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Average Personal Loan Interest Rate by Credit Score

Scott Nelson MoneyNerd Janine Marsh MoneyNerd
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Scott
Scott Nelson MoneyNerd

Scott Nelson

Debt Expert

Scott Nelson is a renowned debt expert who supports people in debt with debt management and debt solution resources.

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&
Janine
Janine Marsh MoneyNerd

Janine Marsh

Financial Expert

Janine is a financial expert who supports individuals with debt management, cost-saving resources, and navigating parking tickets.

Learn more about Janine
· May 26th, 2024
Could you legally write off some debt? Answer below to get started.

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For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.

For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.

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average personal loan interest rate credit score

For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.

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.

Could you legally write off some debt?

There are several debt solutions in the UK, choosing the right one for you could write off some of your unaffordable debt, but the wrong one may be expensive and drawn out.

Answer below to get started.

How much debt do you have?

This isn’t a full fact find. MoneyNerd doesn’t give advice. We work with The Debt Advice Service who provide information about 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. 

Credit Score Average Personal Loan APR
Above 760 9.30%
720 – 759 13.32%
680 – 719 17.82%
640 – 679 22.16%

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.

Simple Interest Calculator

£

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:

Agency Excellent Good Fair Poor Very Poor
Experian 961-999 861-960 721-880 561-720 0-560
Trans Union 628-710 604-627 566-603 551-565 0-550
Equifax 800-850 740-799 670-739 580-669 300-579

How a debt solution could help

Some debt solutions can:

  1. Stop nasty calls from creditors
  2. Freeze interest and charges
  3. Reduce your monthly payments

A few debt solutions can even result in writing off some of your debt.

Here’s an example:


Situation

Monthly income £2,504
Monthly expenses £2,345
Total debt £32,049

Monthly debt repayments

Before £587
After £158

£429 reduction in monthly payments

If you want to learn what debt solutions are available to you, click the button below to get started.

Get started

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.

» TAKE ACTION NOW: Fill out the short debt form

Could you legally write off some debt?

Answer below to get started.

How much debt do you have?

This isn’t a full fact find. MoneyNerd doesn’t give advice. We work with The Debt Advice Service who provide information about your options.

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The authors
Scott Nelson MoneyNerd
Author
Scott Nelson is a renowned debt expert who supports people in debt with debt management and debt solution resources.
Janine Marsh MoneyNerd
Debt Expert
Janine is a financial expert who supports individuals with debt management, cost-saving resources, and navigating parking tickets.