Minimum Credit Score Required For A Personal Loan

8 Min Read
Updated Dec. 20, 2023
African American couple looking over paperwork together in living room.
Written By Ashley Kilroy

While you may have heard the terms “credit score” and “credit history” occasionally while growing up, you may not have understood them at the time. However, starting your career or taking on financial obligations doesn’t automatically mean you’re in the know about credit. In fact, over half of working Americans never check their credit score.

As a result, the credit score for a personal loan isn’t common knowledge. Personal loans are flexible financial tools helpful to many borrowers. But, understanding credit requirements is essential for obtaining one.

A personal loan is money you borrow from a lender for just about any purpose. Whether you want to pay down high-interest debt or renovate your home, a personal loan can finance your needs.

Personal loans can be secured or unsecured. Borrowers provide collateral for secured loans and reduce the risk for lenders. Additionally, lenders may require collateral if your credit score is low.

On the other hand, unsecured loans have no collateral and rely solely on the borrower’s ability to repay the loan. Borrowers with excellent credit histories can access unsecured loans. Read on to understand the minimum credit score required for both kinds of personal loans and how to prepare for the application process.

What Credit Score Is Needed For A Personal Loan? 

Most lenders require a minimum credit score of 640 – 650. However, some borrowers may be able to qualify for a higher interest rate personal loan with a lower score. To get a better interest rate, you’ll probably need a FICO® Score of 670 or higher.

Additionally, your circumstances can affect credit requirements for a personal loan. For example, if you have worked with a specific lender in the past and never missed a loan payment, they might lower the credit score needed for a loan.

But regardless of your relationships with lenders, your credit score falls into a range that can help you procure a personal loan or get a lower interest rate. Use the table below to see how your credit score can help you obtain a personal loan:

Personal Loan Credit Score Requirements 


800 and higher

Borrowers with excellent credit can qualify for the lowest interest rates, longest loan terms, and highest loan amounts their lender offers.

Very Good 

740 – 799 

Borrowers with very good credit can still qualify for great interest rates, higher loan limits, and long loan terms.


670 – 739 

Borrowers with good credit can qualify for low interest rates, decent terms, and medium high loan amounts. 


580 – 669 

Borrowers with fair credit may qualify for a decent interest but could face limits on their loan’s terms and amount. 


579 and lower 

Borrowers with poor credit will likely face stricter requirements. If they do qualify, they’ll have smaller loan limits and shorter terms. 

See What You Qualify For

Why Do Personal Loans Have A Minimum Credit Score Requirement?  

Lenders require a minimum credit score because it reflects your debt history. Credit bureaus assign credit scores, which demonstrate your reliability as a borrower. As a result, lenders use it to determine a borrower’s creditworthiness. However, credit scores can also work in your favor. Instead of only meeting minimum requirements, excellent credit can increase your eligibility for lower interest rates and annual percentage rate (APR).

In addition, your credit score helps lenders assess risk when considering giving you an unsecured loan or secured loan. Secured loans are often safer for lenders because they use collateral and may have lower minimum requirements.

Does Getting A Personal Loan Affect Your Credit Score? 

A personal loan is a double-edged sword for your credit score. On one hand, paying off a personal loan and making on-time loan payments can increase your score. On the other hand, missing payments or defaulting can damage your credit. 

For example, let’s say you have three separate balances for private student loan debt with high interest rates. You’re several years out of college and have developed a solid credit score, so you take out a loan for debt consolidation purposes. As a result, you roll your debts into one new loan with a better interest rate.

Two possibilities emerge from this point: if you make your payments each month, you continue to raise your credit score and eventually pay off the debt. Conversely, if you miss payments, your credit will take a hit. Additionally, if you become unable to pay at all and default on the loan, your credit will take a major dive, leaving you with unaddressed debt and less ability to acquire another loan. 

Can You Get A Personal Loan With Bad Credit? 

Bad credit doesn’t necessarily prevent you from getting a personal loan. A borrower with poor credit may get a personal loan by using a co-signer with a good credit score or opting for a secured loan.

Here are the pros and cons when considering loan options for poor to fair credit.


  • A personal loan can bolster your struggling credit score if you keep up with your payments.
  • Co-signers and collateral can help you obtain better repayment terms and more favorable interest rates.
  • The loan can give you a leg-up financially. For example, if you have bad credit because of numerous debts, a debt-consolidation loan can be the tool you need to start digging yourself out of a hole.


  • Your co-signer or collateral is vulnerable if you default on the loan. In other words, your co-signer is financially obligated to fulfill the terms of the loan if you can’t. Similarly, if it’s a secured loan, you will lose your collateral if you default.
  • Defaulting will hurt your credit further, hindering your ability to take on future debts. This situation can prevent you from getting a mortgage or auto loan, significantly impacting your life.
  • Because you have challenged credit, the personal loan will likely have a higher interest rate. Therefore, you’ll have high monthly payments that can strain your budget.

Because of the risks involved, borrowers may want to wait and build their credit before applying for a personal loan. This option allows you to strengthen your financial position and eliminate the need for a co-signer or collateral.

Credit Score Tips For Getting A Personal Loan 

Your personal loan terms hinge on your credit score. Use the following tips to boost your credit score before filling out a personal loan application.

Make On-Time Payments 

Making on-time payments brings numerous benefits. By staying current on your loan, you will:

  • Avoid late fees
  • Prevent the possibility of default
  • Gradually improve your credit score
  • Lower your principal balance and the resulting interest accrual
  • Have peace of mind

Your credit score and financial health depend on making on-time payments. This vital financial habit will benefit you tremendously in the long run. As a result, your bank account’s autopay feature is an excellent way to help you avoid missing payments.

Improve Your Debt-To-Income Ratio 

Your debt-to-income (DTI) ratio compares your monthly debt payments and income. For example, if your monthly debt payments add up to $1,000 and your monthly income is $3,000, your DTI is 33% ($1,000/$3,000). Lenders use this metric to assess borrowers because it indicates your financial capacity for additional debt payments.

If your DTI is an obstacle to loan prequalification, here are some ways you can lower it:

  • Pay off other debts so your monthly payments aren’t as high.
  • Increase your income so you have room for another debt payment.
  • Refinance or consolidate other debts to lower your monthly payment.


Reduce Credit Utilization 

Credit utilization is a ratio of your total credit to total debt. In other words, it’s a comparison between how much you could borrow and how much you currently owe. For example, if you have three credit cards with a $5,000 limit on each. The cards confer a total credit limit of $15,000. You currently owe $1,000 on each credit card. As a result, your credit utilization is 20% ($3,000/$15,000).

Keeping credit utilization low is the primary reason never to close a source of credit if possible. Plus, keeping lines of credit open improves your credit history. Lenders like to see long credit histories. So, even if you don’t plan on using a credit card you received 10 years ago, don’t close it. The account helps your credit utilization and shows lenders an accurate picture of your credit history.

Check Your Credit Report 

Borrowers can get a free copy of their credit report annually from each of the three major credit bureaus: Experian™, TransUnion® and Equifax®. Checking your credit report can inform you what’s hurting your credit the most. Additionally, errors may appear on your credit report, dragging your score down. The company generating the report containing the error can help you correct it.

The Bottom Line 

The average minimum credit score required for a personal loan is 640 to 650. Collateral or help from a co-signer can help borrowers with poor credit obtain a personal loan. However, improving your credit score can help you secure loan approval without a higher interest rate or shorter loan term.