How to Become a Prime Loan Borrower

Quick Answer

Becoming a prime loan borrower involves understanding which actions help and hurt your credit and developing good credit habits over time.

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To become a prime loan borrower, you'll typically need to have a credit score of 670 or above. However, the specifics can vary slightly from lender to lender and the various credit scoring models that are available.

Prime borrowers can enjoy many benefits, so it's a worthy goal to have. Here's what you should know to help you achieve your goal.

What Is a Prime Borrower?

Lenders generally put potential borrowers into two buckets: prime and subprime (sometimes further divided to include super prime and near prime). Prime borrowers are candidates who are considered most likely to make loan payments on time and in full, while subprime borrowers are considered more likely to default on their loans.

Prime borrowers typically have credit scores of 670 or above, while subprime borrowers usually have scores below that, typically in the 580 to 669 range.

But again, each lender has its own criteria for determining creditworthiness, and credit scoring models can vary slightly in how they assess your credit profile. The important thing is that your credit history shows that you use debt responsibly.

What Are the Benefits of Being a Prime Borrower?

Because prime borrowers with good credit are considered less risky by lenders, they tend to enjoy more benefits than subprime borrowers. Here are just a few:

  • Increased approval odds: Lenders are primarily concerned with a borrower's ability to repay a debt, and if you've shown a history of paying on time, you'll have an easier time getting approved for loans and credit cards.
  • Interest savings: Borrowers who pose less risk of default typically qualify for lower interest rates. Depending on which type of loan you're getting, you could save anywhere between hundreds of dollars and tens of thousands. Just keep in mind that to maximize your interest savings, you'll want to work toward becoming a super prime borrower, which typically means having a credit score of 740 or higher.
  • Better credit card rewards and benefits: If you want a credit card for everyday use, having prime credit will improve your odds of getting some of the best rewards cards on the market for rewards and perks.

How Do I Become a Prime Borrower?

The process of becoming a prime borrower boils down to developing good credit habits, but here are some specifics to help you get started:

  1. Know where you stand. Check your Experian credit score for free to get a general idea of your credit health. Also review your credit reports to get more details on what's influencing your score and where you can make some adjustments. You can get your Experian credit report for free anytime, and you can also obtain free credit reports from all three credit bureaus (Experian, TransUnion and Equifax) through AnnualCreditReport.com.
  2. Pay on time. Because lenders are primarily concerned with repayment, it's crucial that you always pay your bills on time. If you miss one, though, get caught up quickly because late payments don't get reported until they're 30 days past due. Once they're reported as late, they will stay on your credit report for seven years.
  3. Keep your credit card balances low. Your credit utilization rate on your credit cards shows how much of your available credit you're using at a given time. If you're using too much, it could damage your credit score. As a result, it's best to keep your utilization rate as low as possible.
  4. Dispute inaccurate information. If you find something amiss on one or more of your credit reports, you can file a dispute directly with the credit bureaus or contact the lender who reported the information.
  5. Avoid applying for credit too often. Each time you apply for credit, the lender will perform a hard inquiry on your credit reports. Each individual inquiry won't do much damage, if any at all, but if you apply for multiple credit accounts in a short period, those inquiries can have a compounding effect and hurt your credit score. An exception is if you're rate shopping for a single loan type, such as a mortgage or car loan, which is not seen as negative by the credit scoring models as long as you keep your applications within a brief time period.
  6. Use Experian Boost®ø. Experian Boost may be able to help you increase your FICO® Score powered by Experian data by incorporating some of your bills, including eligible rent, utilities, streaming subscriptions and more. Simply register and connect your bank accounts, then verify your positive payment history and add it to your Experian credit file.

Can I Still Get Approved for Credit if I'm Not a Prime Borrower?

If you're not a primer borrower, all is not lost. You can still get approved for various credit cards and loan products, but there's a catch. You'll likely qualify for less favorable terms, like higher interest rates, lower credit limits or lower loan amounts.

If you're planning to take out a big loan in the future, like for a car or a home, it's worth it to spend some time trying to get yourself into the prime category. However, you could also make a bigger down payment to potentially improve your terms. Getting a cosigner who is also a prime borrower may help as well.

As you work toward prime credit, you may consider a secured credit card or even a credit-builder loan to help you establish a positive payment history.

Monitor Your Credit As You Build and Maintain Your Credit Score

As you work toward becoming a prime borrower, monitor your credit regularly to track your progress. Once you've achieved your goal, it's important to avoid becoming complacent. Continue to monitor your credit to spot and address issues as they arise, and continue to watch your credit score increase over time.

With Experian's free credit monitoring service, you'll get access to your FICO® Score and Experian credit report, along with real-time alerts when changes are made to your report.

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