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Getting a loan is a big step financially, and shouldn’t be taken lightly. Here are 6 things to know before you take out a loan, so you know if it"s the right decision for you.
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With emergency savings not always available and debt levels rising, more and more people are turning to personal loans to cover emergencies, pay for medical bills, and consolidate their credit card debt.

Taking out a loan can be a significant financial decision, so it’s best to make it a smart one. Here are six essential things to know before you take out a loan


1. Why you need the money (and if there’s a better option)

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Now that you know what you can really afford to borrow and pay back, it’s time to figure out what type of loan and rate you can qualify for. Enter the credit score.

Your credit score and credit history are the lifeblood of your financial well-being. Without credit—specifically, good credit—you can kiss low rates, low payments, and overall savings goodbye.

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One thing I found particularly shocking was that 45% of college students don’t know their credit score. A college student is right at the beginning of their credit history in most cases, so I would think this would be the most crucial time to level-set and know where you stand. But it’s not just college students. MoneyTips found that 30% of the general population they surveyed don’t know their credit score either.

The point is, you need to know your credit score and your credit history. The good news is that it’s easy to accomplish this. For simplicity, I recommend using free tools like Credit Sesame and Credit Karma. But as a consumer, you’re entitled to get a free copy of your credit report from each of the three credit bureaus (Equifax, Experian, and TransUnion) every year.

MU30 even built a Credit Score Estimator tool so you can estimate what your score should be.