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When you apply for a personal loan, your credit score will play a large role in determining whether you get approved. In most cases, you’ll need good to excellent credit — a score of 700 or higher.
Each lender has its own set of eligibility requirements — so the minimum required score you’ll need to get a personal loan will ultimately depend on the lender you choose.
If you’re wondering what credit score you need for a personal loan, here’s what you should know:
- When you apply for a personal loan, the lender will check your credit score
- What credit score do I need to take out a personal loan?
- What loan features should I consider before choosing a lender?
- How to apply for a personal loan
When you apply for a personal loan, the lender will check your credit score
A credit score is a risk score that’s calculated using information gathered by the three credit bureaus: Equifax, Experian, and TransUnion. When you apply for a personal loan, the lender will review your credit to determine how likely you are to repay the loan.
Generally, borrowers with high credit scores are seen as less of a risk than borrowers with bad credit — which is why good credit borrowers typically have an easier time getting approved. Several lenders offer personal loans for bad credit, but keep in mind that these loans usually come with higher interest rates compared to good credit loans.
If you find any errors, dispute them with the appropriate credit bureau to potentially boost your credit score.
You can also consider applying for a credit-builder loan if your credit isn’t where you’d like it to be. With this loan, the lender (usually a credit union) will deposit a small amount into a locked savings account. You’ll make payments over a set period of time, and the lender will report your payments to the credit bureaus. At the end of the loan term, you’ll receive the funds. Making all your payments on time can help you boost your credit score.
What factors affect your credit score?
Five main factors make up your credit score:
- Payment history: Lenders want to see that you have a history of making on-time payments. Your payment history makes up the largest portion of your credit score.
- Amounts owed: Your credit utilization is the amount you owe on revolving credit lines compared to your overall credit limits. Keeping your credit utilization as low as possible can help show lenders that you aren’t overextending yourself financially.
- Length of credit history: Having a long credit history shows you’re experienced and able to handle credit. This is why it’s usually a good idea to keep accounts open even if you’re not using them.
- New credit: Whenever you apply for a new credit account — such as a loan or credit card — it can temporarily affect your credit. Opening multiple accounts in a short period of time can make you seem like more of a risk to lenders.
- Credit mix: Having a diverse portfolio of credit accounts — including both installment loans as well as revolving credit — is another way to show lenders that you can manage multiple kinds of debt.
- Verifiable income that supports your ability to repay the loan
- Low debt-to-income ratio — usually no higher than 40%
Learn More: How to Get a Personal Loan
How a personal loan will affect your credit
Many lenders allow borrowers to see their personalized loan offers with only a soft credit check that won’t affect their credit — for example, you can compare your prequalified rates from Credible’s partner lenders with no impact on your credit.
But when you officially apply for a personal loan, the lender will perform a hard credit check. This could cause a slight drop in your credit score — though this is usually only temporary, and your score will likely bounce back within a few months.
Ultimately, these positive effects could far outweigh any initially negative impact.
What credit score do I need to take out a personal loan?
Personal loan requirements — including the credit score you’ll need to qualify — vary by lender. Generally, you’ll need good to excellent credit, which typically means having a score of 700 or higher.
Keep in mind that having a good credit score can also help you qualify for the best interest rates. For example, here are the average personal loan interest rates offered to borrowers who took out a three-year loan through Credible in August 2022 based on their credit scores:
|Credit score ranges||Average APR|
|780 or above||8.92%|
|720 to 779||12.50%|
|680 to 719||17.97%|
|640 to 679||24.70%|
|600 to 639||29.64%|
|Less than 600||32.06%|
What if I have a poor credit score?
Several lenders offer personal loans for bad credit. This means you could still have a chance of approval even if your credit is less than stellar — though remember that these loans usually come with higher interest rates compared to good credit loans.
While many reputable lenders offer loans to people with bad credit, you should also be aware that some lenders prey on people with poor credit who need to borrow money. Do your research to make sure you’re working with a reputable lender, and avoid predatory lending at all costs.
A cosigner can be anyone with good credit — such as a parent, another relative, or a trusted friend — who is willing to share responsibility for the loan. Just keep in mind that this means they’ll be on the hook if you can’t make your payments.
Before applying for a personal loan, be sure to shop around and consider your options from as many lenders as possible. This way, you can find the right loan for your needs.
This is easy with Credible. Below you’ll find our partner lenders that offer personal loans for bad credit — you can compare your prequalified rates from each of them in just two minutes.
|Lender||Fixed rates||Loan amounts||Min. credit score||Loan terms (years)|
|9.95% - 35.99% APR||$2,000 to $35,000**||550||2, 3, 4, 5*|
|8.99% - 35.99% APR||$5,000 to $35,000||600||2, 3, 4, 5|
|6.99% - 24.99% APR|
$2,500 - $40,000
|660||3, 4, 5, 6, 7|
|11.25% - 24.5% APR||$5,000 to $40,000||640||2, 3, 4, 5|
|9.57% - 35.99% APR||$1,000 to $40,000||660||3, 5|
|7.99% - 35.99% APR||$2,000 to $36,500||600||2, 3, 4, 5, 6|
|7.99% - 24.99% APR||$5,000 to $100,000||700||2, 3, 4, 5, 6, 7
(up to 12 years for home improvement loans)
|18.0% - 35.99% APR||$1,500 to $20,000||None||2, 3, 4, 5|
|8.49% - 17.99% APR||$600 to $50,000 |
(depending on loan term)
|700||1, 2, 3, 4, 5|
|11.69% - 35.99% APR7||$1,000 to $50,000||560||3, 5|
|8.49% - 35.99% APR||$1,000 to $50,000||600||2, 3, 5, 6|
|4.6% - 35.99% APR4||$1,000 to $50,0005||580||3 or 5 years4|
What loan features should I consider before choosing a lender?
As you weigh your personal loan options, it’s important to take your time to compare as many lenders as you can. This way, you can find a loan that best suits your needs.
Here are several important factors to keep in mind while doing your research:
- Interest rate: Your loan interest rate will play a major role in determining your overall loan cost — in general, the lower your interest rate, the less you’ll pay on your loan over time. Keep in mind that other factors — such as your credit and the repayment term you choose — will affect the rates you’re offered.
- Repayment terms: You’ll generally have one to seven years to repay a personal loan, depending on the lender. It’s usually best to choose the shortest term you can afford to keep your interest costs as low as possible. Many lenders also offer better rates to borrowers who opt for shorter terms.
- Loan amounts: With a personal loan, you can typically borrow $600 up to $100,000 or more, depending on the lender. Be sure to borrow only what you need so your future repayment costs are manageable.
- Fees: Some lenders charge fees on personal loans, such as origination fees or late fees. These can increase your overall loan cost. Keep in mind that if you take out a loan with one of Credible’s partner lenders, you won’t have to worry about prepayment penalties.
- Cosigner option: If you have poor credit, applying with a cosigner could help you get approved for a personal loan — this might also get you a better interest rate. Not all lenders allow cosigners on personal loans, though, so you’ll need to check before you apply.
Before you apply for a personal loan, be sure to consider how much the loan will cost you. This way, you can be prepared for any added expenses.
You can estimate how much you’ll pay for a loan using our personal loan calculator below.
Enter your loan information to calculate how much you could pay
With a $ loan, you will pay $ monthly and a total of $ in interest over the life of your loan. You will pay a total of $ over the life of the loan.
How to apply for a personal loan
If you’re ready to apply for a personal loan, follow these four steps:
- Compare lenders. Be sure to compare as many lenders as possible to find the right loan for your situation. Consider not only rates but also repayment terms, any fees the lender charges, and eligibility requirements.
- Pick a loan option. After comparing lenders, choose the loan option that best suits your needs.
- Complete the application. Once you’ve picked a loan option, you’ll need to fill out a full application and submit any required documentation, such as pay stubs or tax returns.
- Get your funds. If you’re approved, the lender will have you sign for the loan so the funds can be released to you. The time to fund a personal loan is usually about one week — though some lenders will fund loans as soon as the same or next business day after approval.
If you decide to take out a personal loan, remember to consider as many lenders as you can to find the right loan for you. Credible makes this easy — you can compare your prequalified rates from multiple lenders in two minutes.
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About Rates and Terms: Rates for personal loans provided by lenders on the Credible platform range between 4.60%-35.99% APR with terms from 12 to 84 months. Rates presented include lender discounts for enrolling in autopay and loyalty programs, where applicable. Actual rates may be different from the rates advertised and/or shown and will be based on the lender’s eligibility criteria, which include factors such as credit score, loan amount, loan term, credit usage and history, and vary based on loan purpose. The lowest rates available typically require excellent credit, and for some lenders, may be reserved for specific loan purposes and/or shorter loan terms. The origination fee charged by the lenders on our platform ranges from 0% to 10%. Each lender has their own qualification criteria with respect to their autopay and loyalty discounts (e.g., some lenders require the borrower to elect autopay prior to loan funding in order to qualify for the autopay discount). All rates are determined by the lender and must be agreed upon between the borrower and the borrower’s chosen lender. For a loan of $10,000 with a three year repayment period, an interest rate of 7.99%, a $350 origination fee and an APR of 11.51%, the borrower will receive $9,650 at the time of loan funding and will make 36 monthly payments of $313.32. Assuming all on-time payments, and full performance of all terms and conditions of the loan contract and any discount programs enrolled in included in the APR/interest rate throughout the life of the loan, the borrower will pay a total of $11,279.43. As of March 12, 2019, none of the lenders on our platform require a down payment nor do they charge any prepayment penalties.