What is an excellent-credit personal loan?

If you have excellent credit — meaning a credit score of 800 or higher — you can expect lower rates, longer term options and higher loan amount choices for personal loans than borrowers with lower credit scores. The volume of loans made to excellent credit borrowers shot up by 20 percent toward the end of 2023. That rise has continued into the first half of 2024, which may be a sign that lenders are seeking out higher quality credit for personal loans.

Borrowers eligible for personal loans with excellent credit may even find rates are the same or even lower than home equity loan rates.

What is a personal loan for excellent credit?

An excellent-credit personal loan is an unsecured installment loan designed for borrowers with credit scores above 800. If your credit score is in this range, you can typically borrow more, pay it off over longer terms and pay lower costs than borrowers with good or fair credit.

Excellent-credit borrowers may be more likely to use funds for home renovations or to pay for large expenses, like weddings or business inventory needs. However, they can be used for standard purposes like debt consolidation,

An excellent credit score range means you always make your payments on time, use credit cards sparingly and have a solid history of managing a variety of types of credit, including installment debt, like car loans, or revolving credit card debt. Lenders know you’re likely to repay your debt and reward you for your credit management skills by offering you more money for less than the average personal loan rate.

Benefits of loans for excellent credit

The primary benefit of excellent credit is that lenders will compete for your borrowing business. They’re more willing to offer better terms on larger loans because they know the odds you’ll pay them back as agreed are very high. This often means low rates, low or no fees and longer repayment schedules.

Lower rates

Excellent credit typically means you could qualify for personal loan rates just below 6 percent at the most competitive lenders. Your rate may be higher depending on the repayment term you choose and how much you borrow.

Average annual percentage rates (APRs) associated with personal loans for individuals with stellar credit ratings range between 10.30 percent to 12.50 percent. That’s about three times lower than the 32 percent average rate you’ll pay for bad credit loans.

Estimated APR by FICO credit score ranges

Source: Experian, Bankrate

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 cap at most fair or bad credit lenders.

You’ll still have to qualify for a higher payment based on your income. The payment could be steep considering the maximum term is seven years, so make sure it fits your budget.

Excellent credit loans for home improvement

If you’re planning home improvements, using a personal loan for home improvement may be a better option than home equity financing. Here are three reasons:

1. Rates may be comparable — or lower — than home equity financing. You read that right — though mortgage rates are coming down from multiyear highs, home improvement loan rates may be worth some extra number crunching.
2. You won’t tie up your home’s equity or add a new lien to your home. That means more money in your pocket if you plan to sell in the near future.
3. Easier approval process. Home loans require extra hoops to prove you can repay them, including vetting the value of your home. You won’t need to verify your home’s value for a home improvement personal loan.

Longer term lengths

An excellent credit score makes it more likely a lender will extend terms past the five-year maximum most personal loan lenders offer. Check with your excellent credit lender to see if it offers terms beyond five years if you need a lower monthly payment for a higher loan amount.

Easier and faster approval

A high credit score makes it easier for lenders to approve your loan, because you’ve already shown you are a responsible credit user. In some cases, you may be able to get your loan funds the same day you apply.

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.

1. Pay everything on time, all the time. Your payment history has the greatest impact on your credit scores. Set up automatic payments and keep your accounts to a minimum to avoid missing a payment.
2. Keep your credit balances low or pay them off. Carrying high credit card balances pulls your credit scores down. Your credit utilization ratio should be at 30 percent or less. That means for every $10,000 worth of available credit you have, you shouldn’t ever charge more than $3,000 at a time. Besides payment history, this factor has a major impact on how high your credit scores are.
3. Don’t open a lot of accounts at once. Whenever you apply for credit, your score can drop  slightly. If you apply for several different credit accounts at once, your score may drop more rapidly because the credit scoring system thinks you’re taking out a bunch of new credit. Only apply for credit when you need it and avoid new accounts for small discounts at retail stores or online vendors.
4. Check your credit report for errors. If your score is lower than expected, check for errors on your credit report. Reach out to credit report agencies and dispute any errors so they can be removed.
5. Keep credit cards open. Unless you have a strong reason to, try to keep credit cards open. Closing them will lower the average age of your credit accounts, which can affect your score.

The bottom line

An excellent credit score gives you a wide range of personal loan borrowing options to use. Whether you’re funding a major home renovation or financing a new business startup, your exemplary credit history gives you more repayment terms and loan amount options to choose from.