Personal Loans Lender Rating Methodology
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Credible’s process in rating personal loan lenders for the benefit of the borrower
We collected over 1,000 points of data on over two dozen lenders to determine which are the best overall, and which are the best for specific uses and needs, such as personal loans for debt consolidation and personal loans for bad credit and fair credit. Here’s how:
- Establish lenders: Senior Credible editors research which lenders to evaluate based on lender size, online search traffic and rankings, lender type (bank, credit union, online lender), and whether lenders are Credible partners. Our senior editors are experts in the personal loan field.
- Determine criteria: Senior editors then determine which criteria to evaluate across lenders. Criteria include key loan terms, such as APRs, repayment periods, eligibility requirements, and loan types, plus loan features like whether cosigners are allowed and available discounts.
- Collect and verify data: Senior editors and editorial staff collect lender data from lender sites, lender representatives, and internal intake forms from Credible partners. Data is verified by a third party against its source to ensure that data is accurate, and the source is reliable and current.
- Clean and score data: Once data collection and verification are complete, the data is cleaned and evaluated numerically. Scores are assigned for individual criteria based on how that lender compares in that category to its competitors. For example, a personal loan lender who offers repayment terms up to 10 years would compare favorably to a similar lender that only offers a 5-year repayment term.
- Assign weights: Once individual criteria are scored, they are each weighted by senior editors according to their importance for each user set. For example, a list of the best lenders for bad credit would heavily weight the minimum credit score that each lender requires, while a list of the best lenders for excellent credit would not.
- Determine star ratings: Once the scores for each set of criteria are weighted appropriately, each lender’s weighted scores are summed to arrive at an overall star rating, on a scale of 0 to 5.
- Establish superlatives: Overall star ratings and individual criteria scores are evaluated across lenders to determine the best lenders by category, such as “best debt consolidation loans for fair credit”
Below are the weightings assigned to each general category for the best personal loan lenders — which is made up of individual criteria (that is individually weighted) in that category.
18% - Rates and feesDefinition: The APR range available from each lender
We compared each lender’s annual percentage rate (APR) range, which accounts for the interest rate charged plus upfront fees, like origination fees. The lenders with the lowest available APRs scored the highest in this category. However, lender scores suffered if the maximum APR was relatively higher than that of competitors.
Why it matters to the borrower
The lower the APR, the less you’ll pay to borrow money. It’s important to compare minimum APRs between lenders if you have good or excellent credit. If you have poor or fair credit, it’s important to consider the lender’s maximum APR.
18% - Loan termsDefinition: Repayment periods and loan amounts
We compared the maximum repayment period and the number of repayment periods available from each lender, as well as the maximum and minimum loan amounts available. The lenders with the longest available repayment periods tended to score highest in this category. The lenders with the largest available loan amounts also did well. Lender scores were dinged if their minimum loan amounts were relatively high.
Why it matters to the borrower
A loan’s repayment period affects your monthly payment, your APR, and how much you’ll pay in interest over the life of the loan. A longer repayment period can make a personal loan more affordable on a monthly basis. Lenders that offer a wide range of loan amounts are suitable for a wider range of borrowers.
17% - Customer experienceDefinition: Customer service accessibility and website ease of use, including the prequalification process
We considered features like whether live chat is available on the lender’s site and whether it offers a mobile app. We also looked at the prequalification process via the lender’s site: Is prequalification available and is a Social Security number required?
Why it matters to the borrower
Lenders should make it easy to ask questions about your existing loan or a potential loan, and to compare rates without requiring excessive personally identifying information or hurting your credit.
14% - EligibilityDefinition: Who can apply for a loan
We considered state availability, as well as minimum income, minimum credit, and membership requirements. Lenders available in all 50 states with no membership requirement and low minimum income and minimum credit score requirements scored highest in this category.
Why it matters to the borrower
Your own criteria, such as credit score, the state you live in, and your income, dictate which loans you’re eligible for. Understanding lender eligibility requirements can help you narrow down which loans you should apply for.
10% - Customer satisfactionDefinition: Third-party reviews
Better Business Bureau (BBB) letter ratings and average Trustpilot customer review scores were considered for each lender on a relative scale.
Why it matters to the borrower
Whether a business is BBB accredited and how well it responds to customer complaints can help you determine whether you want to do business with that lender.
10% - EfficiencyDefinition: How quickly loans fund / how easy it is to get a loan
We considered minimum loan funding times, how likely loans were to close once prequalified, and whether the lender’s process is 100% digital. Quick funding times and a high correlation between prequalification and loan approvals resulted in high scores in this category.
Why it matters to the borrower
Lenders should make it easy for you to get a personal loan by having an honest prequalification process, funding within one day of loan approval, and an application that can be completed 100% online.
9% - Options for poor credit and no creditDefinition: The availability of cosigned loans and secured loans
We considered which lenders allow applicants to apply with a cosigner (someone who is responsible for the loan, but is not entitled to loan funds). We also considered whether lenders offer personal loans that can be secured by collateral, such as a bank account.
Why it matters to the borrower
If you have poor credit or no credit at all, you may need help qualifying for a personal loan. Applying with a cosigner who has good credit or securing the loan with an asset are two ways to do this.
4% - DiscountsDefinition: Autopay and direct pay discounts
Whether lenders offer autopay and direct pay discounts was considered, as was the size of the discount. Lenders that offer the largest discounts for automatic monthly payments and for payments made directly to creditors on debt consolidation loans scored the highest in this category. Lenders that don’t offer discounts scored the lowest.
Why it matters to the borrower
Loans can be expensive. While a loan with a low APR is the best way to save money on interest, discounts can help.
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