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. Experian reports that 22 percent of borrowers have excellent credit, which can translate to major savings on borrowing money. If you have a super-prime credit score and a low amount of debt, you may even find rates are the same or even lower than home equity loan rates.

What are personal loans for excellent credit?

Personal loans for excellent credit are unsecured installment loans for those with a credit score above 800. If your credit score is in this range, you can typically borrow more, pay it off over longer terms and enjoy lower costs than borrowers with good or fair credit.

Excellent-credit borrowers may be more likely to use funds for home improvements or to pay for large expenses, like weddings or boats. However, funds can also be used for standard purposes, like debt consolidation.

Earning an excellent credit score range likely 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 credit cards. Lenders know you’re likely to repay your debt and may reward you for your credit management skills by offering a lower-than-average personal loan rate.

The best personal loans for excellent credit

If you have excellent credit, consider Bankrate's top picks for low-interest personal loans.

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Why excellent credit gets you better loan terms

The primary benefit of excellent credit is that lenders will compete for your borrowing business. 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 interest rates

A high credit score can help you qualify for low-interest loans. You could qualify for personal loan rates as low as 7 percent with 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 are typically below 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

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 you’ll find at most fair or bad credit lenders.

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

Longer term lengths

Applying with 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.

But keep in mind that extending your loan term means you’ll pay more over the life of the loan, since interest has more time to accrue. For example, let’s say you need to borrow $10,000, and you qualify for a 10 percent APR. While a long repayment term results in a lower monthly payment, you’ll pay significantly more overall.

Generally, it’s wise to select the shortest repayment term you can afford. Use a personal loan calculator to better understand the impact of term on your budget.

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. You may even be able to get your loan funds the same day you apply.

How to qualify for low-interest loans with excellent credit

If you haven’t reached the excellent credit score range, take these 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 balances 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. Ideally, your credit utilization ratio should be 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 truly 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 close a credit card, try to keep it open. Closing cards will lower the average age of your credit accounts, which can affect your score. A smart strategy is to put a small, recurring charge on each credit card, and set the balance to be automatically paid each month. This way, you keep the credit line active without incurring new debt.

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 and opens the door to lower rates.