Average Personal Loan Interest Rate by Credit Score

Wondering about the average personal loan interest rate in the UK? You’ve come to the right place for answers! This guide will help you understand more about the impact of your credit score on loan interest rates.

We know it can be worrying if you’re unsure about how to handle your loan debt. Are you concerned about not being able to pay it off? Or the effects it could have on your future? We hear you, and you aren’t alone. In fact, every month more than 170,000 people turn to us for guidance on their debt worries.

In this easy-to-understand guide, we’ll take you through:

• What the average personal loan interest rate is in the UK.
• How your credit score can affect this rate.
• Ways to get a free personal loan quote.
• Tools to work out simple interest.
• Tips to improve your credit score.

We’ll help you to get a clear picture of your situation and find a way forward that fits your needs.

Let’s dive in and discuss your options.

Statistics

When you’re applying for a personal loan, the lender will look at your credit report as an indication of your risk level when considering loan eligibility.

The average interest rate for a personal loan with excellent credit will naturally be better than it would be for someone with a lower score. Obtaining a personal loan with a low-interest rate will mean the repayment amounts and length of the loan are more favourable. 

• In October 2022, the average interest rate on a personal loan with two-year repayment was 10.16%.
• Personal loan interest rates typically range from 6% to 36% but can occasionally be higher. 
• In April 2021, the average APR on a personal loan ranged between 9.30% to 22.16%.

The figures below show the average personal loan APR as of April 2021. 

As you can see, the average interest rate on a personal loan when you have good credit is much better than those with a lower score. An excellent, good or fair credit score will help you get the best average personal loan interest rates and loan terms.

Additionally, those with a credit score lower than 640 might find it difficult to get a personal loan or be subject to higher interest rates they are seen as a higher default risk.

You can use my free interest calculator to see how your interest affects your monthly bills.

This is a guidance tool only and not an assessment. For accurate interest calculations, contact the company issuing the credit. Do not rely solely on this calculator’s results.

Understanding ranges

In the UK, there are three credit agencies, all with different credit score ranges. These are as follows:

Tips to Build Up Your Credit

To improve creditworthiness, do the following:

• Make sure you are on the electoral roll to prove where you live

• Make regular payments on time

• Do not use all of your available credit – aim to use 30-50%

• Keep an eye on your record and report any suspicious or credit report errors.

• Avoid moving home regularly – it can be a red flag to some lenders.

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