Improve your credit score
Fixing your credit score is the best way to qualify for a personal loan with lower interest rates. Here are some practical tips:
2. Pay off your debt
Paying off your debts is crucial for improving your credit score. Your debt-to-income ratio (DTI) measures how much debt you have compared to your income. A high DTI indicates you have a lot of debt relative to your income, making it harder to pay down debt and less likely for lenders to loan you money.
Start by paying off your smallest debt and then move on to larger ones. Every bit you pay off helps. As your debt decreases, your credit score will improve, leading to lower interest rates.
3. Increase your income
Increasing your income improves your debt-to-income ratio, making you more appealing to lenders. More income also gives you more flexibility to pay down debt.
If you can't get more hours at work or don't qualify for government benefits, consider picking up a side gig or earning passive income.
4. Consider a co-signer
If you can't improve your credit score or need money quickly, having a co-signer can help you secure a personal loan with better rates. A co-signer's income and credit score are considered along with yours, increasing your chances of getting favorable terms if your co-signer has good financial standing.