What Credit Score Do You Need for a Personal Loan?

The typical minimum credit score needed to qualify for a personal loan is from 560 to 660, according to lenders surveyed by NerdWallet, but credit score requirements for personal loans vary across lenders and some may require a higher score.

Many lenders give preference to borrowers with good or excellent credit scores (690 and above), but some accept borrowers with bad credit (a score below 630).

Lenders often 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.

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 tool to learn what loan options you may have based on your credit score.

» MORE: Compare the best personal loans

How your credit score impacts your personal loan offer

Your credit score not only affects whether you qualify for a personal loan, but it also helps determine what annual percentage rate, or APR, you’ll receive. Borrowers with good scores are likely to qualify for a lower APR than bad-credit borrowers.

Here are the average estimated personal loan APRs based on credit score ranges:

Getting a personal loan with fair or bad credit

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

It’s possible to get a personal loan with fair or bad credit, but you’re likely to receive a rate on the high end of a lender’s range, which can be up to 36%. Those with a score below 550 may not qualify for a loan with an APR below 36% — the highest interest rate an affordable loan can have, according to most consumer advocates.

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 an approval decision. Credit unions, for example, may consider membership history and other factors on an application.

» MORE: Best personal loans for bad credit

Tips to build your credit

If you have time to build credit before applying, you may improve your chance of qualifying for a personal loan at a low rate. It’ll take at least a month, but more likely a few months, for these steps to affect your score, but it may be worth it if you get a lower rate on a loan you’ll be repaying for a year or more.

» MORE: How to build credit

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 for you, 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 that may be dragging your score down, like incorrect account balances or accounts you don’t recognize. Dispute any mistakes online, by mail or by phone. You can get weekly credit reports for free at AnnualCreditReport.com.

» MORE: Check your credit report for free with NerdWallet

3. Lower your credit utilization

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

» MORE: How does a personal loan affect your credit score

Requirements for a personal loan beyond credit score

Meeting a lender’s minimum credit score requirement doesn’t necessarily mean you’ll qualify for a loan.

Here are the other factors most lenders review on a personal loan application:

• 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 show 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.

» MORE: Learn more about personal loan requirements

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 if a personal loan fits your budget and borrowing needs.

Consider co-signed, joint or secured loans. 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. If you default on a co-signed or joint loan, your co-signer or co-borrower will be responsible for making payments. If you stop making payments on a secured loan, you’ll lose your collateral.