What Credit Score Do You Need for a Personal Loan?

Your credit score is one — but not the only — factor that lenders use to decide your rate and loan amount.
Ronita Choudhuri-Wade
Annie Millerbernd
By Annie Millerbernd and  Ronita Choudhuri-Wade 
Edited by Kim Lowe

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Credit score requirements for personal loans vary across lenders. Many give preference to borrowers with good or excellent credit scores (690 and above), but some lenders accept borrowers with bad credit (a score below 630).

The typical minimum credit score to qualify for a personal loan is 560 to 660, according to lenders surveyed by NerdWallet. Some lenders may require a higher score.

A high credit score doesn’t guarantee you’ll qualify or get a low interest rate. Qualifying rests largely on your creditworthiness, which is usually a combination of your credit history and score, in addition to income and debt. Use this calculator to learn what loan options you may have based on your credit score.

What you need to qualify for a personal loan

Just because you meet a lender’s minimum credit score requirement doesn’t mean you’ll qualify for a loan.

Lenders have a range of criteria they consider on an application. Some look at alternative data, like where you went to college and what field you work in. Others look mostly at your credit report and history, along with your income and debts.

Here’s what most lenders look at on a personal loan application:

  • Credit score: Many lenders look at the FICO credit scoring model, but some use VantageScore. Other lenders say they use many data points to determine approval, which may include a FICO or VantageScore.

  • Credit history: Lenders like to see a long credit history on a loan application. A lender may say it requires a minimum of two or three years of credit history, but longer is typically better. More accounts throughout your credit history shows a lender how diligently you’ve made payments. Borrowers with multiple credit cards, a mortgage, or an auto loan showing regular on-time payments may be more likely to qualify.

  • Debt-to-income ratio: Lenders seek borrowers who make enough money to meet their current monthly financial obligations, plus loan payments. Many use your debt-to-income ratio to see whether another loan would overextend your finances.

  • Free cash flow: Your debt-to-income ratio doesn’t account for expenses like gas, groceries and rent, so some lenders look at bank account transactions to see how much money borrowers have left after other expenses. Lenders call this “free cash flow,” and the more of it you have, the more confident a lender may feel approving your application.

Personal loans for fair or bad credit

Though lenders consider multiple factors on a loan application, your credit score is often given a lot of weight.

Borrowers with fair or bad credit often qualify for high rates, which can be up to 36%. A low credit score could also be the reason a lender approves you for a small loan amount.

Lenders that offer fair-credit loans may look beyond your credit score to make a loan decision. Credit unions, for example, look at a member’s standing with the credit union and other factors on an application.

Tips to build your credit

If you have time to build your credit before applying, you may improve your chance of qualifying for a personal loan at a low rate. Your credit score won't go from poor to good overnight, but the following tips can help.

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1. Make payments on time

Credit card and loan payments that are more than 30 days past due can cause your credit score to drop by up to 100 points. Consider setting up automatic payments or due date reminders to ensure you won’t miss payments on your current debts. If the payment date doesn’t work with your budget, ask your creditors to change it.

2. Dispute credit reporting errors

Review your credit reports from each of the three credit bureaus – Equifax, Experian and TransUnion – to see if there are any errors, like incorrect account balances or accounts you don’t recognize that may be dragging your score down. Dispute any mistakes online, by mail or by phone. You can get weekly credit reports for free at AnnualCreditReport.com.

3. Decrease your credit utilization

Your credit utilization ratio is the percentage of your available revolving credit that you’ve spent. Try to keep this number below 30%. If it's higher, take time to pay down your credit card balances and other credit lines. Asking for a credit limit increase can also lower your credit utilization.

How to compare personal loans

Check annual percentage rates. The APR is the total cost of the loan, including interest and fees. APR provides an apples-to-apples cost comparison across personal loans and other financing options.

Pre-qualify for multiple loans. Many lenders let you pre-qualify to preview your potential rate and monthly payments before applying for a loan. Pre-qualifying won’t affect your credit score and can help you decide which personal loan fits your budget and borrowing needs.

Consider other loan types. Adding a co-borrower or collateral to your application may help you qualify or get a lower rate, but not all lenders offer co-signed, joint or secured loans. Most lenders only advertise unsecured loans, but may include information about other loan types in their website’s FAQ or blog section.

Weigh other features. Lenders may include perks like credit-building assistance, free career coaching, and unemployment or hardship assistance. If you have two affordable loan offers, compare other features that may be helpful for your plans.

Comparing options? See if you pre-qualify for a personal loan - without affecting your credit score
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