What Credit Score Do You Need For A Personal Loan

Most lenders want a score of at least 610–640 to approve a personal loan, but you typically need a score of 720 or higher to get the lowest advertised rates. Borrowers with scores below 580 are usually limited to secured loans or lenders that charge triple-digit APRs.

The personal loan credit score lenders actually use

When you apply for a personal loan, the lender almost always pulls a FICO score, not the VantageScore you see on free dashboards. Specifically, they use the FICO Score 8 or FICO Score 9 version designed for installment loans. That model weighs your payment history and amounts owed more heavily than the generic score you check. Your free score might show a 680, but the lender’s FICO could be 650 because the version for installment loans punishes recent hard inquiries and high credit utilization harder. If you have only a thin credit file, say, one credit card open for 18 months, the lender may reject you even with a 700 FICO. The scoring model cannot generate enough data to predict repayment. For the full breakdown of how these loans work across all credit levels, read the hub for this topic: personal loans.

What you can get with bad or fair credit

With a score between 300 and 579, you are in the bad credit zone. Most mainstream lenders will not offer an unsecured personal loan at all. Your only options are secured loans requiring collateral, a car title or a savings account, or lenders charging APRs above 100%, effectively payday loans. If your score is 580-669, considered fair credit, you can sometimes qualify for an unsecured loan, but expect APRs of 25% to 36% and origination fees of 5% to 10%. The hard floor for unsecured personal loans is usually around 580. Below that, only a co-signer with a 680+ score can get you approved. If you are unemployed, the lender will also check your income source. The related article can I get a personal loan with no job explains how unemployment benefits or a co-signer can substitute for a paycheck. Some borrowers consider borrowing extra to invest, but the article make money from personal loan warns that using loan proceeds for stocks or crypto usually violates the lender’s terms and can trigger default.

When a high score still gets you denied

A 750 FICO score does not guarantee approval. Lenders also evaluate your debt-to-income ratio. If your monthly debt payments, including the new loan, exceed 43% of your gross income, you will likely be denied. For example, an applicant with a 750 score but $4,000 in monthly debt payments and a $5,000 monthly income has a DTI of 80%. That is an automatic rejection at most banks. Another common failure is a credit history shorter than three years. A 750 score built on a single credit card opened six months ago is too new for most personal loan underwriters. If you are comparing loan types, the article which is better breaks down when a consolidation loan beats a standard personal loan for high-score applicants. Even a perfect score cannot fix a DTI over 50% or a history of late payments on the only account you have. The one fact no competitor will tell you: lenders using FICO 9 ignore paid medical collections entirely, so paying a $200 doctor bill can jump your score 25 points overnight.