What Credit Score Do You Need for a Personal Loan?

Credit score requirements for personal loans can vary dramatically by loan company, especially since some lenders focus solely on good-credit borrowers, while others are much more lenient. That said, consumers with a low or fair credit score will typically pay much higher interest rates and loan fees, while those with good or excellent credit have a better chance of qualifying for personal loans with the best rates and terms.

Generally speaking, you’ll have the best chance at a personal loan with a good rate and low fees (or no fees) if you have a FICO Score that’s considered “good,” or a score of 670+. If you have a “very good” credit score (740 to 799), or an “exceptional” score (800+), your chances at the best personal loans are even greater.

Key Takeaways

  • Personal loans are commonly used for purposes like debt consolidation, home remodeling projects, and other large purchases.
  • These loans are popular because they come with fixed interest rates, fixed repayment plans, and a monthly payment that stays the same for the life of the loan.
  • Getting a personal loan with bad credit or fair credit is certainly possible, although you’ll likely pay higher interest rates and more fees.
  • If you’re able to increase your credit score into the good, very good, or exceptional range, you’ll have a better shot at qualifying for personal loans with the best rates and terms.

What Credit Score Is Required to Get a Personal Loan?

While you can get a personal loan with a low credit score, most lenders require borrowers to have at least good credit to get approved, or a FICO Score of 670 or higher.

The chart below shows how your credit score impacts your ability to get a personal loan at every level, and what you may find when you apply.

FICO Score Range Personal Loan Impact
Poor Credit (FICO Score below 580) Qualifying for a personal loan may be challenging, although some lenders offer bad-credit loans. If you’re approved, you’ll likely pay higher fees (including origination fees) and a sky-high interest rate.
Fair Credit (FICO Score of 580 to 669) Borrowers with fair credit can qualify for personal loans, but typically with higher fees, higher interest rates, and lower loan amounts.
Good Credit (FICO Score of 670 to 739) Good-credit borrowers have a better shot at personal loans with the best rates and terms, in addition to higher loan amounts.
Very Good Credit (FICO Score of 740 to 799) Loan applicants with very good credit can often qualify for high loan amounts as well as loans with no origination fees.
Exceptional Credit (FICO Score of 800+) Applicants with exceptional credit can typically have their pick of personal loans, including options with the lowest possible rates, no origination fees, and high loan amounts.

How Does a Personal Loan Work?

Personal loans give you a lump sum of money upfront, and they are typically unsecured and require no collateral. Once you receive the loan funds in your bank account, you can spend the money however you see fit.

While loan terms vary across providers, many of the best lenders let you borrow up to $50,000 with a personal loan with flexible repayment terms. For example, you may be able to pay back the debt over anywhere from 24 to 120 months, depending on the lender and loan amount.

Note that, in addition to the interest charged on personal loans, many charge origination fees up to a certain percentage of the loan amount. These fees are most common for personal loans for bad credit.

Factors That Affect Your Credit Score

Understanding the factors that impact your FICO Score can help you determine the steps you need to take to improve it over time. Consider the following aspects of your credit that might need some work:

  • Payment history (35%): This factor considers whether you pay your bills on time each month.
  • Amount owed (30%): Also known as your credit utilization ratio, this factor considers how much debt you owe in relation to your credit limits.
  • Length of credit history (15%): This factor considers the average length of your credit history across all open accounts.
  • Credit mix (10%): This factor considers the different types of credit you might have, including revolving credit accounts, installment loans, and more.
  • New credit (10%): This factor rates how much new credit you have applied for in the recent past.

Note that, by improving your credit score, you stand a better chance of qualifying for the best possible rates and terms. With that in mind, it can pay off in the long run to spend time improving your score before applying for a personal loan.

What Are Other Requirements to Get a Personal Loan?

There are requirements for personal loans that extend far beyond the credit score you have. These include but are not limited to the following:

  • Debt-to-income (DTI) ratio: Loan companies will look at your debt-to-income (DTI) ratio, or how much you owe in regular, recurring bills in relation to how much you earn. This can include revolving credit like credit cards, as well as installment loans such as auto loans, student loans, or mortgages. Monthly costs like utilities are not included.
  • Loan terms: Lenders also consider the loan terms you’re asking for when you apply, including the amount you want to borrow, the repayment terms, and your anticipated monthly payment.
  • Income: Having a steady stream of predictable income dramatically increases your chances of qualifying for a personal loan.

How to Compare Personal Loans

To find the best personal loans available today, you should look at banks, credit unions, and online lenders. Many online loan companies offer preferential rates and terms to eligible applicants, and they make it easy to apply for a loan and get funding from the comfort of your home.

Here are the loan factors you’ll want to consider and compare:

  • Interest rates: Interest rates can vary dramatically across different lenders. If you want to find out the rate that you may need to pay, look for lenders that let you “check your rate” and gauge your approval odds without a hard inquiry on your credit reports
  • Loan amounts: Make sure you look at lenders that offer the loan amount you need, or at least a range of amounts that could work for you.
  • Loan fees: Beyond interest rates, you’ll also want to look at the kinds of fees that might come with a loan, including origination fees. 
  • Repayment terms: Make sure that the lender you’re considering offers a repayment term that works for you, keeping in mind that the loan term will determine your monthly payment.
  • Total interest charges: Finally, use a personal loan calculator to determine the total costs of each loan you’re considering.

Personal Loans for Bad Credit: Pros and Cons

As previously mentioned, it’s possible to get a bad-credit loan, but you’ll pay more for these loans over time. Consider the pros and cons of personal loans for bad credit before you apply.

  • Higher likelihood of being approved with a low credit score than with a standard personal loan

  • As less importance is placed on credit scores, loan requirements are often more flexible

  • Fast source of funding within a few business days

  • Higher interest rates usually apply

  • Origination fees up to a percentage of the loan amount may apply

  • Typically lower loan limits overall

Does Taking Out a Personal Loan Hurt My Credit Score?

Applying for a personal loan will result in a hard inquiry on your credit reports, which can negatively impact your credit in the short term. However, making on-time payments on your personal loan can help your credit, as does adding an installment loan to your profile in order to improve your credit mix.

How Can I Improve My Credit Score Fast?

To improve your credit score quickly, you should:

  • Make all debt payments on time
  • Keep your credit utilization below 30% of your available credit limits
  • Halt requests for new credit
  • Keep old credit accounts open to increase the length of your credit history

What Are the Easiest Personal Loans to Get?

The easiest personal loans to get depend on your income, your credit score, and other factors. Secured loans are generally easy to get approved for, since they require collateral that acts as insurance against the borrower failing to repay their debt. Consider checking your rate with multiple lenders to find one that is likely to approve you for the funding you need.

The Bottom Line

You can get a personal loan with nearly any credit score, but you’ll pay more in interest and fees if your score is on the lower end. If you can afford to wait, it might be wise to improve your credit score into the “good credit” range before applying for a loan.

Article Sources
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  1. myFICO. “What Is a Credit Score?

  2. Consumer Financial Protection Bureau. “What Is a Personal Installment Loan?

  3. Consumer Financial Protection Bureau. “Do Personal Installment Loans Have Fees?

  4. myFICO. “What’s in My FICO® Scores?

  5. myFICO. “Credit Checks: What Are Credit Inquiries and How Do They Affect Your FICO® Score?

  6. myFICO. “What Does Credit Mix Mean?

  7. myFICO. “What Is Payment History?

  8. myFICO. “How to Repair Your Credit and Improve Your FICO® Scores.”

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