Ratings Methodologies for Personal Loans

NerdWallet currently rates and reviews traditional personal loan products as well as high-interest installment loans.

Data collection and review process

Traditional personal loan lenders

We survey more than 35 financial institutions that offer traditional personal loans, cap annual percentage rates at 36% and serve consumers in more than one state. These lenders include:
  • The largest national banks based on asset volume.
  • The largest credit unions based on search volume.
  • The largest digital lenders and lending platforms based on search volume.

High-interest lenders

In addition to traditional lenders, we also review companies that offer high-interest installment loans. These loans have APRs above 36% but below the triple-digit rates of payday lenders. We review companies that serve consumers in more than one state and are the top lenders by search volume.

For both traditional and high-interest lenders, we ask each company approximately 45 questions, interview company representatives and cross-check company websites to confirm product details. At least three writers and editors verify the facts to ensure accuracy of all data, from interest rates and fees to funding times and customer service hours.

Traditional lenders can receive a star rating from poor (1 star) to excellent (5 stars). The maximum allowable rating for high-interest lenders is 4 stars. Ratings are rounded to the nearest half-star.

How we rate personal loan lenders

NerdWallet rates lenders that offer traditional personal loans separately from those that offer high-interest loans due to the consumer risk associated with the latter type of loan.

Traditional personal loan lenders

For traditional lenders, we assess five categories and 31 subcategories. We weight four of the categories in this way:

  • Affordability, including competitive rates, no origination or prepayment fees and rate discounts for autopayments (30%).
  • Transparency in credit impact and loan product, including soft credit checks and credit reporting, as well as clearly presented rates, terms and fees (25%).
  • Flexibility, including options to change payment due dates; multiple loan types, amounts and terms; and refinancing options (25%).
  • Consumer experience, including available and convenient customer support, mobile apps and financial education (20%).

The fifth category is unweighted and discretionary. A lender’s rating may be lowered if it has faced governmental regulatory action in the past five years or been accused of predatory practices by a reputable source. A lender that offers a unique, consumer-friendly feature (outside of the scored categories above) that few others offer may earn a higher score.

High-interest lenders

For high-interest lenders, we assess eight categories and 26 subcategories. We weight seven of the categories in this way:

  • Overall cost, including APR and fees (25%).
  • Underwriting, including whether a lender checks credit and measures ability to repay (20%).
  • Credit-building features like reporting payments to credit bureaus and offering credit-building products (15%).
  • Cost structure that caps total interest and fees against principal and caps monthly payments against income (15%).
  • Transparency of rates, fees and other costs (15%).
  • Flexibility, including options to change payment due date and hardship plans (5%).
  • Consumer experience, including available and convenient customer service (5%).

The eighth category is unweighted and discretionary. A lender’s rating may be lowered if it has faced governmental regulatory action in the past five years. In addition, there are four essential subcategories a lender must have in order to earn four stars.

Data accuracy

Personal loan reviews are thoroughly reassessed annually. Writers and editors also make updates to data such as rate changes, new features and star ratings throughout the year as necessary. We establish and maintain contact with providers’ primary point people to ensure current information.

The review team

The Personal Loans review team is made up of reporters, writers and editors who cover traditional and high-interest personal loans as well as credit products such as paycheck advance and "buy now, pay later" apps. Each team member adheres to NerdWallet’s strict guidelines for editorial integrity.

Our writers’ bylines have appeared in The New York Times, The Associated Press, USA Today, MSN, MarketWatch, Yahoo! Finance and other national and regional media outlets in addition to NerdWallet. External media frequently tap our personal loans experts for input on industry trends and developments that impact consumers.

Do you want to provide feedback? Contact us at [email protected].