Key learning points
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Lenders typically consider a credit score of 800 or above as “excellent credit.”
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FICO defines excellent credit as 800 or higher, while VantageScore defines it as 781 or higher.
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More lenders will compete for your business if you have excellent credit.
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You still need to compare multiple offers to get the best, excellent personal loan rates.
Borrowers with excellent credit – usually defined by a credit score of 800 or higher – can expect lower interest rates, longer term options and higher loan amount choices than borrowers with lower credit scores. In fact, the volume of loans to prime borrowers is expected to increase by 20 percent by the end of 2023, which could be a sign that lenders are looking for higher quality personal lending.
In fact, borrowers who qualify for personal loans with excellent credit may find that interest rates are the same or even lower than home loan interest rates, which have recently risen to their highest levels in decades.
What is a personal loan for excellent credit?
An excellent personal credit loan is an unsecured installment loan designed for borrowers with a credit score above 800. Borrowers with credit scores in this range often have access to higher loan amounts, longer terms, and lower fees than borrowers with good or fair credit. While the funds can be used for standard purposes such as consolidating debt, excellent borrowers are more likely to use them for home renovations or to finance major expenses such as weddings or business inventory needs.
If your score is in the excellent credit score range, you’ve probably managed your payment history perfectly, use credit cards sparingly, and have a solid history of credit management with both installment debt, such as car loans, and revolving credit card debt. The bottom line is that lenders know that you are likely to repay your debt and they will reward you for your credit management skills by offering you more money for less than the average personal loan interest rate.
How loans with excellent credit scores differ from personal loans with lower credit scores
Excellent credit shows lenders that you know how to repay the credit you have taken out. As a result, they are more willing to offer better terms on larger loans because they know the likelihood of you paying them back as agreed is very high. This often means low rates, low or no fees and longer repayment schedules.
Lower rates
Interest rates for personal loans can range between 6 percent and 36 percent, depending on a number of factors. Excellent credit usually means you will be offered the most competitive rates from the lender. The average annual percentage rates (APRs) associated with personal loans for individuals with excellent credit range from 10.30 percent to 12.50 percent. On the other hand, borrowers with lower credit scores can pay an average interest rate as high as 32 percent.
Estimated APR according to FICO credit score ranges
| CATEGORY | CREDITWORTHINESS | PERCENTAGE OF PEOPLE IN THIS CATEGORY | ESTIMATED APR |
|---|---|---|---|
| Excellent | 800-850 | 21% | 10.30%-12.50% |
| Very good | 740-799 | 25% | 10.30%-12.50% |
| Good | 670-739 | 21% | 13.50%-15.50% |
| Honestly | 580-669 | 17% | 17.80%-19.90% |
| Very poor | 300-579 | 16% | 28.50%-32.00% |
Source: ExperianBank rate
Higher loan amounts
You may be able to borrow $100,000 or more with excellent credit. That’s significantly more borrowing power than the $50,000 limit at most fair or bad lenders. Keep in mind that you should still qualify for a higher benefit based on your income. The payment can be quite expensive given the maximum term of seven years, so make sure it fits within your budget.
Longer term lengths
An excellent credit score makes it more likely that a lender will extend terms beyond the five-year maximum that most personal loan providers offer. If you need a lower monthly payment on a higher loan amount, check with your excellent lender to see if it offers terms longer than five years.
How to increase your credit score and qualify for excellent credit loans
If you haven’t reached the excellent credit score range yet, take some steps to improve your credit.
- Pay everything on time, always. Your payment history has the biggest impact on your credit scores. Set up automatic payments and keep your accounts to a minimum to avoid missing a payment.
- Keep your balances low or pay them off. Your credit utilization ratio must be 30 percent or less. This means that for every €10,000 of available credit you have, you should never charge more than €3,000 at a time. In addition to payment history, this factor has a major impact on how high your credit score is.
- Don’t open many accounts at the same time. When you apply for credit, your score drops slightly. If you apply for multiple credit accounts at once, your score can drop faster because the credit scoring system thinks you’re taking out a lot of new credit. Apply for credit only when you need it and avoid new accounts for small discounts at stores or online sellers.
- Check your credit report for errors. If your score is lower than expected, check for errors on your credit report. Contact credit reporting agencies and dispute any errors so they can be removed.
it comes down to
You will find better loan options with excellent credit. However, if you don’t qualify for a loan with excellent credit, you can still find a good deal. Shop around with different lenders to find the best loan package. If you don’t find rates and terms that work for you, try raising your credit score before looking again.
Having an excellent credit score of 800 is often the path to the lowest rates, longest terms, and highest loan amounts that personal loan providers offer. If you haven’t reached the excellent credit range yet, take some steps to improve your credit. Always shop around and compare offers from different lenders to find the best credit loan for your financial plans.
