Personal loans are a broad category of loans you can use for almost anything, such as home improvement loans or medical expenses.
Qualifying for a personal loan isn’t always easy. After you submit your loan application, lenders will run a credit check to see if you’re a trustworthy borrower, and to determine what rates they will apply to your loan.
For most lenders, you will need a credit score of at least 620 to be approved, but there are some lenders who offer loans for those with lower scores.
On this page:
- What Credit Score Do You Need to Be Approved?
- How to Qualify for a Personal Loan
- Understanding Your Credit Score
- How Do You Apply for Personal Loans?
What Credit Score Do You Need to Be Approved for a Personal Loan?
There is no universal minimum credit score to be approved for a personal loan. Most lenders offering bad credit loans, however, will require at least a 560 score. If your score is lower than that, you may only be eligible for payday loans which you should avoid if possible.
The following table shows the minimum credit score requirement for a number of personal loan companies.
|Lender||Minimum Credit Score||Rates (APR)|
|LightStream||660||3.49% – 19.99%* with AutoPay|
|Payoff||640||5.99% – 24.99%|
|Upgrade||620||7.99% – 35.97%|
|Upstart||620||7.00% – 35.99%1|
|LendingPoint||585||9.99% – 35.99%|
Below you will be able to compare some popular lenders’ minimum credit scores, interest rates, loan amounts, and repayment terms by credit category.
Personal Loans for Poor Credit
You can be approved for a personal loan or installment loan even if you have a very low credit score, but you’ll pay a high interest rate.
These rates can be quite expensive over time, so be aware of the total cost of your loan before signing. Generally, we recommend avoiding any loans with APRs above 36%.
Two Lenders Offering Personal Loans for Poor Credit
To compare other options, you can check out our guide to the best bad credit loans.
Personal Loans for Fair Credit
Once your score improves a bit, you have more options. Typically, interest rates will also be lower in this credit range when compared to bad credit loans.
To compare other options, you can check out our guide to the best fair credit loans.
Two Lenders Offering Personal Loans for Fair Credit
Personal Loans for Good Credit
Finally, for borrowers with “strong” credit profiles, terms can be even better. Lenders offering loans to good credit borrowers typically offer the lowest rates and friendliest repayment terms.
Two Lenders Offering Personal Loans for Good Credit
To compare other options, you can check out our guide to the best good credit loans.
How to Qualify for a Personal Loan
To qualify for personal loans, borrowers will need a reasonable credit score, proof of income to show they can pay back the loan, and some other required documentation.
However, qualifying requirements, interest rates, and other loan terms vary dramatically from one lender to another. That’s because there are all kinds of personal loan lenders catering to different clients.
Banks, credit unions, online lenders, and peer-to-peer lenders all make personal loans available, but some have strict qualifying requirements, while others offer bad credit loans at higher rates.
Anyone looking for a personal loan should try to improve their credit as much as possible, as higher credit scores open up the door to more loan offers and better rates.
>> Read more: How to Get a Loan With No Credit Check
Other Factors That Determine Approval
While credit is extremely important in determining if you’ll be approved for a loan, it’s not the only thing that matters. Lenders also look at some other financial characteristics, including:
- Your income: Lenders want to know you have a reliable source of income and so may require pay stubs or tax returns.
- Your other debt: Lenders usually calculate your debt-to-income ratio which is total debt divided by your total income. If it’s too high (usually above 30% or so), you may not be able to borrow—especially if you don’t have excellent credit.
- Collateral: If you qualify for a secured loan and pledge assets as collateral, you can get financing more easily and get a lower interest rate.
- Repayment history: Lenders will look carefully at your payment history on your credit report to assess the likelihood you’ll repay a loan.
Understanding Your Credit Score
You have lots of different credit scores, but the two most commonly used are your FICO and VantageScore. Both range from 300 to 850, with higher scores preferred to lower scores. Here’s how lenders typically view different scores:
- 300 to 559 (no credit or poor credit) – A credit score in this range indicates no or little credit or a damaged credit history potentially caused by bankruptcy or excessive defaults. Personal loans are available, but the terms of the loan are usually restrictive, and the interest rate is high.
- 580 to 669 (fair credit) – This range also shows a damaged credit history, often caused by loan defaults or an excessive number of late payments to multiple lenders. Usually, lenders recommend you repair your credit first, then apply for a loan. Loans are available, but you’ll pay a higher interest rate.
- 670 to 739 (good credit) – With a credit score in this range, you’re more likely to secure a personal loan with a decent interest rate.
- 740 to 799 (very good credit) – Credit scores considered very good can qualify you for favorable rates, and you’ll have your pick of lenders.
- 800 to 850 (excellent credit) – With excellent credit, you’ll get low interest rates, you’ll be eligible to borrow larger loan amounts, and you’ll be able to qualify for loans with even the most stringent qualifying requirements.
>> Read More: Can personal loans improve your credit score?
How Do You Apply for Personal Loans?
When you’ve shopped around among lenders and found the right one, you’re usually able to apply online and can often get a decision within minutes. However, some small local banks or credit unions may require you to visit a branch to apply for a loan.
When you apply for a personal loan, you’ll need to submit personal information, including your Social Security number and other relevant info. Lenders check your credit and either approve or deny your loan. They’ll also let you know the specific loan terms you’ve qualified for. Pay attention not only to the monthly payments, but also any fees you’ll have to pay and how long you’ll have to pay off the loan.
If your credit score is below the mid-600s, you’ll have few choices for personal loans and will pay a fortune in interest if you obtain financing.
But once your credit score hits around 740, you should qualify for the best personal loans with very low rates—provided you also have a steady income and can meet other lender requirements.
Just remember, whatever your credit score, shop around to find the loan that’s most affordable for you.
*Your loan terms, including APR, may differ based on loan purpose, amount, term length, and your credit profile. Excellent credit is required to qualify for lowest rates. Rate is quoted with AutoPay discount. AutoPay discount is only available prior to loan funding. Rates without AutoPay are 0.50% points higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice.
**Payment example: Monthly payments for a $10,000 loan at 5.95% APR with a term of three years would result in 36 monthly payments of $303.99.
1 The full range of available rates varies by state. The average 3-year loan offered across all lenders using the Upstart platform will have an APR of 21.97% and 36 monthly payments of $35 per $1,000 borrowed. For example, the total cost of a $10,000 loan would be $12,646 including a $626 origination fee. APR is calculated based on 3-year rates offered in the last 1 month. There is no down payment and no prepayment penalty. Your APR will be determined based on your credit, income, and certain other information provided in your loan application.