What Credit Score Do You Need For A Personal Loan?

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Credit scores typically range from 300 to 850, with 300 considered “poor” credit and 850 considered “exceptional” credit. Thankfully, a perfect 850 credit score isn’t necessary for most people to have when it comes to approval for personal loans or credit cards. But there are some other guidelines and requirements you should be aware of before applying for a personal loan. 

Below, Select breaks down what a personal loan is, why your credit score matters when applying for one and tips for increasing your chances of approval. 

What is a personal loan and why might you consider one? 

A personal loan is a form of credit you can use to pay for just about any large purchase – home renovations, funeral expenses, medical bills, debt consolidation or even unexpected emergencies if you don’t already have an emergency fund that can cover the cost.

Much like a credit card, personal loans accrue interest while you pay off the balance. But unlike credit cards, personal loans usually have terms that allow you to repay equal amounts over a span of a few months to a few years. Because of this, personal loans are considered installment loans.  

People may consider taking out a personal loan to cover an expense because they typically carry lower interest rates compared to credit cards, though the rates may also be variable. You may also be able to get a larger personal loan compared to your credit card’s credit limit.

According to the Federal Reserve, the current average APR for a two-year personal loan is 9.58% while the average APR for a credit card is 16.30%. However, using a credit card with a 0% intro-APR period could save you even more money, but you’ll likely be subject to a shorter lending period.

One other thing to keep in mind when it comes to personal loans is that you may be charged an origination fee or an early pay-off fee if you pay off the loan before the end of its term. If you’re new to personal loans and know you can consistently make your monthly payments, you might want to opt for one that doesn’t have an origination fee, like a Discover Personal Loan. 

Personal loans are also really simple to use — once you’re approved for a loan, the amount is delivered straight to your checking account and you can start using the money as you see fit. Read our list of the best personal loans to find one that’s right for you.

Discover Personal Loans

Information about Discover Personal Loans has been collected independently by CNBC and has not been reviewed or provided by the bank prior to publication. Discover Bank USA is a Member FDIC.

  • Annual Percentage Rate (APR)

  • Loan purpose

    Debt consolidation, home improvement, wedding or vacation

  • Loan amounts

  • Terms

  • Credit needed

  • Origination fee

  • Early payoff penalty

  • Late fee


  • No origination fees, no early payoff fees
  • Same-day decision (in most cases)
  • Option to pay creditors directly
  • 7 different payment options from mailing a check to pay by phone or app


  • Late fee of $39
  • No autopay discount
  • No cosigners or joint applications

Why does your credit score matter when applying for a personal loan? 

You’ll need a few things before you apply for a personal loan, but the first thing you should do is take a look at your credit scores and review your credit reports. Equifax, Experian and TransUnion, the three main credit bureaus, each report a different score based off of different scoring models.  

Your credit history and credit scores are important because they provide lenders with clues to determine whether they think you’ll be a responsible borrower who will pay back the loan on time and in full.

“Lenders want to ask themselves, ‘if I lend you money, will you pay me back?'” said Jim Droske, the president of Illinois Credit Services.

Plus, the better your credit, the more likely you are to get favorable terms — like lower interest rates — on your loan. You can use a number of services to check your Equifax and TransUnion scores, which use the VantageScore model, or use Experian to check your score based on the FICO 8 model. Note, the FICO 8 model gets used in about 90% of lending decisions in the U.S. 

What credit score do you need for approval? 

For the most part, the minimum credit score needed for a personal loan approval will depend on the lender. Some lenders will tell you upfront what their minimum requirements are. Payoff Personal Loan, for example, requires a FICO score of 640 or higher for approval.

While lenders might approve loans to consumers with a wide range of scores, the terms will likely be better for those with higher scores.

“If you have a 760 credit score, they’ll give you different terms versus if you have a 580 credit score,” Droske says. “If you have a 580 credit score, a lender may still give you a loan, but they’ll adjust the terms accordingly because you’ll be seen as a riskier borrower.”

Having a higher credit score usually means you can be approved for lower interest rates and more favorable loan terms. 

But while your credit score is an important piece of the puzzle, keep in mind that you’ll also need to provide some other crucial pieces of information like your annual income, employment status, social security number and details on how you’d like to use the loan. 

“Before you have a bunch of different lenders run your credit, ask if they have a credit score requirement and what it is,” Droske says. “You can also ask what scoring model they use so you can see for yourself if your credit score currently falls in their required range.”

Another option is to check with different loan providers to see if you’ll get pre-approved for a loan, before you have them run a bunch of hard inquiries. You can use a loan comparison tool, like the one below, to compare multiple loan offers without dinging your credit score.

The tool is provided and powered by Even Financial, a search and comparison engine that matches you with third-party lenders. Any information you provide is given directly to Even Financial. Select does not have access to any data you provide. Select may receive an affiliate commission from partner offers in the Even Financial tool. The commission does not influence the selection in order of offers.

Once you’re approved for your loan, all that’s left to do is sign the documents — aka, “close” on the loan — and the money will be deposited into your account and is ready to be used. 

Can I still get a personal loan if I have bad credit?

If your credit score is on the lower end, and you’re worried it may prevent you from securing a personal loan, there’s some good news: Some lenders will still help you borrow money.

Just keep in mind that while you may be approved for a personal loan with a low credit score, it’s likely lenders will charge you higher interest rates, an origination fee, early pay-off fee and other fees. So it’s a good idea to really shop around for a lender that will offer the best terms. You want to make sure you don’t sign up for a loan with a company that

Upstart, for example, won’t charge you a fee for paying off your loan early. And the company has a rate checker tool that lets you input your information to get an idea of what APR you’d pay on for your loan. This tool only results in a “soft inquiry” on your credit report, so it won’t impact your credit score. However, once you actually apply for the loan, the lender runs a “hard inquiry” on your credit, and your score may be impacted. Hard inquiries are run any time you apply for a new line of credit.

Upstart is one lender on Select’s list of best personal loans that are best for bad credit.

What can you do to increase your chances of approval? 

If you worry your credit score isn’t quite where a desired lender may want it to be for approval, there are a few things you can do to improve your credit score, so you’ll be able to walk away with the personal loan that has the most favorable rates and terms.

Continue to make debt payments consistently and on time. Skipping a payment or making a late payment can be a red flag to lenders. Plus, making on-time monthly payments can actually help you increase your credit score (payment history accounts for a whopping 35% of your credit score). 

Pay down as much existing debt as possible. Lenders want to make sure you aren’t taking on more debt than you can afford, and your debt-to-income ratio can give clues about how much debt you have in relation to the money you earn. A high debt-to-income ratio is typically considered to be around 36%. You might reduce your amount of existing debt by slightly increasing the amount you put toward your balance each month, or by making extra payments. 

Bottom line

Personal loans can help you cover large expenses without having to pay as much in interest compared to other forms credit. Your credit score is a vital part of getting approved for a personal loan. And while the minimum credit score needed for approval will vary depending on the lender, taking small steps to maintain a healthy credit score can get you closer to approval and more favorable terms. 

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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