Applying a loan with an average credit score means that you will get a higher quoted APR fee. The low interest rate advertised by the lenders is usually assigned to only a small group of applicants who have good or excellent credit score. Your credit score is not the only factor that determines the APR fee.

The lender will also assess other areas of your finance to determine if you belong to a low credit risk or high credit risk group. Borrowers with low credit risk will get a lower APR while borrowers with higher credit risk will be charged with a higher APR. Besides the APR interest rate, borrowers will also get charged with a variety of fees.

Most loans do not charge application fee nowadays. It is completely free to submit the loan application online. However, many loans do charge an origination fee which is an amount that you have to pay upfront. The origination fee is about 1-6% of the loan. The origination fee depends on your credit score. The lower your credit score, the higher the origination fee will be. It is automatically deducted from the loan amount before the funds is being released to the borrower so that you receive lesser than the full loan amount.

Many lenders do not inform their customers about the redemption fees. The redemption fee, also known as prepayment fee, is a fee that you must pay when you repay the loan in full prior to the end of the loan term. The redemption fee is fixed and will be the same no matter if you repay the loan fully a month after you apply the loan or a month before the loan term comes to an end. When looking for a loan, you should find one that does not charge any prepayment fee as you will probably have the funds to pay the loan in full before the loan term ends. Prepaying your loan can reduce the amount APR interest that you pay.

You can increase your credit score by promptly making repayment by the due date. If you fail to make prompt payment, you will be charged with extra fees like missed payment fees and late payment APR. Late payment will be reported to the credit bureau so that it appear on your credit report. The missed payment fee and late payment APR can be found in the loan agreement.

Before applying for a loan, you can request for a free credit report to check for any incorrect record that appear fraud. You can contact the credit bureau about the issue and they will start an investigation. If they find out that the record is incorrect, they will get it removed so that you can have a higher credit score.