford the monthly payments.
• Check your credit score. Your credit score will determine what type of financial products you qualify for and the associated rates and terms. You can get a free credit report from websites like AnnualCreditReport.com. If needed, work on improving your credit score before applying for a loan.
• Research your options and choose the loan type. Decide what type of loan will work best for your situation. Depending on your credit score, you may need a co-signer or a collateral to receive a personal loan with a decent interest rate. In addition, the intended use of the funds will also determine what type of loan you can apply for.
• Shop around for the best rate. There are a variety of online lenders catering to applicants with fair credit. Take a look at the suitable products offered by each of them and choose the one with the best interest rate and lowest fees.
• Apply and provide necessary documentation. Once you pick the lender, you can finally apply for your loan. With many alternative lenders, you may be able to complete the application process and provide any necessary documents online, from the comfort of your home.
• Accept the offer and start making payments. Once your application is approved, you will need to accept the offered loan terms. Once you do this, you can expect to receive your funding within several days. From there, keep up with the payments to repay the loan over the agreed period.

How to Improve a Credit Score of 600

Short credit history, high balances, overdue payments, and past bankruptcies or foreclosures can all have an adverse effect on one’s credit score, making it fall to 600 or below.

Here are a few simple actions you can take to improve your credit score of 600:

• Take control of your payment history. Always make your payments on time and make sure to contact the lender immediately if you won’t be able to pay the full amount you owe.
• Use credit wisely. Never go over your credit limit. In fact, it is best to use less than 35% of total available credit each month.
• Increase the length of your credit history. The longer your credit history, the better. Never close an old credit account, even if you no longer need it.
• Limit the number of credit checks. Frequent credit applications and checks can have a negative effect on your credit score. Apply for credit only when you really need it and try to get all your quotes within a two-week period. This way, all the inquiries will be treated as a single one for your credit score.
• Use different types of credit. It is ideal to have a mix of different types of credit, such as a credit card, a line of credit, and a car loan.

A credit score of 575 to 650 is considered “fair.” While credit scores in this range fall below average, not all is lost! Many online lenders still approve borrowers with credit scores around 600. Plus, if you spend a few months building up your credit score, you may be able to receive more favorable rates and terms.

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“Apply for credit only when you really need it and try to get all your quotes within a two-week period. This way, all the inquiries will be treated as a single one for your credit score.”

Final Word

Without a doubt, having a fair credit score can make it more challenging to qualify for a personal loan. Luckily, a number of alternative lenders available online make it possible with their lenient qualification requirements and simple application processes.

If you are applying for a personal loan with a 600 credit score, you can receive your funds quickly, - but don’t be surprised by higher rates and associated origination fees. So, make sure to know your options, shop around, and find just the right financial product for your needs.

• Equifax: How to Improve Your Credit Score
• Free Credit Report from Equifax
• Loan Repayment Calculator
• FinImpact: Personal Loans Ratings Methodology
• FinImpact: Best Personal Loans to Consider for Fair Credit in 2023