What credit scores do I need to get a personal loan?

When you apply for a personal loan, lenders may check your credit scores.

A credit score is a number that’s calculated based on your credit reports. It measures factors like how well you’ve handled finances in the past, and it helps lenders predict whether you’ll make on-time payments in the future.

Credit scores are important because most lenders use them to help determine whether you’re approved for loans, what interest rate you’re charged and how much you can borrow.

Your credit scores aren’t the only factor lenders look at to evaluate your credit profile and decide whether to approve a personal loan application. There’s no particular score that guarantees you’ll get approved or be offered a good interest rate.

There are lenders that offer loans to people with credit scores that fall in varying ranges, but you’re more likely to get a lower interest rate and better terms with higher credit scores.

• What credit scores do I need to get a personal loan?
• What factors affect my credit scores?
• Looking to build your credit? Consider a credit builder loan.
• What loan features should I compare before taking out a personal loan?

What credit scores do I need to get a personal loan?

The minimum credit score you need to be approved for a personal loan depends on the lender. Some lenders state their requirements upfront.

For example, Happy Money says that applicants should have a FICO® score of at least 640 and Upstart requires a minimum credit score of 300 (terms may be different if you apply through Credit Karma).

Others give a range of approved applicants’ scores: Avant says people who receive loans usually have credit scores between 600 and 700, but that you may qualify with a score as low as 580.

Some lenders don’t disclose minimum credit requirements before applicants go through a prequalification process or apply for a loan. In some cases, you may be able to find information about approved applicants’ credit scores in lender filings with the U.S. Securities and Exchange Commission.

For example, Discover reported that more than 95% of its personal loans went to borrowers with FICO scores of 660 or above as of March 2024.

To get a general idea of whether your credit scores are high enough to be approved for a personal loan, check which ranges your scores fall into.

If you’re not sure if you’ll qualify for an unsecured personal loan, you can also consider putting up collateral and applying for a secured loan.

What factors affect my credit scores?

There are many different credit scores, and the factors that affect your scores can vary depending on which scoring method is used. Here are a few common factors.

• Payment history: FICO and VantageScore both look at your payment history to see if you have a track record of paying bills on time. Making full, on-time payments helps your scores.
• Credit used: How much credit you use also affects scores in both models, and using close to the maximum amount available to you may lower your scores. Paying down credit card debt so that you don’t owe more than 30% of your credit limit may help.
• Account length and mix: Having established credit history and using a mix of different types of credit like installment loans and credit cards can have a positive effect on your scores. On the other hand, if you’ve opened many new accounts recently, your scores may go down.

If your credit scores are low, you may want to work on improving your credit before applying for a loan.

Try not to fall behind on paying bills. If you’re struggling to come up with the money to pay a bill on time, ask for a payment plan so your account doesn’t go to collections.

Check that the info on your credit reports is correct. Request a copy of each of your credit reports and contact the credit bureaus if you find any mistakes.

Looking to build your credit? Consider a credit builder loan.

Taking out a credit builder loan can help you build your credit by giving you the opportunity to show you can make regular on-time payments, which is an important part of your credit scores. 

When you get a credit builder loan, the lender typically puts the money you’ve borrowed into a reserve account it controls. You then make regular payments toward the loan, building a positive payment history that’s reported to the credit bureaus. When the loan is paid off (or you reach a certain threshold), the lender gives you access to the funds. 

Loan fees, interest and repayment terms vary among lenders, so you’ll want to compare your options before applying.

You might also want to consider Credit Karma’s Credit Builder plan, which can help you build low credit while you save.

What loan features should I compare before taking out a personal loan?

Before finalizing a personal loan, compare common fees and costs.

• Interest rates: Check both the interest rate and the annual percentage rate, or APR, of the loans you’re considering. APR will include any fees and interest and give you an idea of the affordability of your loan.
• Fees: Fees can add up, so check for common ones such as fees for late payments, payment processing and any prepayment penalty for paying off the loan early. Factor in loan origination fees, which are fees for issuing the loan and are usually a percentage of the amount you’re borrowing.
• Loan term: Compare how much time you’ll have to pay off the loan and the size of your monthly payments.
• Loan amount and total interest: For each loan, calculate the total amount you would pay in interest over the course of the loan.
• Co-signer or joint applicant option: Check whether each lender will allow you to add a co-signer or to apply jointly with another person. Having a co-signer with better credit than you may help you get approved for a loan you wouldn’t qualify for otherwise or may help you get a better interest rate.

What’s next?

Consider how taking out a personal loan will affect your credit. For example, making payments on time can help build your payment history, which may improve your credit scores. On the other hand, taking out a new loan may increase your total debt — which may bring your scores down.

Use a credit score simulator to explore how these factors could affect your scores and to estimate how your scores are likely to change after you take out a loan.

Finally, before applying, gather the information you need for the application process. In addition to your name, address and phone number, lenders may ask for your Social Security number, employer’s name and contact information, proof of income, how long you’ve lived at your current address and how much you spend each month on housing.

*Approval Odds are not a guarantee of approval. Credit Karma determines Approval Odds by comparing your credit profile to other Credit Karma members who were approved for the personal loan, or whether you meet certain criteria determined by the lender. Of course, there’s no such thing as a sure thing, but knowing your Approval Odds may help you narrow down your choices. For example, you may not be approved because you don’t meet the lender’s “ability to pay standard” after they verify your income and employment; or, you already have the maximum number of accounts with that specific lender.