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Home Loans What Credit Score Do You Need for a Personal Loan?

What Credit Score Do You Need for a Personal Loan?

credit score for personal loan

At a glance

The credit score you need to get a personal loan varies from lender to lender. However, you may have a hard time getting a good loan with a low score.

Written by Jesslyn Firman and Yi-Jane Lee

Reviewed by Victoria Scanlon and Robert Jellison

Jul 11, 2022

Fresh advice you can trust

We promise to always deliver the best financial advice that we can. Our writers and editors follow strict editorial standards and operate independently from our advertisers and affiliates. Learn more about how we make money.

If you think your credit score will affect your chances of securing a personal loan, you’re right. Your credit score is one of the main factors that lenders use to determine your creditworthiness, and you’ll have more loan options with a higher score.

That said, don’t worry if you don’t have an excellent credit score right now—you can always improve your score before applying for a loan, or explore alternatives to a traditional personal loan.

Table of Contents

  1. Is there a minimum credit score required for a personal loan?
  2. Other requirements for personal loans
  3. How to improve your credit score before applying for a personal loan
  4. Alternatives to personal loans

Is there a minimum credit score required for a personal loan?

No, there isn’t a universal minimum credit score required to get a personal loan. However, lenders favor borrowers with credit scores that fall within the “good” range—aka at least a 670 credit score in FICO models or 661 score in VantageScore models.

If your score isn’t quite that high, you may still be able to get a loan. However, if your score is lower than 600, you’ll probably have a pretty tough time qualifying for anything.

The graphic below illustrates the credit score ranges in both models and how they’re classified. The farther you are to the right side of the credit score gauge, the easier it will be to get approved for a personal loan (or any other type of credit).

FICO Score Classifications

fico credit score range

VantageScore Classifications

vantagescore credit score range

How easy is it to qualify for different types of personal loans?

What credit score you need for a personal loan also depends on the type of loan it is:

  • Unsecured loans: Unsecured personal loans aren’t backed by collateral. They’re higher risk for lenders, so they often have higher credit score requirements.
  • Secured loans: Secured personal loans are backed by some form of collateral—an asset that you’ll forfeit if you fail to pay back the loan, such as your car. For this reason, they’re easier to get than unsecured personal loans and often come with lower interest rates. 1

Some companies offer personal loans for people with bad credit. However, these loans usually come with worse interest rates and higher fees.

Do you need credit to get a loan?

No, you don’t necessarily need credit to get a loan. However, if you don’t have a credit history, lenders will have a more difficult time determining your creditworthiness, so you’ll have fewer loan options. You’ll also probably pay higher interest rates and fees.

How can you get a personal loan with bad credit or no credit?

If you’re trying to get a loan with a bad credit score or no credit score at all, try finding a lender that offers secured personal loans or considers factors other than your credit score. Some creditors may be willing to overlook your credit if the rest of your finances are healthy (i.e., if you have a stable income and a lot of money saved away).

Additionally, you can try applying with a cosigner, which is someone with good credit who will agree to pay back your loan if you default (stop paying it). Many lenders will relax their requirements if you have a cosigner, so you can ask around and see if you have any friends or family members who will cosign your personal loan.

If you go this way, make sure you really are prepared to pay the loan back in full and on time. If you don’t, you might badly strain your relationship with your cosigner.

Other requirements for personal loans

In addition to running a credit check on you, personal loan providers will also usually consider the following other factors when assessing your loan application:

  • Credit history
  • Income
  • Employment status
  • Debt-to-income ratio
  • Savings

All of these factors help lenders determine how capable you are of repaying your personal loan and how likely you are to abide by the terms of your loan agreement (e.g., by always paying in full and not making late payments).

As mentioned, if your credit isn’t very good, you can look for lenders that weight other factors more heavily than your credit score. Search the web for reviews of loan providers in your area or call local credit unions and ask about their requirements.

Don’t take out payday loans, even if you have bad credit

In some states, it’s possible to get short-term loans called payday loans even if you have very bad credit. Don’t fall into this trap—payday loans have predatory terms, and getting out of payday loan debt can be very hard. If you need money and can’t get a personal loan, check out some of the alternatives at the bottom of this article.

How to improve your credit score before applying for a personal loan

If your credit score isn’t ideal and you’re not in a particular hurry to take out a personal loan, consider spending a few months improving your credit score before you apply.

Use the following tips to start building your credit:

  • Check for errors on your credit report and file a credit dispute if you find any
  • Improve your payment history by bringing past-due accounts current
  • Avoid making any late payments
  • Keep your credit utilization ratio low by using less of your credit limit
  • Ask someone with a good credit history to add you as an authorized user on their credit card

Taking the time to build up your credit won’t just make it easier to get a personal loan with great terms. It’ll also allow you to reap the other benefits of good credit, such as eligibility for credit cards with rewards, lower insurance premiums, and even a smoother apartment-hunting process (landlords often impose credit score requirements for renting an apartment).

Make sure to regularly check your credit reports with the three main credit bureaus (Experian, Equifax, and TransUnion) and your credit scores to track your improvement. You can request free copies of your credit report at AnnualCreditReport.com.

Alternatives to personal loans

If your credit score is too low for an unsecured personal loan and you don’t have any collateral you can use for a secured personal loan, then you can still get some quick cash with these personal loan alternatives:

  • Credit card cash advance: This is a convenient way to get money on the go if you have a credit card. All you need to do is use your card at an ATM and enter a special PIN. However, interest rates on credit card cash advances are generally quite high, so this will end up costing you in the long run.
  • Peer-to-peer loans: Peer-to-peer (P2P) lending allows you to borrow money from other people rather than going through a traditional bank. While P2P loans don’t necessarily require good credit, you may end up paying higher interest rates and fees than you would with a conventional loan. 2

Don’t hesitate to seek out help if you’re having trouble managing your finances. You can receive credit counseling from a nonprofit credit counseling organization, ask your creditors about hardship programs, or explore other solutions for getting out of debt.

Takeaway: Taking out a personal loan is harder with a bad credit score, but it’s not impossible.

  • Lenders will be more willing to approve you for a personal loan if you have a good credit score, and you’ll also qualify for better interest rates and loan terms.
  • Personal loans can be either secured or unsecured. Secured personal loans are easier to get and come with lower interest rates because they require collateral.
  • In addition to your credit score, lenders may consider your credit history, income, employment status, debt-to-income ratio, and savings when reviewing your application.
  • If you don’t urgently need money, consider improving your credit score before applying for a personal loan to boost your approval odds and save money in the long term.
  • If you’re struggling to get a personal loan, explore alternatives, such as a credit card cash advance or peer-to-peer loan.

Article Sources

  1. Experian. "What Is a Secured Loan?" Retrieved July 11, 2022.
  2. Lending Tree. "What Is a Peer-to-Peer Loan?" Retrieved July 11, 2022.

Jesslyn Firman

Credit Analyst

View Author

Jesslyn Firman is a credit analyst for FinanceJar. Her work covers credit repair and credit scores, and in the past she's extensively researched and written about the insurance industry. Jesslyn has a B.S. in Finance and Accounting and an MBA in Management.

Yi-Jane Lee

View Author

Yi-Jane Lee is a credit analyst who writes for FinanceJar. Her work covers credit repair, the credit scoring industry, budgeting, and debt. She has a BA from McGill University in Montreal, Quebec.

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