How Can I Get an Unsecured Loan With Good Credit?

Having a positive credit history and a good credit score makes life a lot easier, especially when it comes to finding loans with good interest rates and other terms. If you have a good credit score, you'll have no problems getting an unsecured loan of any type. You'll also be able to pick and choose between different offers to choose the loan with the best possible terms.

Secured and Unsecured Debt

A secured debt is one in which the lender requires that the borrower provide a security interest to secure the loan. When you take a car loan, for example, you give the lender a security interest in the car. If you default, the lender can repossess the car to satisfy the terms of the loan. An unsecured loan, therefore, is one in which you do not give a security interest and do not provide the lender any kind of collateral.

Good Credit Scores

Your credit score, a number that ranges from 300 to 850, indicated your risk to a potential creditor. Your credit score is based on your past actions as a credit user, and if you have a long history of positive behavior, you'll also have a great credit score. A good score is generally 720 or above, while a score above 750 or 760 places you in the best credit score group and will practically guarantee you the most competitive interest rates.

Types of Unsecured Loans

One of the most commonly used types of an unsecured loan is the standard credit card. When you apply for a credit card in most cases, you do not have to give the lender any collateral. Borrowers with excellent credit scores can expect to receive the lowest possible interest rates on their credit cards. Other forms of unsecured loans includes bank lines of credit, personal loans and student loans.

Obtaining a Loan

When you're a consumer with excellent credit, getting a loan is easy. If you go to your bank and ask what kinds of loans they have available, for example, you'll be presented with an array of options. As soon as the bank learns of your credit score, you may be given more options as well as being assured the most competitive rates. Similarly, if you apply for a credit card, you'll likely receive the lowest possible interest rates the company offers, and can sometimes even negotiate for lower rates.