Types of Personal Loans for a 650 Credit Score
Several types of personal loans are available for consumers with a 650 credit score.
- Unsecured loan - doesn’t require any collateral
- Secured loan - backed by collateral (assets that you own)
- Installment loans - a loan that you repay over time with regularly scheduled payments
- Peer-to-peer loans - a loan obtained from another individual which doesn’t require a financial institution
- Payday loans - a short-term, high-cost loan, generally for $500 or less, that must be repaid before your next payday
How to Choose The Best Personal Loan with a 650 Credit Score
If you want to get a loan for a 650 credit score, here is what you should look for.
- Loan features - pay attention to the loan terms, loan amounts, and loan use limitations.
- Interest rates and fees - understand if there is an application origination fee and what interest rates they typically charge (never sign your loan agreement if you don’t understand the APR you will be responsible for).
- Application process - find out if they will do a hard-pull or soft-pull on your credit (hard-pulls can impact your credit score) and how long it will take to fund the loan.
- Qualification process - different lenders have different qualification criteria. Make sure you understand the requirements for a minimum credit score for a personal loan, income requirements if you will need a co-signer and any membership requirements.
- Customer support - find out if they have a physical branch or reasonable customer support hours should you need help.
- Online reviews - check Google or the lender's website for reviews from other customers.
- Perks & bonuses - Look at payment flexibility, advertising transparency, and advanced technology to make it easy to find your balance and balance due at any time.
How to Get a Personal Loan with a 650 Credit Score
If you want to get a loan with fair credit, you should understand that all lenders have different steps involved in their process. But typically, the process looks as follows:
- Research lenders that have the features you want
- Understand the lender’s minimum and maximum loan amount requirements so you know you can get the amount you need
- Understand any fees that you might be charged such as origination fees, prepayment penalties, and the potential APR
- Prequalify for loans, so you understand your options
- Compare the loan amounts, fees, APRs, and repayment terms for any loans that are you pre-approved for
- Submit your application for the loan that will best fit your needs
How to Improve a Credit Score of 650
If you have a credit score of 650, the chances are that you are going to want to improve your credit. And you are probably wondering if your 650 credit score is good or bad. It is fair, and you will want to take steps to get your score closer to a good credit score.
Your FICO score may be 650 if you:
- Have missed payments in the past
- You typically have balances over 30% of your credit limit (this is called utilization)
- You’ve applied for too many loans
- You are young and haven’t yet developed a good credit history
To improve your 650 credit score to a good credit score, do the following:
- Pay your bills on time
- Keep your utilization under 30%
- Pay attention to your credit score - many banks or credit card companies offer you the ability to check on your credit score periodically
- Avoid taking on new debt if you don’t have to
- Avoid having too many credit lines in the same bucket (the best strategy is to have a healthy mix of credit - perhaps a home loan, one or two credit cards, and an auto loan)
Alternatives to Personal Loans with a 650 Credit Score
If you are unable to get a personal loan, there are other creative options for you to pursue. Here are some of the best alternatives to personal loans with a 650 FICO score.
- Borrow from family members or friends. Though some people feel this is a last resort, it’s often a great option if you are still working on building credit and know you have the means to pay them back.
- Look for low-interest credit cards for consumers with poor credit. Using your credit card responsibly is an excellent strategy to help you improve your credit. Just be sure you are paying your bill on time, keep your balance to credit limit ratio under 30%, and pay at least the minimum due (if not more) each month.
- Take out a loan against your mortgage. Home equity loans enable homeowners to borrow money by leveraging the equity they have built in their homes. Loan amounts are dispersed in one sum and can be paid back monthly.
Final Word
All in all, a personal loan with a 650 credit score is attainable, but you might not be able to get as good of terms as you would if your score was 700 or higher. If you need money, consider one of the options suggested above. However, at the same time, start following the recommendations to help improve your credit score. The better you pay your bill on time, pay attention to what you owe, and manage a decent mix of credit, the more your score will rise.
