Your credit score is a major factor lenders consider to determine if you’ll be approved for a personal loan. To qualify for the best interest rates and terms, you’ll generally need good credit, meaning a FICO score of 670 or higher.
Each lender has their own minimum credit requirements for personal loans, however. There’s no specific credit score that means you will or won’t be able to take out a personal loan. You can still get a personal loan if you have poor or fair credit, but you’ll likely be offered higher interest rates.
A personal loan is money you borrow from a financial institution like a bank, credit union, or online lender. Personal loans are versatile and can be used for a variety of expenses, from covering the costs of a medical procedure to funding your wedding or vacation. While eligibility criteria will vary among lenders, here are some basic requirements to consider:
| Good to know: While the upper borrowing limits for personal loans vary by lender, they usually fall in the $35,000 to $50,000 range. Some lenders offer larger personal loans of up to $100,000 for those who qualify. |
You can apply for a personal loan online or in-person, depending on the lender. The lender will evaluate your credit score, income, and financial documents (such as tax returns and pay stubs) to determine if you qualify.
If you’re approved, the time to fund for personal loans varies among financial institutions, but most online lenders are able to distribute loan funds as soon as the same or next-day of approval, or within a week.. Most lenders will disburse the money via direct deposit, but some will offer a check or prepaid card. Others, in the case of debt consolidation loans, may offer to pay off your creditors directly.
After you get your loan, you’ll pay back what you borrowed, plus interest and any applicable fees in equal monthly installments, typically over one to seven years. Most personal loans are unsecured, meaning you don’t have to back them with collateral, like your house or car, that could be vulnerable to seizure if default on the debt.
The minimum credit score for a personal loan will vary by lender. But you may need good to excellent credit (a FICO of 670 to 739) to get approved and lock in the competitive interest rates and various term options. You’ll likely need a very good score (740 to 799) or an excellent one (800 to 850) to secure the bargain-basement APRs that lenders advertise.
Many lenders also offer personal loans to borrowers with poor or fair credit, and some even specialize in lending to borrowers who are working toward building their credit. Just keep in mind that if your credit is less than stellar, lenders may see you as a risky investment and offer you a higher interest rate to offset the risk of loaning you money.
You can apply with a cosigner (or co-borrower) with good credit to lock in a lower rate than you’d get on your own. Even if you apply with a cosigner, you should be able to comfortably afford your monthly payments. Otherwise, your cosigner will be on the hook for repaying your loan.
Related: Learn more about getting a personal loan on Credible.com
Your credit score is a three-digit number ranging from 300 to 850 that shows lenders how responsible you are with debt. The higher the number, the better your credit. The three credit bureaus — Equifax, Experian, and TransUnion — measure your credit based on information in your credit report, including factors like your payment history and how much debt you owe.
In general, lenders prefer a high credit score as it gives them confidence that you’ll pay back the money you borrow. Low credit implies that you’re a riskier borrower that might default on your loan. But if you have a low credit score, there are still lenders you might qualify with.
The most common factors that affect your credit score include:
After the prequalification process, when you formally apply for a personal loan with your preferred lender, the lender will perform a hard credit check to determine if you’re eligible. This can cause your credit score to temporarily fall by five points or less, but it will usually recover within a few months.
Fortunately, a personal loan may also help your credit score in the long run. If you consistently make your payments on time, you’ll likely see an improvement. A personal loan can also diversify your credit mix, which can positively impact your credit as well.
Several lenders specialize in offering bad credit loans. These lenders are more likely than others to approve your application for a personal loan, even if your credit is less than ideal.
When you submit an application, bad credit personal loan lenders will look beyond your credit and consider other factors, like your income and employment situation. Just keep in mind that you’d likely have to settle for a higher interest rate.
You can increase your chances of approval and potentially land a lower interest rate by applying with a cosigner (or co-borrower) with good credit. Be aware, though, that if you miss payments or default on your loan, not only will your credit score take a hit, but your cosigner’s will, too.
Consider the following Credible partners that work with borrowers with poor or fair credit:
| Lender | Min. credit score |
|---|---|
| Achieve | Undisclosed |
| Avant | 550 |
| Best Egg | 600 |
| Discover | 660 |
| Happy Money | 600 |
| LendingClub | 600 |
| LendingPoint | 580 |
| LightStream | 660 |
| OneMain Financial | None |
| PenFed Credit Union | 660 |
| Prosper | 640 |
| Reach Financial | 600 |
| Tally | 660 |
| SoFi | Undisclosed |
| Universal Credit | 560 |
| Upgrade | 580 |
| Upstart | 580 |
Before you commit to a personal loan, consider these factors.
You can use a personal loan payment calculator to estimate how much your payments will cost each month.
Related: Learn more about getting a personal loan on Credible.com
If you’re ready to get a personal loan, follow these four steps:
1. Compare lenders: Shop around and compare lenders. As you do, consider interest rates, repayment terms, fees, and eligibility requirements. Prequalifying will give you a more accurate idea of what APRs and terms you qualify for.
- Pick a loan option: Choose a loan option that best suits your needs. Ideally, it would comfortably fit within your budget and still allow you to meet your financial goals.
- Complete the application: Once you’ve chosen a lender, fill out an online or in-person application. Be prepared to submit documents like pay stubs and tax returns — and ready for a minor and temporary negative impact to your credit score.
- Get your funds: If you’re approved and want to accept the loan, you’ll sign a loan agreement. The time to fund for personal loans can range from as soon as one to two business days to as long as a week, depending on the lender.
Related: Learn more about getting a personal loan on Credible.com