Does Prosper offer good debt consolidation loans?

You need a credit score of 640 or higher for a Prosper personal loan, according to the company, which means the Prosper credit score requirement is in the fair credit range. Applying with a co-applicant can also help you qualify for a Prosper personal loan if you don’t meet the credit score requirement. To put this in perspective, most other lenders' credit score requirements are similar to Prosper.... read full answer

Keep in mind that just having a 640 credit score is not enough to qualify you for a Prosper personal loan. Prosper will consider your entire financial profile, including things like your income, existing debts and recent credit inquiries, when deciding whether to approve you. It's also worth noting that some applicants might be able to get a personal loan from Prosper with a slightly lower score if it's offset by other factors like an especially high income. But it's best to wait to apply until your score meets the threshold.

If you're unsure of what your current credit score is, you can check it for free on WalletHub. You can also pre-qualify for a Prosper personal loan online to gauge your chances of getting approved with your current credit score.

Prosper’s interest rates are part of their overall APR, which ranges from 6.95% to 35.99%. The interest rate is always less than the annual percentage rate because the APR also accounts for Proper’s origination fee (the fee charged to process the loan). The origination fee can range from 2.41% to 5% of the loan amount.... read full answer

Essentially, your Prosper interest rate is your APR if you take away the origination fee. But it’s not as simple as just subtracting the entire origination fee from the APR. The APR indicates the cost of finance charges over the course of a year, while the origination fee is spread across the entire loan term. This affects the math a bit.

Here’s an example from Prosper’s website: “A three-year $10,000 personal loan with a Prosper Rating of AA would have an interest rate of 5.31% and a 2.41% origination fee for an annual percentage rate (APR) of 6.95% APR.”

In all, though, it’s really not necessary to separate Prosper’s interest rates from their APRs. You’ll only be making payments based on the APR. But some lenders don’t charge origination fees. So in many cases a personal loan’s interest rate can be the same as its APR.

For a more in-depth look at Prosper personal loans, check out WalletHub’s review.

Personal loans affect your credit score in the short-term and in the long-term. In the short-term, a personal loan may damage your score because it causes a hard credit inquiry and increases your debt load. But in the long-term, a personal loan can either help or hurt your credit, depending largely on whether or not you pay the bills on time. Ultimately, it’s up to you how much impact the personal loan will have.... read full answer

How a Personal Loan Affects Your Credit Score:

• Does temporary damage with an initial hard inquiry. When you first apply for a personal loan, your credit score will immediately take a small hit. That’s because applying for a personal loan triggers a hard inquiry into your credit history. But this shouldn’t drop your score by more than 5 points or so, and you should be able to bounce back quickly.
• Adds to your overall debt. If you’re approved for a personal loan, you will immediately have a higher debt load, which may cause your credit score to drop in the short-term. That’s because the more debt you have, the riskier it is for banks and credit unions to lend to you.
• Reports to the major credit bureaus monthly. The banks, credit unions and online lenders that issue personal loans report payment information to the major credit bureaus on a monthly basis. If you make on-time payments, you can expect your score to increase. But if you are late or don’t pay altogether, your score will drop.
• Improves your credit mix. Proving yourself capable of managing multiple types of loans and lines of credit responsibly is good for your credit score. It shows you can be trusted to repay what you borrow in a variety of situations. So if you only have one or two other types of accounts on your credit report, such as credit cards or student loans, your score may benefit in the long run from getting the personal loan.
• Could help reduce credit utilization. Personal loans give you a lump sum up front, which you pay back in monthly installments. This is different from a credit card, where you can borrow up to a certain amount any time you want. Credit cards are known as “revolving credit,” and a big part of your credit score is how much of your revolving credit you use up each month, or your “credit utilization ratio.” Personal loans don’t count toward this ratio, so if you use them to pay off revolving debt, you can lower your ratio and improve your score.

In conclusion, as long as you’re sure to pay on time each month, a personal loan should eventually increase your score by a lot more than the initial inquiry caused it to fall. You can also avoid wasting hard inquiries by getting pre-qualified for a loan first. Pre-qualification only uses a harmless soft inquiry. And while it doesn’t guarantee approval, it will let you know if your odds are good.