subject: Loan: How To Prepare [print this page] Loan: How To Prepare Loan: How To Prepare
There are many different types of loans. No matter what kind of loan you get though, you must have good credit in order to get a lower interest rate. The better your credit, the lower the interest rate will be. It is therefore important to know your credit score before getting a loan. You can check your credit score for about a dollar on-line. A credit score above 800 is excellent, 750-800 is very good, 700-750 is good, 650-700 is fair (the average is around 678), 600-650 is bad, and anything below 600 is very bad.
In order to get the best credit, you must use a credit card, and pay your required payments (at least the minimum) on time each month. Some prepaid credit cards will even let you build up your own credit while you use them, but you may have to pay a fee. Prepaid credit cards are a great alternative to building up your credit in order to qualify for a loan if you do not want to risk going into debt since with a prepaid credit card, you are using your own money that you put in there. Once you run out, the money is gone and the card will stop functioning. However, you can check the balance and put any amount of money into the card whenever you want.
If you do not have any credit, or if you have bad credit, you may want to try for a secure loan rather than an unsecure loan. A secure loan means that if you cannot pay the loan, they can take your house, your car, or anything that you agree on ahead of time that is worth the same amount as the money you are borrowing. With an unsecured loan, they cannot take any assets away, but you may not get as low of an interest rate either since lenders generally use higher interest rates to make extra money to help protect themselves in case you are not able to pay them back in full. They especially worry that you won't pay them back in full if your credit history already proves that you do not make full payments on time. Therefore, with unsecured credit, the worse the credit, the higher the interest rate.
