Here’s How People With Higher Credit Scores Are Using Personal Loans To Build Wealth

there are a lot of Benefits of having a good credit score. — It’s easier to get approved for that new apartment, and you can often get the best rates on car and homeowners insurance, for example — But one of the biggest advantages is having money when you need it. it’s cheaper to rent

Those with solid credit are usually offered the best interest rates and loan terms. take on a larger personal loan liability than their counterparts with lower credit scores.

In fact, according to Recent lending tree research,example The majority of personal loans taken by high-scoring borrowers were for debt consolidationthese borrowers are personal loan To cover home renovation or business related expenses. Borrowings for home improvements averaged $21,510, and borrowings for business purposes averaged $22,778.

The study looked at closed personal loan data from April 2021 to March 2022, high credit score As over 720.

under, select examines why home improvement and business expenses account for the largest loan amounts for borrowers with high credit scores.

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Why high-scoring borrowers spent the most on loans to cover home repairs and business expenses

One obvious reason why high-scoring borrowers spent the most on home renovation and business financing is that financing home renovations and businesses typically requires a large amount of capital and is therefore It may be because you need a lot of money.

But not just for that fact, borrowers with higher scores spent the most money on these loan objectives. build wealth.

“A large financial margin of error allows high-scoring, high-income individuals to use debt as an investment,” he said. Matt Schultzchief credit analyst for the company’s LendingTree statement“So they can take on debt to improve their home and increase its value, or start a small business that will help increase the family’s income.”

This is not to say that people with low credit scores chose not to use personal loans as an investment. The lower an individual’s credit score, the less likely lenders will see these borrowers as someone with a high credit score to repay their debts, and therefore have less access to a large borrowing capacity.

Personal loan options for everyone

The good news is that when it comes to taking out a personal loan, almost anyone can borrow, regardless of the amount. Some lenders also support

if you are looking for best personal loans for those with fair or good creditexamination start-upwhich allows borrowers to apply for up to $50,000, with a minimum credit score requirement of 600Upstart may, in some cases, make exceptions and approve applicants with no credit history. We also offer long-term loans of 36 to 60 months, giving you plenty of time to pay off your debt. Note that even if you are approved with a low credit score, you will have to pay a high interest rate.

new personal loan

  • Annual Rate (APR)

  • Purpose of the loan

    Debt consolidation, credit card refinancing, marriage, moving, healthcare

  • loan amount

  • Clause

  • need credit

    FICO or Vantage score of 600 (but applicants with poor credit history and no credit score will be accepted)

  • Outgoing fee

    0% to 8% of the target amount

  • Early Payoff Penalty

  • late fee

    5% of monthly delinquency amount or $15, whichever is greater

Borrowers with higher scores best personal loans for good credit to consider light stream, offers low-interest loans on flexible terms to borrowers with good or better credit. A person with good credit quality can take advantage of the lowest interest rates ranging from 3.49% per annum to 19.99% for him*. Apply for autopayHowever, just in case you were inspired by the topic of this article, please note that LightStream does not offer loans for small businesses. However, you can get LightStream personal loans to undertake projects like bathroom and kitchen remodels.

lightstream personal loan

  • Annual Rate (APR)

    4.99% to 19.99%* when you sign up for automatic payments

  • Purpose of the loan

    Debt consolidation, renovation, car loan, medical expenses, marriage, etc.

  • loan amount

  • Clause

  • need credit

  • Outgoing fee

  • Early Payoff Penalty

  • late fee

More Options for Home Improvement and Small Business Financing

There are many ways to finance a home renovation or small business. Options other than a personal loan include saving money in a high-yield savings account and paying with cash, or using a revolving home his equity his credit line. Herlock – for fund a home renovationspecifically — or using a credit card.

of Best credit cards to help pay for your next home renovation include Chase Freedom Unlimited® for the introduction Annual interest rate 0% On new purchases — Get up to 15 months interest-free financing on new purchases (after a variable APR of 17.99% – 26.74%) to cover the costs of your project. That way, you can fund home repairs for a year or more. Plus, you can earn cashback on your purchases.

Chase Freedom Unlimited®

  • reward

    Enjoy 5% cash back on travel purchased through Chase Ultimate Rewards®. This is the premier rewards program where you can redeem your rewards for cash back, travel, gift cards and more.3% cash back on drugstore purchases and dining in restaurants, 1.5% cash back on all other purchases, including takeout and eligible delivery services

  • welcome bonus

    Earn an extra 1.5% on everything you buy (up to $20,000 in the first year) – equivalent to up to $300 cash back. That’s 6.5% on travel purchased through Chase Ultimate Rewards®, 4.5% on restaurants and drugstores, and 3% on all other purchases.

  • Annual fee

  • Introduction APR

    0% for 15 months after account opening At the time of purchase and balance transfer

  • Normal APR

  • Balance transfer fee

    A referral fee of $5 or 3% of each transfer amount, whichever is greater, for transfers made within 60 days of account opening. Then $5 or 5% of each transfer amount, whichever is greater.

  • foreign transaction fee

  • need credit

of best small business credit card offers everything from rewards on new purchases and interest-free financing to business-related perks such as luxury travel benefits, extended warranties and insurance, while helping you finance your business expenses.

When American Express Blue Business® Plus Credit Cardfor example, cardholders can introduce a zero interest rate APR at the time of purchase for 12 months from the date of account opening (then a variable APR of 16.99% – 24.99%, see below). Fees and Fees). This special financing term can offer an interest-free period of up to one year. You can also earn twice as much Member Benefit Points For qualifying purchases up to $50,000 annually (1x thereafter).

American Express Blue Business® Plus Credit Card

American Express secure site

  • reward

    Earn double Membership Rewards® points on daily business purchases up to $50,000 annually, then earn 1x points per dollar spent thereafter

  • welcome bonus

    Earn 15,000 Membership Rewards Points® when you spend $3,000 on qualifying purchases with your card within the first three months of your card membership.

  • Annual fee

  • Introduction APR

    0% for 12 months from account opening date

  • Normal APR

  • Balance transfer fee

  • foreign transaction fee

  • need credit

Click here for American Express The Blue Business® Plus credit card rates and fees. here.

*LightStream loan terms, including APR, may vary depending on loan purpose, amount, length of term, and credit profile. Good credit is required to qualify for the lowest rates. Rates are quoted with AutoPay discounts. AutoPay discounts are only available prior to loan financing. Rates without AutoPay are 0.50% points higher. Credit approval required. Conditions and restrictions apply. Prices and terms posted are subject to change without notice. Payment Example: A $10,000 loan with 3 years annual interest rate of 3.99% with monthly payments equals $295.20 in 36 months of payments.

Editor’s Note: The opinions, analyses, reviews or recommendations expressed in this article are those of Select’s editorial staff only and have not been reviewed, approved or otherwise endorsed by any third party.

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