Best Personal Loans for Good Credit in 2024

What is a personal loan for good credit?

A personal loan gives you a lump sum of money which can range from $1,000 to $50,000. Having good credit often means you’ll get lower annual percentage rates and better terms on personal loans. Personal loans for good credit are usually unsecured – in other words, you’re not required to put up collateral like your savings, car, or home. Instead, lenders evaluate your ability to repay by looking at things like your credit, income, and any existing debt.

What is considered a good credit score?

A good credit score typically falls within the range of 670 to 739, according to widely used credit scoring models like the FICO Score. While credit score ranges may vary slightly depending on the scoring model and the institution using it, a score in this range generally indicates a solid credit history and demonstrates creditworthiness to lenders.

Can you get a personal loan with good credit?

A good credit score puts you in good standing to secure a personal loan. You’ll be able to get average-to-good rates and borrow more (depending on your income), though it does depend on your current credit utilization. Credit utilization is how much of the available credit you have in total you’ve used.

For example, if you have $10,000 credit available across all your credit cards, and you’ve only got a balance totaling $1,000, your credit utilization is 10%. It’s recommended to keep your utilization close to 30%. If your utilization is high, especially in tandem with your income, you may struggle to secure an additional loan.

What are the pros and cons of personal loans for good credit?

PROS

• It’s flexible: some loans, like motor and mortgage loans, can only be used for specific purposes. You can use personal loans for many purposes, whether you need to pay off a medical bill or cover a major purchase. The main draw here is that you can use the money how you like without becoming locked into how you use it.
• Personal loans often incur a lower interest rate than credit cards. As of February this year, the average personal loan rate was as low as 11.84 percent, whereas the average credit card rate was 04 percent. If you have an excellent credit history, you may qualify for personal loan rates between six and eight percent.
• Personal loans are easier to manage than a few credit cards with different interest rates and payment due dates. If you qualify for a personal loan with a lower interest rate than your credit cards, you can streamline your monthly payments and save some money in the process.
• You’ll pay off the loan in the defined timeframe – one of the biggest pros of a personal loan is if your terms are to pay it off in 5 years, you will pay it off in 5 years. Credit cards can quickly become a trap of paying off and reusing, so you’re never out of debt, but personal loans ensure you pay it off.
• You know exactly what it’s going to cost you – you know upfront how much the loan will cost you over the lifetime of the loan.

CONS

• You don’t have payment flexibility ­– the pro and con of a credit card is you can choose what to pay above the minimum, and the minimum payment is usually affordable (unless you’ve got yourself into some trouble). A personal loan has a fixed fee, which if you’ve stretched yourself financially for the loan, can be a lot of money to find when you need it.
• You need to be strict if you consolidate debt – using a personal loan to consolidate credit card debt can be the key to getting debt-free in the future, but only if you put those credit cards somewhere you can’t access them. Many people end up using credit cards again and dig themselves deep into debt.
• Personal loans sometimes involve fees and penalties, such as origination fees of one to six percent of the total loan amount. These fees cover loan processing and can be included in the loan total or subtracted from the amount you get as the borrower. Surprisingly, certain lenders also charge prepayment penalties if you pay off the full balance before your loan term ends.