What credit score do you need for a personal loan?

Applying for a loan can feel a little like taking a leap of faith. You find a lender, fill out an application, send it off, and hope for the best.

It’s perfectly normal to have questions about the loan process and how to improve your chances of being approved. One of the most common questions people have is the credit score needed for a personal loan.

If you’re trying to figure out how to get a personal loan, there’s good news. Meeting the requirements, including the credit score requirements, may be easier than you think.

What's the minimum credit score for a personal loan?

To get a personal loan, most lenders look for a credit score between about 580 and 660 or higher, depending on the lender and loan type. People with higher scores often qualify for lower interest rates, but lenders also review your income, debts, and overall financial history.

The range of 580 to 660 would generally be considered a "fair" credit score. We'll show you how various credit scores stack up and what they mean below.

Credit scores are just one factor lenders look at when evaluating loan applications. Some lenders are more accepting of a less-than-perfect credit history.

Understanding credit score ranges

The following table should give you a feel for how different credit score ranges are generally looked at by lenders:

If you're in one of the top credit tiers, you could have a pretty easy time getting a personal loan, as long as you meet any other requirements the lender has. It's still a good idea to shop around and present the strongest possible qualifications you can. That could help you get the best possible deal on your loan.

If you're in one of the lower tiers, you could still get a personal loan. Even in the bottom credit tier, it's possible to qualify. It just means your options will likely be more limited. That makes it vital that you put your best foot forward.

How your credit score affects loan terms

Your credit score also plays a big role in the terms a lender offers you. Here's how it typically shapes the key parts of a personal loan:

• Interest rate. Your credit score is one of the biggest factors in the rate you're offered. Borrowers with higher scores tend to qualify for lower rates, while borrowers with fair or poor credit typically receive higher rates.

• Loan amount. Lenders may offer larger loan amounts to borrowers who have stronger credit histories, because a solid track record signals lower risk. If your score falls in the fair or poor range, you might qualify for a smaller amount.

• Fees. Many personal loans come with an origination fee, which is a one-time charge the lender deducts from your loan proceeds. Origination fees typically range from 0% to 12% of the loan amount, and borrowers with lower credit scores often land on the higher end of that range.

• Repayment terms. Personal loans usually come with repayment periods ranging from one to seven years. Your credit score can influence which term lengths a lender makes available to you, along with your income and debt load.

The bottom line: A stronger credit score generally opens the door to more favorable terms. But even if your score isn't where you'd like it to be, you still have options, and other parts of your financial picture matter, too.

What personal loan lenders look at beyond credit scores

The credit score needed for a personal loan varies by lender. So do other approval factors, which are especially important for people with lower credit scores.

Here are some of the other things lenders are likely to consider:

• Debt-to-income (DTI) ratio. Your DTI ratio is calculated by dividing your monthly debt payments (including housing) by your gross monthly income. This measures how much of your income goes to debt payments, and as a general rule, the lower the better. Some lenders prefer 36% or below, while others accept up to 43% DTI. But if your other qualifications are strong, a higher DTI ratio could be okay. With a low credit score, you may need a much lower DTI.

• Strong payment history. This is a factor in calculating your credit score, but also something lenders will focus on specifically. They'll want a look at how well you've done at making your payments on time in the past.

• Consistent income. The amount of your income can influence your loan amount, but for approval, consistent income is also important. For example, a salary from steady employment is generally more consistent than commissions or freelance work. Spending several years at one job could also be seen as more reliable income than hopping from one employer to another.

• Credit utilization. This is the percentage of your available credit limits that you currently use. Say the credit limits on your credit cards total $10,000. If your balances total $2,000, you’re using 20% of your available credit. If you owe $9,000, your credit utilization is 90%. This tells a lender whether your finances have some breathing room or you're close to being tapped out.

Can you get a personal loan with fair or bad credit?

Yes, you could get a personal loan even if your credit score is in the fair or poor range. Lenders look at a variety of factors.

There’s no specific absolute minimum credit score for a personal loan. Yes, lenders generally prefer borrowers in the good or excellent credit tiers. Still, under the right circumstances, you could get a personal loan with poor credit—say, below a 600 credit score.

Here are some examples of how this may play out.

Personal loan for fair credit score borrowers (580-669 credit score)

In the 580-to-669 credit score range, you're in the middle. In this territory, any little thing you can do to improve your score could mean the difference between rejection or approval. Clearing up problems on your credit report or paying down a balance or two might tip the decision in your favor.

In this range, a reasonable DTI ratio is also critical. The lower you can get that ratio, the better your application will likely look to lenders.

Achieve Personal Loans, for example, considers your whole financial picture, not just your credit score. You can prequalify for a personal loan through Achieve Personal Loans to find out where you stand, without any impact to your credit score, before you formally apply.

Do some research on which lenders cater to fair credit score borrowers. You could also try prequalifying with multiple lenders to learn where your chances are best. Prequalification gives you an idea of your approval chances and potential rate. Look for lenders that prequalify with a soft credit pull that won't impact your scores.

Even under the best circumstances, you probably won't get the absolute lowest interest rates when you’re in this credit score range. To minimize the cost, try getting by with a smaller loan for now. Then you could improve your credit score by paying off that loan on time and as agreed. That way, you could qualify for a more cost-effective loan later on.

Personal loans for bad credit score borrowers (below 580 credit score)

At this level, you're considered to have poor credit. Few lenders will approve a personal loan for a below-580 credit score borrower, but they do exist.

Shopping around is key if your credit score is in this range. Some lenders will be out of the running based on credit score requirements alone. Those that remain are likely to require all other aspects of your financial situation to be strong. This means having a low DTI ratio and a stable income history.

How to improve your chances of getting approved for a personal loan

If you can't find a conventional personal loan due to your credit score, some other options to consider are:

• Apply for a secured loan, if you have something of value you can put up as collateral to back the loan.

• Use a co-signer with better credit who is willing to share responsibility for the loan.

• Try a payday alternative loan (PAL). Federal credit unions can offer these small-dollar, short-term loans. Some PALs don’t require a credit check, but you do have to be a member of the credit union.

• Use a credit builder loan (CBL) to improve your credit score. This kind of loan won't help with an immediate need for cash, because you receive the loan after you finish making the payments. However, they could give you an opportunity to build the kind of payment history that will allow you to qualify for a loan in the future.

Realistic examples of how to get a loan with a low credit score

Here are some hypothetical examples of how to get a personal loan with fair or bad credit:

• Raise credit score. Jerry had a credit score of 660 when he started thinking about getting a personal loan. Before applying, he checked his credit report and found some outdated negative information. He communicated with the credit bureaus to get his report updated. He also decided to wait six months to pay down some existing debt and build a positive payment history. These efforts raised his credit score from fair to good. That allowed him to qualify for a personal loan easily and at more favorable terms.

• Stable income and low DTI. Donna's credit score was 590, which was considered the low end of fair. She also had very little current debt and had been at the same job for three years. With a DTI ratio below 20% and a stable income history, she was able to find a lender that would give her a loan despite her low credit score.

• Borrow with a co-signer. Mickey's credit score was very low, at 550. He had worked on his budget so he wouldn't have to keep borrowing, but he wanted to consolidate some existing debt. He got a close friend with a good credit history to co-sign a loan. He was able to show the friend how consolidating into lower-interest debt would help him keep up with his payments. On the strength of his co-signer's strong credit score, Mickey was able to get the loan. By making his payments on time, he gradually built up his own credit.

Next steps: What to do now

Now that you know the possibilities for getting a personal loan even if you have a low credit score, here's what to do next:

1. Budget before you borrow. Qualifying for a loan is moot if you can't make the payments. The first step is figuring out how you'll afford the payments before you commit.

2. Check your credit report for mistakes or outdated information. These can be fixed, but it may take time, so do this when you first start thinking about getting a loan.

3. Check your credit score. If you've had changes made to your credit report, wait a month or so for them to be reflected in your credit score.

4. Calculate your DTI ratio. If it's above the 43% range, consider steps to bring it down. These could include paying off or restructuring current debt.

5. Research loan options. Knowing your credit score and DTI ratio should give you a feel for how strong your qualifications are. Find a lender and loan type well-suited to those qualifications.

6. Choose a lender and get a quote. Compare rates and fees and find out which lender has the best terms for your situation.

A personal loan could help you pursue your financial goals. Approaching a loan the right way can help you succeed in meeting those goals.