What credit score do you need for a personal loan?

By Lindsay Vansomeren

Reviewed by Kimberly Rotter

May 20, 2024

Read time: 5 min

Happy young couple reviewing credit score before applying for personal loan

Key takeaways:

  • Lenders vary, but you’ll generally need a credit score of 620 or higher to get a personal loan. 

  • The higher your credit score, the better your chances of getting approved for an affordable personal loan. 

  • There are lots of options to get a personal loan if you’re still working on building your credit.

Taking out a personal loan can be a great way to cover a major expense or reach a financial goal. It’s okay to be unsure about whether your credit score qualifies. Personal loans are available for folks with all sorts of credit backgrounds. And even if your score isn't where you'd like it to be, there are steps you can take to improve it. Let's explore what it takes to get a personal loan.

What credit score is needed for a personal loan?

Most lenders require a credit score of 620 or higher to qualify for a personal loan, and some require a 680. This falls into the range of fair credit, according to FICO, the company that calculates the credit score that most lenders use.

If you have good or excellent credit, you’ll likely meet the personal loan approval criteria with most lenders, including the ones that offer the lowest interest rates. But if your credit isn’t top-notch, it can be a bit tougher to know where to start. 

Here are some clues that can guide you. 

Some types of personal loan lenders make it easier to qualify if you have a lower credit score. If your credit score isn’t yet high enough to qualify for a personal loan with a traditional bank or credit union, an online lender may be able to help you instead. Achieve, for example, only requires a credit score of 620 or higher. 

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How to find out if you qualify for a personal loan

You don’t need to guess whether you have the right credit score for a personal loan or not. There are two easy steps you can take to find out. First, figure out your own credit score. Check with your bank or credit card, since many offer free credit score updates. If not, search for “free credit score” online to find other options. 

Once you know your own credit score, you can use it to find lenders that cater to your credit profile. Some lenders have more flexible guidelines, even if they don’t specify the exact credit score you need for a personal loan. On the other hand, if a lender says they require good credit and you only have fair credit, you know to keep looking for other options. 

Even if a lender doesn’t specify what sort of credit you need to get approved for a loan, there’s still one more handy way to know for sure: by getting pre-approved for a loan. Many lenders offer this option as a simple form you can fill out on their website. All you have to do is enter a few details about yourself, including things like your:

  • Contact information

  • Social Security Number

  • Monthly income and expenses

  • Amount of money you’re looking to borrow

In return, the lender will let you know whether you’re likely to be approved for a loan, and what your rate and term options may be. They do this through a soft credit check, which doesn’t have a negative impact on your credit score. In fact, it’s a good idea to complete the pre-approval process with several lenders as a way to shop around before choosing the best option. 

Options for borrowers with a credit score lower than 620

Don’t panic if your credit score isn’t above 620. Here are a few options available to you:

Secured loan

Some lenders are more likely to approve you for a personal loan if you offer some sort of collateral. Collateral is something of value that you own that you agree to let your lender take if you don’t pay back your loan in the future. Car loans and mortgages are the two most common types of secured loans. For a personal loan, your collateral could be jewelry, collectibles, a boat, an investment account, or anything else of value that the lender accepts. 

Change your loan amount

You may find it a bit easier to get approved if you ask for a smaller amount. Smaller loans are less risky for the lender to make, so they may be more willing to approve your loan. 

Explore other funding options

Depending on what you need to borrow the money for, you may have other options available. Many healthcare providers offer interest-free payment plans for medical debt, for example, or you may qualify for a government grant to repair your home.

Get a co-signer or co-borrower

Many lenders are more willing to approve your loan if someone else with a better credit score agrees to be listed as a co-signer on the loan

Try a payday alternative loan (PAL)

If you only need a small bit to tide you over, some credit unions offer affordable small-dollar loans with no credit check. Make sure to join the credit union first, since you’ll need to be a member for a month or more before you apply. Avoid payday loans if you can. The name sounds similar, but traditional payday loans are typically so expensive, they’re difficult to pay off. 

Shop around with different lenders

The more lenders you apply for pre-approval with, the better your odds of finding a lender who will approve you for a loan. Just make sure they do a soft credit check, or your credit score could suffer.

Work on your credit

If your credit standing was damaged (and it doesn’t matter why), start working on fixing your credit. Credit scores change over time, and once you understand what factors affect your credit, you can work on positive changes.

What’s next

  • Find out your credit score.

  • If your score is lower than you’d like, find out why. When you view your credit score for free online, you might also find information on the screen about the factors affecting your score. 

  • If you need to work on improving your credit standing, try to hold off on the loan for a few months. A higher score might end up saving you a lot of money in interest. 

  • Get preapproved by a lender who does a soft pull.

  • Talk to a loan consultant about your loan options.

Lindsay Vansomeren

Lindsay is a writer for Achieve. She's passionate about helping people learn how to manage their money better so that they can live the life they want. She enjoys outdoor adventures, reading, and learning new languages and hobbies.

kim rotter 2022 2

Kimberly is Achieve’s senior editor. She is a financial counselor accredited by the Association for Financial Counseling & Planning Education®, and a mortgage expert for The Motley Fool. She owns and manages a 350-writer content agency.

Frequently asked questions

The best ways to get and keep a higher credit score are to pay all of your bills on time and keep your credit card balances low. 

It depends on what’s already on your credit report. If you’ve been paying your student loans or credit cards responsibly, you may already have a good credit standing. This can make it easy to get approved for a personal loan for the first time. If you don’t have any experience with credit, or if you have late bill payments, it may be tougher to get a loan for the first time.

 

Payday alternative loans (PALs) offered by some credit unions are generally the easiest type of personal loan to get. You won’t need to undergo a credit check, although you'll need to have been a credit union member for at least a month. If you’re applying for a traditional personal loan, it’ll generally be easier to get approved for a smaller personal loan with an online lender. 

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