What Credit Score Do You Need for a Personal Loan?

If you’re gearing up for a major expense or want to consolidate high-interest debt, you might consider a personal loan. But you often need a minimum credit score to qualify for a personal loan.

Most lenders use your credit score to determine your interest rate and loan terms. Other factors, like your income and current debt, contribute to your ability to qualify for a loan, but the better your credit score, the better loan terms you’ll usually receive.

What is a credit score?

Your credit score is a number between 300 and 850 that represents your credit history. Personal loan lenders use your credit score to get an idea of how likely you are to repay a loan.

There are several different scoring models that assign credit scores based on the information in your credit report. One of the most commonly-used credit scoring models is the FICO score, developed by the Fair Isaac Corporation.

Other companies have different credit scoring models, but most lenders use FICO scores when assessing your loan and credit card applications.

FICO scores are divided into the following credit score ranges:

Below 580: Poor
580 to 669: Fair
670 to 739: Good
740 to 799: Very Good
800 or higher: Exceptional

Compare Rates Now

Tip: A good, very good, or excellent credit score will make it more likely you qualify for a larger loan and a lower interest rate.

FICO scores and other credit scoring models take several different factors into account when determining your credit score, including:

Payment history: Whether or not you’ve made previous payments on time. Doing so positively impacts your credit score.
Credit utilization: How much of your available credit you use. A lower credit utilization can help improve your credit.
Length of credit history: How long your credit accounts have been active. A longer credit history generally improves your credit.
Credit mix: If you carry a variety of debt — like credit cards, installment loans, and mortgages — this can boost your credit score.
New credit inquiries: The number of accounts you’ve applied for recently. Too many credit inquiries in a short period of time can lower your credit score.

Minimum credit score for a personal loan

Your credit score — along with your income and debt-to-income ratio (DTI) — impacts your ability to qualify for a personal loan. Your credit score also affects the loan amount and interest rates you’re offered.

Lenders, understandably, want to avoid taking on too much risk. Looking at your credit score when assessing your loan application allows them to get a sense of how likely you are to repay a loan.

The higher your credit score, the more likely you are — from a lender’s perspective — to pay back your loans. That’s because your credit score demonstrates your history of repaying debt. Paying your loans and credit cards off on time helps boost your credit score. On the other hand, falling behind on payments and overextending yourself leads to a lower credit score.

The minimum credit score required for a personal loan depends on the lender. Some are more lenient than others when it comes to lending to borrowers with bad credit. Some lenders require fair credit — a score of at least 580 — to qualify for a loan. But many require a good credit score for a personal loan — generally, a score in the high 600s or above. Fewer lenders offer personal loans for bad-credit borrowers, or those with a credit score below 580.

Credit score range and personal loans

While different lenders have different eligibility requirements for personal loans, here’s what you might expect when applying for a personal loan based on your credit score:

Credit score range	Impact on loan application and terms
Less than 580: Poor	Lenders will generally see you as a very risky borrower. You may struggle to qualify for a loan on your own.
580 to 669: Fair	You may qualify for a loan, but you’ll probably face higher interest rates and lower loan limits.
670 to 739: Good	You’re more likely to qualify for a loan with a decent interest rate and loan limit.
740 to 799: Very Good	You’re more likely to qualify for low interest rates and higher loan limits.
800 or more: Exceptional	Lenders will typically see you as a very low-risk borrower. You’re more likely to qualify for the lowest available interest rates and highest loan limits.

Compare Rates Now

Tips to improve your credit score

If you don’t have the credit score needed for a personal loan — or your score is preventing you from getting a low interest rate — you can take steps to improve your credit score. While you usually won’t see your credit score jump overnight, the following strategies can help you raise it over time:

Pay off your debt on time and in full: Payment history is the biggest factor that affects your credit score. Improve your score by making full payments on time, every time.
Don’t max out your credit cards: Using all or the majority of your credit limit signals that you may be overextended. Lowering your credit utilization can help raise your credit score.
Keep old credit cards open: Avoid closing old credit cards, even if they’re paid off. The length of your credit history has a big impact on your credit score, so keeping those long-standing accounts open makes a difference.
Look for errors on your credit report: Hopefully, your credit report is error-free, but mistakes do happen. Check it for errors at least once per year and before applying for a loan. If you find a mistake, follow the Consumer Financial Protection Bureau’s steps for disputing it.

How to get a personal loan with bad credit

If you aren’t able to wait for your credit score to improve, you may need to get a personal loan for bad credit. While it’s not as easy to get a loan with bad credit, it’s not impossible. In fact, you have several options:

Secured loans: Secured loans require you to put up collateral — like your house, car, or another valuable asset — in order to qualify. Because they’re less risky for the lender, they tend to have lower interest rates and are usually easier to qualify for.
Get a cosigner on a loan: If you’re struggling to qualify for a personal loan, you may be able to apply for a loan with a cosigner. A cosigner with good credit can help you qualify for a loan with low interest rates, but their credit, as well as your own, will be on the line if you default.
Credit-builder loans: Credit-builder loans work “backward.” Instead of receiving your funds upfront, you make monthly payments — which can help you build your credit — before you receive your funds. Look for credit-builder loans at credit unions or smaller community banks.
Payday alternative loans (PALs): PALs are small loans available to federal credit union members. These short-term loans have repayment periods of up to 6 months and have much lower interest rates than traditional payday loans.

Check Out: Types of Bad Credit Loans

FAQ

Is it possible to get a personal loan with a 600 credit score?

Open

Yes, you can get a personal loan with a credit score of 600 — which, according to FICO’s scoring model, is considered fair.

While a score of 600 is lower than average, meaning lenders likely will consider you a riskier borrower, you may still be able to qualify for some loans. However, options will be limited and you’ll likely face higher interest rates and lower loan limits.

What are the easiest loans to get approved for?

Open

The easiest loans to get approved for are usually those that don’t perform a credit check. But some of these loans — like payday loans, for example — compensate for this by charging extremely high interest rates.

Just because you can get approved for a loan doesn’t necessarily mean you can afford it. However, if you have good, very good, or excellent credit, it won’t be as difficult to qualify for more affordable loans.

Can you get a loan with bad credit?

Open

Yes, but your options will be limited. While some lenders do offer loans for bad credit, they tend to have higher fees and interest rates that may make them unaffordable.

Alternatively, you can use a cosigner — who has good credit — to apply for a loan with some lenders. Or you could look into a payday alternative loan if you’re a member of a federal credit union.

Read More:

Meet the expert:

Emily Batdorf

Emily Batdorf is a personal finance expert, specializing in banking, lending, credit cards, and budgeting. Her work has been featured by USA TODAY Blueprint, New York Post, MSN, and Forbes Advisor.