Credit score

What credit rating do you need for a personal loan?

If you need cash to finance a project or pay a bill, consider taking out a personal loan. You may be wondering if you qualify for a personal loan given your credit score, and ultimately it will depend on the lender.

What is a personal loan?

A personal loan is a lump sum of money that you can borrow for a variety of reasons, including home renovations, medical bills, debt consolidation, and even vacations. You will repay the loan in fixed monthly installments, and it usually comes with a fixed interest rate. The amount you can borrow generally ranges from $1,000 to $100,000.

Most personal loans are unsecured, which means you don’t have to post collateral on the loan. Average interest rates on personal loans tend to be higher than rates on secured loans like mortgages and car loans, and roughly comparable to credit card interest rates if you have a lower credit score.

If you need a personal loan, you should start by shopping around the different lenders and seeing which lender offers you the best loan terms.

What credit score do you need for a personal loan?

Typically, lenders require a credit score in the mid-600s to qualify for a personal loan, although some companies will lend to borrowers with lower credit scores. The better your credit score, the better your interest rate should be. If your credit is poor, check out Insider’s list of the best personal loans for bad credit.

Just because you don’t qualify with one lender doesn’t mean you won’t qualify with another. Here are examples of the minimum credit scores required for some popular online personal lenders.

However, your credit score isn’t the only thing lenders consider when deciding whether to approve you for a loan. Lenders will also consider your debt-to-equity ratio — or how much debt you owe each month compared to your gross monthly income — and your employment status, among other financial factors.

How to improve your credit score if you don’t qualify for a loan

If you don’t qualify for a loan from a lender, you can try raising your credit score to increase your chances of approval. Plus, improving your credit score can earn you better terms on your loan.

To get your credit report from any of the three major credit bureaus, use You can get your report for free once a week until April 20, 2022. Although you won’t get your credit score on this report, you will get information about your credit and payment history. When reviewing your credit report, you can spot errors and determine where you can improve.

You can get your score for free from your credit card statement or online account. You can also buy it from a credit reporting agency.

If your credit score is low and lenders have turned down your loan applications, here are some steps you can take to improve your credit score:

  • Request and review a copy of your credit report. Look for any errors on your report that could hurt your score. If necessary, contact the credit bureau to discuss correcting the error.
  • Keep credit card balances low. Having a credit utilization rate – the percentage of your total credit that you use – of 30% or less will prove to lenders that you can manage your credit well.
  • Create a system to pay bills on time. Your payment history makes up a substantial percentage of your credit score, and lenders like to see regular, reliable payments in the past. Set up calendar reminders or automatic payments so you don’t fall behind.

If you can wait to take out a personal loan until you improve your credit score, you may qualify to borrow from more lenders and get better rates.