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What Credit Score Needed to Get a Personal Loan?

While most lenders require at least 600 credit score to get a personal loan, you can find a loan with 550-580 - but rates may be very high
Author: Baruch Mann (Silvermann)
Baruch Mann (Silvermann)

Writer, Contributor


Baruch Silvermann is a financial expert, experienced analyst, and founder of The Smart Investor.  Silvermann has contributed to Yahoo Finance and cited as an authoritative source in financial outlets like Forbes, Business Insider, CNBC Select, CNET, Bankrate, Fox Business, The Street, and more.
Interest Rates Last Update: April 15, 2024
The banking product interest rates, including savings, CDs, and money market, are accurate as of this date.
Author: Baruch Mann (Silvermann)
Baruch Mann (Silvermann)

Writer, Contributor


Baruch Silvermann is a financial expert, experienced analyst, and founder of The Smart Investor.  Silvermann has contributed to Yahoo Finance and cited as an authoritative source in financial outlets like Forbes, Business Insider, CNBC Select, CNET, Bankrate, Fox Business, The Street, and more.
Interest Rates Last Update: April 15, 2024

The banking product interest rates, including savings, CDs, and money market, are accurate as of this date.

You can trust the integrity of our unbiased, independent editorial staff. We may, however, receive compensation from the issuers of some products mentioned in this article. Transparency is a core value for us, see how we make money.

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required credit score for personal loan
(Photo by TierneyMJ/Shutterstock)

A personal loan is one of the most common forms of finance for funding a project, paying for a large purchase or consolidating debts. However, while a personal loan is a popular choice, there are still many people who are a little confused about this financial product including what credit score is needed to get a personal loan.

So, here we’ll delve into this topic in more detail to help you make an informed decision for your financial plans and wellbeing.

Why Lenders Check Your Credit Score?

While the application forms for personal loans from various lenders may differ, there is one thing that they all have in common; a credit check. Lenders check your credit report and credit score to establish your risk profile. This will not only determine if you will qualify for a loan, but also your rate.

Lenders need to evaluate risk to make all their lending decisions. If you have excellent credit, you’ll be considered to be a low risk, but if you have poor credit, there is a higher risk that you will not be able to repay your loan. This means that the lender will want to compensate for this risk with higher interest rates.

Another reason why a credit score check is important is that the lender can assess your debt to income ratio, an important factor affecting your loan eligibility. This is a percentage to express your current debt obligations as a percentage of your income.

If you have a high debt to income ratio, it means that you have very little disposable income to meet new borrowing. Ideally, your debt to income ratio should be less than 28 percent, but some lenders will allow new loans with a DTI of 36% or more.

In this chart compiled with LendingTree customer data, you can see that those with a 720+ credit score pay an average of 7.63%. At the other end of the scale, for those with a poor credit rating of less than 560, the rate shoots up to an eye-watering 113%.


What is the Required Credit Score for a Personal Loan?

The required credit score to be approved for a personal loan will depend entirely on the lender. However, while some lenders state their required credit score upfront, others are a little more obtuse about their personal loan requirements.

If a lender does not disclose a minimum credit requirement, they may allow the applicant to go through prequalification for a personal loan. This allows you to check the likelihood of approval without needing to have a hard credit inquiry logged on your credit report. Alternatively, you may be able to find out the minimums via consumer websites or lender filings with the S.E.C.

For example, Discover reported to the SEC that 91% of its personal loans were approved for borrowers with a FICO score of 660 plus. So, if you have a score less than 660, you are unlikely to be approved for a Discover personal loan.

For example, Happy Money requires a FICO score of 640 , while Avant needs a score of 580

However, the type of personal loan can also play a role in the minimum required credit scores. Here are the average credit score required from some of the most popular personal loan lenders:

Minimum Credit Score
Lending Club

Can You Get a Personal Loan With Poor or No Credit?

While the best rates may be available to those with good to excellent credit, it does not mean that those with poor or no credit will have no approval success.

In fact, there are a number of lenders who specialize in offering personal loan options for those with poor credit or no credit history. These lenders tend to focus less on your actual credit score and consider other factors such as:

If you’ve shown signs of getting your finances under control, a poor credit lender may be more willing to approve your personal loan.

If you can demonstrate that while you’ve had credit problems in the past, you are establishing a track record of making payments on time and you now have more disposable income, it could work in your favor.

If you have poor credit, you may struggle to qualify for an unsecured personal loan, but some lenders may offer a secured personal loan.

Essentially, this means that you provide some asset or form of security, such as a stock portfolio, vehicle or home that can be used for the loan. This provides the lender with the reassurance that if you default on your loan, they can seize the asset to recoup any losses.

One of the easiest ways to obtain a personal loan with poor or no credit is to have a co-signer on your account. This is a person with good credit who is prepared to take financial responsibility for the loan.

Your co-signer will need to provide their personal and financial information before passing a credit check, but it can dramatically increase your approval chances. Essentially, the co-signer is agreeing to step in and cover the debt if you fail to make your repayments.

What Are the Easiest Personal Loans You Can Get?

If you need some cash and are concerned about qualifying, there are several options for the easiest personal loans you can get. However, each of these loans do carry risks.

1. Emergency Loans

These loans typically allow you to borrow smaller amounts of up to $1,000 plus, but you may be able to have the funds deposited into your bank account the same business day that you sign your loan agreement.

However, this does come at a cost, with interest rates of up to 35.99% depending on your income, credit score, debt to income ratio and other factors. Typically, the lower your credit, the higher your rate.

Emergency loan lenders also tend to charge origination fees, which are a percentage of the loan amount that is paid upfront.

2. Payday Loans

 Payday loans tend to be remarkably easy to get, but there are major downsides.

Firstly, these loans are designed for a very short term period of a couple of weeks. While the interest amount may seem reasonable on a small sum, when you calculate it across a full year, you could be paying several hundred percent in interest charges.

For example, the average rate on a 14 day payday loan of $300 could run to 650% APR in some states. Additionally, if you miss the due date, you’ll incur rollover fees, which are excessively high.

3. No Credit Check Loans

As the name suggests, these loans don’t involve a credit check. However, as with a payday loan, this service comes at a very hefty price. You could be paying rates of up to 35.99% or more. You may also need to pay origination fees and massive late penalties if you miss your scheduled repayment.

While it may be tempting to opt for the easiest route to a personal loan, these methods carry high risks and hefty fees. So, it is a far better approach to take the time to choose a reputable lender with reasonable rates, even if it is a little more challenging to qualify.

How to Improve Your Credit Score for a Personal Loan?

Improving your credit score does not happen overnight, but if you’re thinking about a personal loan in the near future, there are several things that you can do.

  • Check for Credit Report Errors: The first thing you should do is request a copy of your credit report and check for any errors. While basic errors can impact your credit report, if you have accounts that have mistakenly been noted as outstanding or delinquent, they can seriously reduce your credit score. If you do find any errors, report them to the appropriate credit bureau to have your credit report amended.
  • Build Your Payment History: Your payment history is an important factor in calculating your credit score, so if you have time, try to focus on building a history of on time payments. If you’re not very organized, consider setting up auto pay for credit cards and other accounts, so you’ll at least pay the minimum amount due on time every month. You can always make additional payments throughout the month.
  • Work On Your Credit Utilization Ratio: Your credit utilization ratio is the amount of outstanding debt as a percentage of your total credit. For example, if you have several credit card accounts with a total credit limit of $10,000 and your total balances add up to $3,000, your credit utilization is 30%. Ideally, you should keep your percentage at less than 30%. If yours is higher, try to pay down some account balances.

This chart created with Experian data shows that those with an average to good credit score have an average credit utilization ratio of the optimum 33%. This ratio drops significantly for those with very good and excellent scores.

At the other end of the scale, the chart shows that those with poor credit scores typically have a very high credit utilization ratio, with an average of 73%. This will be a massive factor in lending decisions for those in this group.


How Getting a Personal Loan Affects Your Credit Score

Of course, you should be aware of the implications of getting a personal loan on your credit score. Initially, the hard credit inquiry needed to process your personal loan application will reduce your credit score by a few points. However, if you have excellent credit, this should not be too detrimental.

On going, the effect of your personal loan on your credit score will depend on how you manage the account. If you make your payments on time and in full each month, your new personal loan could actually help you to improve your credit score. On the other hand, if you have late or missed payments, it will damage your credit score.

Another consideration for your credit score is your credit utilization ratio. Although the loan will increase your credit, the account limit for the account will be maxed out initially. So, your credit utilization will increase.

However, as you pay down the loan it will equalize. The exception to this is if you use the loan proceeds to clear credit card debts and you keep the credit card accounts open, your loan will actually lower your credit utilization and therefore increase your credit score.

The Bottom Line

A personal loan is an effective way to fund your financial plans, but the credit score requirements are an important consideration.

Therefore, it is crucial that you are realistic about your score and look for loan products that you are likely to qualify for.

If you have excellent credit, you’re likely to access the best rates and have a solid chance of approval. But, if you have less than ideal credit, you’ll need to shop around for the best options for your financial circumstances.


It is possible to get a personal loan with a fair score, but you’ll have a harder time getting a competitive rate compared to someone with a 670 score or higher.

Initially, the personal loan will cause a drop of a few points from the hard credit inquiry and your credit utilization ratio will increase, but with responsible account management it shouldn’t cause credit score damage.

The hard credit inquiry is logged on your credit report, which is visible to any potential lenders. If you have multiple hard inquiries, it can be a red flag for potential lenders.

Yes, if you’ve made on time, in full payments every month, it will build your payment history and help improve your credit score.

Getting a personal loan with poor credit will be more challenging than if you had a good or excellent credit score and your interest rate will be very high.

Picture of Baruch Mann (Silvermann)

Baruch Mann (Silvermann)

Baruch Silvermann is a financial expert, experienced analyst, and founder of The Smart Investor.  Silvermann has contributed to Yahoo Finance and cited as an authoritative source in financial outlets like Forbes, Business Insider, CNBC Select, CNET, Bankrate, Fox Business, The Street, and more.
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