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What Minimum Credit Score Is Needed For a Personal Loan?

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What Credit Score Do You Need For a Personal Loan?

Your credit score can be used by the lender along with other information to determine your overall creditworthiness. Without a sufficient credit score, you can be denied access to financing. Your financial institution may look at your credit score, credit report, debt-to-income ratio, income and employment history in order to make a lending decision.

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Frequently Asked Questions About Personal Loan Credit Scores

When applying for a personal loan, your credit score matters for a few key reasons.

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

Your credit score affects the interest rate you may receive from the lender. Borrowers with high credit scores are usually offered the best interest rates, while borrowers with subpar credit scores must pay higher rates.
To get a better idea of what your current credit score is and what kind of interest rates you can expect to receive, you can get a copy of a credit report at Experian. It's also a good idea to regularly monitor your credit rating using an App such as Credit Karma.

What can you do to increase your chances of approval of a personal loan?

It can be a bit nerve-racking applying for financing when you do not know whether or not you will get approved. Thankfully, there are several things you can do to increase your chances of getting your application for a personal loan approved.
For starters, shopping around with a few different lenders and even attempting to get prequalified with them will help you have a better understanding of how much you can expect to get approved for. When you go through the pre-qualification process, this will typically show up on your credit report as a soft inquiry and should not affect your overall credit score.
If you fear your application will be denied because of your poor credit, look for a lender who offers specialized loans for those with little to no credit history, or consider using a cosigner.
In the meantime, you can also take steps to improve your credit score like paying off your debts, requesting an increase in your credit limits, disputing any inaccurate information, and asking previous lenders for the forgiveness of any late payments listed on your report. Many times financial institutions are willing to remove old derogatory marks from your credit report as a courtesy if you simply ask them. This is especially true if you have been a loyal customer and have not repeated your past mistakes. The more you can do to increase your credit score, even over a short period of time, the more likely you are to get approved.

What factors affect my credit scores?

Your credit score is influenced by several factors including your payment history, account balances, length of credit history, diversity of credit accounts, and the amount of new credit you have recently applied for or opened.
The biggest factor is your payment history, and even one late or missed payment can negatively affect your credit score for years to come. Payment history makes up 35% of your credit score. The second biggest factor is credit utilization, which is based on how much of your available credit you have used up at any given time. Credit utilization makes up 30% of your credit score.

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

Generally, most lenders prefer applicants to have a credit score in the mid-600s. However, the exact credit score you need will depend on the individual financial institution and their own set of requirements. In addition to looking at your credit score, lenders can take your income and employment status into consideration when deciding on your loan application.
Thankfully, there are still plenty of options out there for those with credit scores that are less than ideal. Online lenders are an especially popular choice for those with poor credit or no credit history. For example, Upgrade allows personal loan applicants to have a credit score as low as 560. This is one of the lowest minimum credit scores for a personal loan in the industry.
If you are concerned that you will not qualify for a personal loan, there are a few things you can do to try and improve your chances. If you aren't in a rush, you can take some time to improve your credit score and gain access to easier loan approval and lower interest rates. Taking steps such as paying down debt and requesting credit limit increases can also drastically affect your interest rate and save you money over the lifetime of the loan.
Alternatively, you can use a cosigner to improve your chances of loan approval even with a low credit score. Applying with a cosigner allows you to be evaluated using their credit score instead of your own.

What credit score is good enough for a personal loan?

The answer to the question of what credit score is good enough to qualify for a personal loan is a very subjective one. Each lender has their own unique requirements and conditions that must be met for loan approval.
Some lenders may require a high credit score of 720 and above while others may offer loan products that are extremely lenient and allow borrowers to have a score as low as 560.
Generally though, you will want to have a credit score of at least 620 in order to qualify for most loan offerings, and a credit score of 670 or above in order to access the best rates and not have to worry about whether or not you will get approved.

What credit score is needed for a $5000 loan?

For a personal loan with a small amount such as $5,000, borrowers with good and bad credit scores may qualify. If your credit score is below 600, you may have a harder time finding a lender that will work with you. If you search hard enough you may find a lender willing to approve you eventually. There are some credit unions and online lending companies today who can offer loans to those with low credit scores.

What credit score is needed for a $20000 loan?

In order to borrow funds in excess of $20,000 you should expect to see lenders requiring a credit score of around 620 and above. The exact credit score needed to obtain a $20,000 loan will depend on the requirements of your lender. In general, online lenders and credit unions tend to be more lenient than traditional big-name banks. Many of these financial institutions offer loan approvals to those with subpar credit as long as other loan criteria are met.

What credit score is needed for a $3000 personal loan?

To borrow a small amount such as $3,000 via a personal loan, applicants should be able to qualify with nearly any credit score. That being said, it could be a challenge to get approved if your credit score is below a 600, but there are many credit unions and online lenders who are willing to work with applicants who have poor credit. You may end up paying a pretty penny in high interest rates, however.

What credit score is needed for a 10,000 loan?

In order to get a personal loan of $10,000 or more, most lenders will want you to have a credit score of at least 620 or above. You will also need to qualify for the loan based on other factors like your income and your debt-to-income ratio. Before applying for a loan of $10,000 or more, try to make sure your credit score is as high as it can be in order to get approved and qualify for the best rates.

How much of a loan can you get with a 600 credit score?

With a credit score of 600, you may have a bit more trouble getting approved than if your credit score was higher, but you should still be able to find a lender who will give you a loan. A 600 credit score still falls within the "fair" category of FICO score ranges.
Depending on your income and other factors, you should be able to qualify for a small loan of $10,000 or less. Keep in mind that lenders may also take your income and debt-to-income ratio into account when making decisions. If you have a high income and 600 credit score you may qualify for a larger loan. On the flipside if you have a low income and 600 credit score, you may only qualify for a small personal loan. In addition, there is always the option to use a cosigner if you want to try to qualify for more. Using a cosigner can also give you the advantage of a lower interest rate.

What credit score is needed for a 100k loan?

Not every borrower will be able to qualify for a loan as large as $100,000. To gain access to the best lenders with high loan thresholds, low fees, and low interest rates, you will need to have a top-notch credit score in order to get approved and meet their loan requirements.
While every lender will have their own credit score requirements, you should expect to see most financial institutions requiring a credit score of at least 660 or above in order to qualify for loans with a high amount like $100,000. This is because the lender is taking on much more risk with applicants for a $100,000 loan than with borrowers of a smaller $5,000 loan.
For example, LightStream offers personal loans up to $100,000. Lightstream also has a minimum credit score requirement of 660. However, just because you meet their minimum credit score requirement, does not mean you will be approved for a $100,000 personal loan. Most lenders will also look at your income, debt-to-income ratio, employment and other factors when making lending decisions.

How much of a loan can I get with a 720 credit score?

With a 720 credit score, you should be able to access nearly any loan product from any financial institution as long as the lender's income and employment requirements are also met.
A 720 credit score is considered ideal, and any applicant with a score this high should not have a problem qualifying for a personal loan. The amount a borrower with a 720 credit score qualifies for can vary though. Most lenders consider several factors to determine who qualifies for what. Lenders may even have minimum income requirements in addition to minimum credit score requirements.

How to calculate credit score for a personal loan?

The higher your credit score, the more likely you are to get approved for a personal loan.
Since each lender uses different criteria for evaluating their applicants, there is no guarantee that having a certain credit score will grant you a loan approval. But in general, people with a credit score of at least 670 are considered to have good credit, meaning they should find it easy to qualify for financing with most financial institutions. A credit score of 740 and above is ideal and can get you access to the best rates. On the other hand, applicants with a credit score of 580 or below are considered to have poor credit. Getting financing with poor credit is not easy, but it is still possible.
To determine the credit score that you will need for the personal loan you are hoping to receive, you will need to check with your lender to see what their individual requirements are.
It is important to know what the threshold is for approval with your particular lender, as well as their cutoffs for prime interest rates. This way, you can take the steps to improve your credit before applying if you are just a few points away from reaching the next highest category of creditworthiness.

Does applying for loans affect your credit score?

Taking out a loan could cause a slight drop in your credit score when you first open up the account. In addition, applying for multiple loans in a short amount of time can cause your credit score to drop if lenders process your credit check as a hard inquiry.
Thankfully, opening new credit or attempting to apply for credit multiple times only accounts for 10% of your credit score. You should be able to recover from this slight ding fairly quickly, however it is something to keep in mind if you expect to be applying for another type of financing fairly soon after receiving or applying for your personal loan. For example, if you need your credit score to be in tip-top shape to make it through mortgage underwriting, you may want to wait until after closing to apply for that personal loan you need for moving expenses.
One way to avoid taking a hit from applying for too many loans is to get prequalified instead of applying for multiple loans. When you get prequalified, the lender should pull your credit as a soft inquiry which does not affect your credit report. Prequalification allows you to see how much money you can expect to get approved for once you are ready to go through the approval process. It also allows you to see what kind of interest rate you can expect to receive and if you should wait for your score to increase before you seek a final loan approval.
Getting prequalified from a few different lenders helps you figure out if you are getting the best deal without the need to actually apply for the loan and risk affecting your credit score. At Acorn Finance you can check personal loan offers from top national lenders without impacting your credit score.

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What can I do with a $10,000 personal loan?

A $10,000 personal loan has a number of uses, including (but not limited to):
Home improvement Buying a car Wedding costs
Debt consolidation Medical bills Startup business costs

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