By Karen Axelton

A personal loan can help you pay for your wedding, finance home repairs or pay off high-interest credit card debt. Getting the best interest rate on a personal loan can save you a lot of money—but what if your credit score isn’t so great? You can get a personal loan with bad credit, but you’ll pay more in interest rates and fees. To get the best personal loan rates, take these five simple steps to improve your credit before you apply.

1. Check your credit score.

Because personal loans are unsecured loans (meaning you don’t have to put up any collateral to get them), your credit score is very important to lenders. Two commonly used credit scoring models are the FICO® Score and VantageScore. A FICO Score of 670 or above or a VantageScore of 700 or above is considered “good,” and the higher your score is, the better your chance of getting favorable interest rates. Get your free credit score using ScoreShuttle.

2. Review your credit report and dispute any errors.

Each of the three major consumer credit bureaus—Experian, TransUnion and Equifax—gathers information on your credit accounts and collects it in a credit report. (Get your free credit report.) Inaccurate or outdated information, or something as simple as a typo or incorrect figure, could lower your credit score. You may even discover an unfamiliar credit account has been opened in your name, which could indicate fraud. Get errors corrected quickly using ScoreShuttle’s credit builder software, which makes it easy to digitally dispute errors with all three credit reporting agencies in a single click.

3. Pay your bills on time.

Your payment history is the number-one factor in your credit score, so it’s important to make all your payments on time. If you’re behind on any accounts, bring them current as fast as possible. Then set up automatic payments or reminders to ensure you never miss a payment due date. If a payment does slip your mind, don’t panic; just make the payment as soon as you realize your error. Creditors often offer a grace period in which a payment that’s a few days late won’t be reported to credit bureaus, so it won’t affect your credit score.

4. Reduce your credit utilization ratio.

Your credit utilization ratio compares the amount of credit you’re actually using to the total amount of credit you have available. For example, if you have a credit card with a $10,000 limit and a $1,000 balance, your credit utilization ratio on that card is 10%. Do your best to keep the credit utilization ratio on each individual account, as well as on the sum of your accounts, at or below 30%.

5. Don’t apply for new credit.

Every time you apply for a credit card, loan or other form of credit, the lender performs what’s called a hard inquiry on your credit report. Each hard inquiry has a slight negative impact on your credit score. Although this effect is only temporary, multiple hard inquiries can add up and have a more severe effect on your credit. Once your credit score is where you want it, you can shop around for a personal loan by applying to multiple lenders to see who offers the best personal loan rates. As long as all your applications are made within a few weeks, credit bureaus will count them as one hard inquiry, minimizing their effect on your credit score.

Getting the best personal loan

Once you’ve been approved and received your personal loan, be sure to make your loan payments on time. Managing your personal loan wisely can help improve your credit score, making it easier to get credit next time you need it. Need more help? See how you can use ScoreShuttle’s online tools to improve your credit.

Author Bio:

Drawing on 20-plus years of experience as a journalist, business magazine editor and marketing copywriter, Karen Axelton specializes in writing about business and entrepreneurship. She has written for financial services companies including American Express, Bank of America, Biz2Credit and Experian.

Disclaimer: ScoreShuttle is not a lending firm and does not provide or guarantee personal loan approval. ScoreShuttle does not take loan applications, make loan decisions, lock rates, service loans, fund or approve loans on a lender’s behalf or provide any other loan service. Always be sure to do your own research on the loan and terms that are right for you.