Which bank is lowest interest rate for personal loan?

Banks, credit unions, and online lenders provide personal loans to borrowers across the United States. Where you will be able to access the lowest interest rates greatly depends on your unique financial situation and your credit score. As personal loans are typically unsecured, the main tool used by lenders to measure risk is the borrower’s credit score. The lower the credit score you have, the higher your interest rates are likely to be. The best way to secure the lowest interest rates on all personal loans you apply for in the future is to improve your credit score. 

The FICO credit scoring model uses this formula to calculate consumers’ three-digit scores:

  • Payment History = 35%
  • Amounts Owed = 30%
  • Length of Credit History = 15%
  • Credit Mix = 10%
  • New Credit = 10%


There are a few actions you can take to improve each of these categories to boost your overall score. To improve your payment history, you will need to make sure you complete all your payments on time every month. If you are someone who often forgets to pay their bills on time, consider setting up automatic payments on your credit cards, so you never miss a payment. Doing this will raise your score with consistency and patience. 

Take a pause on applying for any new credit to give your credit report a break from any new hard inquiries. Too many hard inquiries within a short period of time can bring down your credit. In addition to avoiding applying for new credit, pay off some of your current debts to reduce your overall credit utilization ratio. Paying down several credit card balances, so you have significantly more available credit can make an enormous difference.

Unfortunately, credit scores do not just gain 200 points overnight. You need to be consistent in your efforts. Check your credit regularly to see where you can see improvements and where you might need to make some changes. Checking your free annual credit report will also allow you to catch and dispute any errors or inaccuracies bringing your score down. Building credit takes time, so the best thing you can do is to practice responsible credit habits and patiently watch your score rise slowly until you are able to access the most competitive interest rates on the market. 

Other Frequently Asked Questions