What Credit Score Do You Need for a Personal Loan?
Your credit score is one of the most important factors lenders use when reviewing a loan application. Here is what you need to know before you apply.
How credit scores affect loan eligibility
Credit scores typically range from 300 to 850. Lenders use your score to gauge how likely you are to repay a loan on time. A higher score signals lower risk, which generally translates to better rates and more options.
According to the Experian credit guide, scores are typically grouped into the following bands:
- 720 and above: Excellent. Access to the best rates and highest loan amounts from most lenders.
- 680 to 719: Good. Strong approval odds with competitive rates from a wide range of lenders.
- 640 to 679: Fair. Approval is possible but rates may be higher and options more limited.
- 580 to 639: Below average. Some lenders will still work with you but expect higher rates and lower limits.
- Below 580: Limited options. Traditional personal loan lenders may decline. Alternative options like secured loans or credit-building products may be more accessible.
What else lenders look at beyond your score
Your credit score is important but it is not the only factor. Lenders also consider your income, employment stability, existing debt obligations, and payment history. A strong income can sometimes offset a lower score, and vice versa.
Some lenders specialize in working with borrowers who have thin or damaged credit. These lenders may place more weight on income and employment than on credit history alone.
Soft vs hard credit checks
Many lenders now offer a prequalification step that uses a soft credit inquiry, which does not affect your credit score. This lets you see estimated offers before committing to a full application.
A hard inquiry, which can temporarily lower your score by a few points, typically only happens when you submit a formal application and the lender pulls your full credit report.
Steps to improve your score before applying
- Pay down existing credit card balances to lower your utilization ratio
- Make all current payments on time, even minimum payments count
- Avoid opening new credit accounts in the months before applying
- Review your credit report for errors and dispute any inaccuracies
Want to see what you may qualify for today?
Checking your options uses a soft inquiry and will not impact your credit score.
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