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- While you do not need to have a perfect credit score to get a personal loan, lenders generally see those with credit scores of 600 or above as lower risk.
- There are a number of items to have ready for lender before you apply for a personal loan, including financial information, employment status, and your SIN.
- Different types of personal loans include secured loans and unsecured loans. Before getting a personal loan, compare loan options to see which one applies better to your unique situation.
You don't need perfect credit scores to secure a personal loan, and there is no magic number when it comes to reaching a certain number to receive better loan rates and terms, but lenders generally see those with credit scores of 660 and above as lower risk. Those with credit scores of 560 or below are more likely to have difficulty qualifying for better loan terms.
A personal loan is a fixed amount of money that you agree to pay back over a set amount of time. One could look into personal loans when they're considering home improvements, cars, consolidating debt that carries higher interest rates, and other events when there's not enough available cash on hand. However, by agreeing to the loan, you must pay back the full amount plus interest and any fees associated with it. Personal loans are paid back through short or long-term financing plans, and by making regular payments called installments.
Your credit scores can impact what kind of personal loan options you're able to explore and the interest rates, fees or collateral that may be tied to it. However, it's important to note that your credit scores are one of many factors that lenders and creditors generally take into account when assessing your creditworthiness.
What is a good credit score?
Credit scores are calculated on a 900-point range and help determine the likelihood you will pay your bills on time. Although credit scoring models vary, generally credit scores from 660 to 724 are considered good; 725 to 759 are considered very good, and 760 and up are considered excellent.
- 760 to 900: Excellent
- 725 to 759: Very good
- 660 to 724: Good
- 600 to 659: Fair
- 300 to 599: Poor
Credit scores help predict how likely it is that a person will pay back their loan obligations as agreed. The various credit scoring models vary, but generally use your payment history, length of credit history and credit utilization. Learn more about how credit scores are calculated here.
Some of the reasons for a poor credit score can include:
Missed payments on debt obligations
It's important to stay on top of your monthly payments. Consistency in making monthly payments is an important step towards a stronger credit profile.
Having too many or too few open credit accounts:
Too many open credit accounts can suggest to lenders that you're not responsible with borrowing money, and too few accounts may not allow creditors to have enough information on how to manage your money to draw a solid conclusion.
Too many credit applications:
If you're constantly applying for more credit, it could raise a red flag when your credit scores are calculated, as it could suggest that you are overextending your ability to repay.
Having high credit card balances:
Maxed-out credit cards could negatively affect your credit scores.
Meanwhile, showcasing multiple examples of open credit accounts that don't have late or missed payments may improve your credit scores. Learn more about what factors impact your credit scores or learn how to check your credit score here.
How to apply for personal loans
Before applying for a personal loan, there are several documents you should have ready for lenders. Each lender may require additional or different documents.
- Your employment status or proof of regular income
- A government-issued I.D.
- Social Insurance Number (SIN) and date of birth
- Your permanent address, phone number, and email accounts
- Bank account that accepts automatic deposits
Lenders will generally check your credit report and credit scores, along with other information to evaluate your ability to repay the loan. This can impact your available loan options and terms, such as interest rates.
Types of personal loans
Before you check to see if you qualify for a loan, you should compare your loan options to see which one applies better to your unique situation, as well as what type of loan you can afford.
Two types of loans you can apply for include secured loans and unsecured loans.
Secured loan
A secured loan requires some sort of collateral — an asset you own such as a vehicle or home — to qualify for the loan.
Common types of collateral for a secure loan include:
- Cars
- Property
- Recreational vehicles
By offering collateral, the loan is now less risky for the lender, as they can seize your collateral if you default on the loan. Secure loans are frequently offered to those who have experienced financial trouble in the past or have a lower credit score. Different types of secure loans include title loans, pawn loans, and secured personal loans.
Unsecured loans
Unsecured loans don't require collateral but may carry higher interest rates and higher credit scores than secured loans. Two of the main advantages of an unsecured loan are that it may offer faster approvals and less paperwork.
Comparing loan options
To compare loan options, you need the total cost of each loan to see which will be the least expensive for you in the end. However, some people may find the total cost of the loan over time to be more important, while others may find the monthly repayment amount to be a bigger priority. It all boils down to what you want and need with your personal loan.
By casting a wider net and conducting research on competitive interest rates, you can find the personal loan that's best for you.
FAQs
Lenders generally see those with credit scores 660 and up as acceptable or lower-risk borrowers. Those with credit scores below 660 may be less likely to qualify for better loan terms.
What credit score do you need to get a $30,000 loan? ›
This allows them to look at your history from the past seven years and see whether you've typically made payments on time. For a $30,000 loan, you'll typically need a credit score above 600 just to qualify or above 700 to get a competitive rate.
Can I get personal loan with 600 credit score? ›
With a 600 credit score, you can expect to pay a relatively high interest rate — personal loan interest rates for fair credit were around 30% in July 2024, according to Credible data. So shop multiple lenders to find the lowest rates and, ideally, loans with no origination fees.
What credit score is good enough for a personal loan? ›
Payment history is weighed the most heavily in determining your credit score, along with your total outstanding debt. Generally, the required credit score for a personal loan is at least 580. To qualify for a lender's lowest interest rate, borrowers typically need a score of at least 800 and a high income.
Can I get approved for a personal loan with a 650 credit score? ›
Typically, the minimum credit score for personal loan approval is 610 – 640. The best credit score for a personal loan with good rates and terms, though, is most often 650 or higher. Each personal loan gets evaluated on an individual basis, and requirements vary by lender.
What credit score is needed for a $25,000 loan? ›
Typically, a desirable credit score for a $25,000 personal loan is around 670 and above, but some lenders work with those who have scores from 580 and up.
Can I get a $20000 loan with a 700 credit score? ›
As far as qualifying, you'll often need good or better credit (a FICO score above 670), and a stable income source that shows you can afford the payments. Annual percentage rates (APRs) for personal loans typically range from around 6% to 36%, depending on your credit profile and other factors.
What credit score is needed for a $10 000 loan? ›
You need a credit score of 580 or higher to get approved for a $10,000 personal loan in most cases. You will also need a steady income, be at least 18 years old, be a U.S. citizen or a permanent resident, and have a valid bank account.
How much money can I borrow with a 700 credit score? ›
You can borrow from $1,000 to $100,000 or more with a 700 credit score. The exact amount of money you will get depends on other factors besides your credit score, such as your income, your employment status, the type of loan you get, and even the lender.
How much of a personal loan can I get with a 620 credit score? ›
With FICO, fair or good credit scores fall within the ranges of 580 to 739, and with VantageScore, fair or good ranges between 601 to 780. Many personal loan lenders offer amounts starting around $3,000 to $5,000, but with Upgrade, you can apply for as little as $1,000 (and as much as $50,000).
Key Takeaways. The best personal loans are from LightStream, SoFi, PenFed, Discover, Upstart, U.S. Bank, Upgrade and Wells Fargo. They all have low interest rates, flexible loan terms and notable customer service. The best personal loan lenders don't charge origination fees and offer discounts for automatic payments.
Does getting a personal loan hurt my credit score? ›
Does a personal loan hurt your credit score? Your credit score can dip a few points when you formally apply for a personal loan, but missed payments can cause a more significant drop. Getting a personal loan will also increase the amount of debt you owe, which is one of the factors that make up your credit score.
Can you get a 900 credit score? ›
While older models of credit scores used to go as high as 900, you can no longer achieve a 900 credit score. The highest score you can receive today is 850. Anything above 800 is considered an excellent credit score.
What kind of loan can I get with a 600 credit score? ›
Best Personal Loans for a 600 Credit Score
| Lender | Loan Amounts | APRs |
|---|
| Oportun | $300 - $10,000 | 35.95% - 35.99% |
| OneMain Financial | $1,500 - $20,000 | 18% - 35.99% |
| RISE | $300 - $5,000 | 60% - 299% |
| Jora Credit | $500 - $4,000 | 75% - 349% |
1 more rowApr 20, 2023
While some personal loan lenders allow you to apply with a very low credit score, many require a minimum credit score of 660 or 700 to be considered for a $3,000 personal loan. Generally, the higher your credit score, the less interest you will pay.
How much personal loan can I get with 750 credit score? ›
The best personal loans for a 750 credit score are from LightStream because they offer $5,000 - $100,000 with APRs of 7.49% - 25.99% and repayment periods of 24 - 84 months.
What credit score do you need to get a $30000 car loan? ›
The credit score required and other eligibility factors for buying a car vary by lender and loan terms. Still, you typically need a good credit score of 661 or higher to qualify for an auto loan. About 69% of retail vehicle financing is for borrowers with credit scores of 661 or higher, according to Experian.
What is the monthly payment for a $30000 loan? ›
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| Loan Amount | Loan Term (Years) | Estimated Fixed Monthly Payment* |
|---|
| $25,000 | 3 | $771.81 |
| $25,000 | 5 | $518.84 |
| $30,000 | 3 | $926.18 |
| $30,000 | 5 | $622.61 |
13 more rowsYou can borrow from $1,000 to $100,000 or more with a 700 credit score. The exact amount of money you will get depends on other factors besides your credit score, such as your income, your employment status, the type of loan you get, and even the lender.
How much can I borrow with a 630 credit score? ›
With FICO, fair or good credit scores fall within the ranges of 580 to 739, and with VantageScore, fair or good ranges between 601 to 780. Many personal loan lenders offer amounts starting around $3,000 to $5,000, but with Upgrade, you can apply for as little as $1,000 (and as much as $50,000).
