Factors That Influence Personal Loan Rates |

Wondering how personal loan rates are determined?  Tired of dealing with high interest rates every time you apply for a loan, or scared to even apply in the first place?  Before you can qualify for lower interest rates, it’s important to know why personal loan rates vary.  A variety of factors influence personal loan rates, including credit, employment history, and the general mood of the lender that day.

Your credit influences personal loan rates

You probably already know that your credit affects the rate you might be offered when you apply for a personal loan.  When a lender checks your credit report, he or she looks at a few different things.  Your FICO score is usually the most important part of your credit report, but that’s not the only thing that matters.  Generally, if your FICO score is below 600, your odds of getting a loan with a low interest rate are slim to nothing.  However, if your FICO score is low, but all of the debts listed on your credit report are several years old, you still have a chance of being offered an interest rate that isn’t too high.

Your employment history influences personal loan rates

After lenders check your credit report, the next thing they look for is stable employment history.  If you hop from job to job, your chances of getting a low interest rate are not very good.  On the other hand, if you have been employed at the same company for an extended time, this can benefit you.  If your credit score isn’t that great, but you’ve been at the same job for several years, many lenders will view you as less of a threat.

The mood of your lender influences personal loan rates

Many people don’t realize that loan approvals and interest rate amounts are not based on criteria that is set in stone.  Lenders have heard every sob story imaginable about why your credit score is low or your employment history is unstable.  Want to gain your lender’s trust and respect?  Tell them the truth.  If your FICO score is bad because you partied too hard in college, let them know.  Explain that who you were then is not who you are now.  If you had an illness that caused you to fall behind on bills, bring documentation.  When meeting with a potential lender, dress appropriately.  Pretend you are on a job interview if you aren’t sure what to wear.  Arriving for an appointment freshly showered and dressed to impress can increase your chances of receiving a low personal loan interest rate.