For those that live in Arlington, Texas, a personal loan is, without question, the best possible option for someone seeking some additional capital, whether for financing a wedding, vacation, or consolidating debt. Typically, these loans tend to offer competitive rates and at great term lengths.
However, because the average credit score in Texas is 674, which is significantly below the national average, it’s essential that you are prepared for all that comes with a personal loan. With a low credit score comes a higher interest rate.
The Role of Interest Rates and Credit Score
When it comes to applying for a personal loan, it’s important that residents of the Lone Star state are aware of the many implications of a credit score on interest rates. Since the state average is much lower than the national average, residents in Arlington specifically must apply with caution. In light of this, this is why we highly advise residents to seek a copy of their credit report, which is for free, from the credit bureau.
Reason being, your credit report can shine light as to the quality of your credit and where you can make improvements. You might be asking, why is this important? The truth is, your credit score will directly impact your interest rate on a personal loan, which will directly impact the quality of the loan.
In fact, an individual with a lower credit score will only be offered personal loans with higher interest rates. In a market with interest rates ranging between 10%-20%, a 20% interest rate on a personal loan can be absolutely devastating, depending on the size of the loan. A 5- year personal loan of $10,000 at 20% can leave the consumer paying well above $5,000 in interest.
By investing your time and energy into improving your credit score, you may achieve lower interest rates, which will ultimately save you money, time, and stress. Since Texas has one of the worst credit scores in the nation, it’s essential that residents in Arlington take action here before applying for a personal loan.
Questions to Ask a Personal Loan Lender
Now that you understand precisely how important credit scores and interest rates are, before you are quick to get started, we wanted to share a few questions that you should consider asking a lender. This will help during the research phase weed through the bad and the good. Here are 5 powerful and useful questions:
- What are your requirements for a personal loan?
- Are your interest rates variable or fixed? What is your estimated interest rate?
- Do you have an origination fee?
- Do you have a fee for paying off a loan early?
- What is the total cost of the loan, including interest rate?