{"id":10253,"date":"2022-07-15T20:39:05","date_gmt":"2022-07-16T01:39:05","guid":{"rendered":"http:\/\/blog.jlbn.net\/?p=10253"},"modified":"2022-07-15T20:39:07","modified_gmt":"2022-07-16T01:39:07","slug":"heres-how-people-with-high-credit-scores-are-using-personal-loans-to-build-wealth","status":"publish","type":"post","link":"http:\/\/blog.jlbn.net\/?p=10253","title":{"rendered":"Here’s how people with high credit scores are using personal loans to build wealth"},"content":{"rendered":"\n

A new study highlights how high credit score borrowers are using personal loans to build wealth.<\/em><\/strong><\/p>\n\n\n\n

Select\u2019s editorial team works independently to review financial products and write articles we think our readers will find useful. We may receive a commission when you click on links for products from our affiliate partners.<\/em><\/p>\n\n\n\n

There are a lot of advantages to having a good credit score<\/a> \u2014 you’ll have an easier time getting approved for that new apartment and you’ll often get the best rates on car and homeowners insurance, for example \u2014 but one of the biggest benefits is that it’s cheaper to borrow money when you need it.<\/p>\n\n\n\n

Those with solid credit are typically offered the best interest rates and loan terms, which plays a role in why they end up\u00a0taking on larger personal loan debts<\/a>\u00a0than their lower credit score counterparts.<\/p>\n\n\n\n

In fact, according to a recent LendingTree study<\/a>, even though the majority of personal loans taken out by high-score borrowers were for debt consolidation<\/a>, these borrowers tended to spend the most on personal loans<\/a>to finance home improvements and business-related expenses. Those borrowing for home improvements took out an average of $21,510 while those borrowing for business purposes took out an average of $22,778.<\/p>\n\n\n\n

The study looked at closed personal loan data between April 2021 and March 2022, and defined a high credit score<\/a> as being 720 and above.<\/p>\n\n\n\n

Below,\u00a0Select<\/a>\u00a0takes a closer look at just why home improvements and business expenses made up the largest loan amounts for borrowers with high credit scores.<\/p>\n\n\n\n

Why high-score borrowers spent the most on loans to finance home improvements and business expenses<\/a><\/h2>\n\n\n\n

One obvious reason why high-score borrowers spent the most to finance home improvements and business expenses may just be that remodeling a home or funding a business typically requires large amounts of capital, and therefore large loans.<\/p>\n\n\n\n

But beyond just that fact, high-score borrowers spent the most on these loan purposes because they saw them as investments, which over time would help them\u00a0build wealth<\/a>.<\/p>\n\n\n\n

“Having a greater financial margin for error allows high-score, high-income individuals to use debt as an investment,” says Matt Schulz<\/a>, chief credit analyst at LendingTree, in a company statement<\/a>. “So they can take on debt to improve their home and increase its value or to start a small business that can help generate more income for the family.”<\/p>\n\n\n\n

This isn’t to say that those with lower credit scores choose not to use personal loans as an investment, rather they may not have the capacity to take on larger debt loads that entail larger monthly payments. The lower an individual’s credit score is, the less access they’ll have to large borrowing power since lenders view these borrowers as less likely to pay back their debts as someone with a high credit score.<\/p>\n\n\n\n

Personal loan options for everyone<\/a><\/h2>\n\n\n\n

The good news \u2014 when it comes to taking out a personal loan, no matter the amount \u2014 is just about anyone can get one. There are lenders that cater to borrowers with high credit scores just as there are those who cater to borrowers with lower credit scores.<\/p>\n\n\n\n

If you’re looking for the\u00a0best personal loans for those with fair or good credit<\/a>, consider\u00a0Upstart<\/a>, which allows borrowers to apply for up to $50,000 and has a minimum credit score requirement of\u00a0600<\/a>. Upstart will make exceptions in certain cases and may approve applicants with no credit history. It also offers long loan terms ranging from 36 to 60 months to give you ample time to pay off your debt. Keep in mind that if you’re approved with a lower credit score, you may still be subject to paying a higher interest rate.<\/p>\n\n\n\n

Upstart Personal Loans<\/a><\/h3>\n\n\n\n
\"Upstart<\/figure>\n\n\n\n

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