What Credit Score Do You need for a Personal loan?

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What Credit Score Do You need for a Personal loan?
Your credit score is one -however it is not the only factor that lenders use to decide your rate or loan amount.


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Last updated on Oct 26, 2022.

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Credit score requirements for personal loans vary across lenders. A majority of lenders prefer borrowers with excellent or great credit scores (690 and above) however, some lenders accept those with poor credit (a score of less than 630).
The minimum credit score needed to be eligible for personal loan is 560-660 as per lenders that were surveyed by NerdWallet. Some lenders might require a higher credit score.
A high credit score doesn't guarantee you'll qualify or get a low interest rate. The criteria for qualifying is largely based on your creditworthiness, which is typically dependent on your credit score and history, in addition to income and debt. Use the calculator below to find out which loan possibilities you might have based on your .
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Find out if you're pre-qualified for a personal loan without impacting your credit score
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What are the requirements to be eligible for a personal loan
If you meet the minimum credit score of a lender's requirements doesn't mean that you'll be eligible to get a loan.
The lenders have a variety of criteria they consider on an application. Certain lenders will look at things such as where you went to university and what you work in. Others focus on your credit report and history, along with your income and debts.
Here's the most common thing lenders examine when reviewing an individual loan application:
Credit score: Most lenders are influenced by their credit scoring models but some use . Other lenders claim they utilize numerous data points on the borrower's creditworthiness to determine their approval, which may include a FICO or VantageScore.
Credit history: Lenders like to see a long credit history when they review a loan application. The lender might say that it needs two or three years of credit history but more is generally better. More accounts throughout your credit history tells a lender how diligently you've paid your debts. Borrowers with several credit cards, a mortgage, or an auto loan showing regular on-time payments may be more likely to be eligible.
Ratio of debt-to-income: Lenders look for borrowers who make enough money to cover their monthly financial obligations, plus loan payment. Many of them use it to assess whether another loan will overextended your financial resources.
Free cash flow The ratio of your debt to income doesn't account for expenses like gas, groceries and rent, so some lenders look at bank transactions to determine how much cash borrowers have left over after paying other expenses. This is what lenders call "free cash flow," which means that the higher amount cash that you've got, the better secure the lender is in accepting your application.

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Personal loans for bad or fair credit
While lenders will consider a range of factors on an loan application Your credit score will often be considered to be a significant factor.
Borrowers with fair or bad credit often qualify for high rates, which could be up to 36%. A low credit score can be one of the reasons the lender is able to approve an unfavorable loan amount.
The lenders that provide loans may take a look at your credit score in making an loan decision. , for example, take a look at the status of a member within the credit union as well as other aspects of an application.
How to compare personal loans
Here are some factors to take into consideration when choosing between personal loan lenders:
Annual percentage rates. APR is the annual percentage rate. APR represents the entire cost for the loan that includes interest and charges. APR provides an apples-to-apples cost comparison between personal loans and other financing options.
Pre-qualifying with an informal credit check. Many lenders will allow you to pre-qualify to preview your potential interest rate and monthly payments prior to applying for the loan. This won't impact your credit score, and will aid you in choosing the personal loan is best suited to your budget and borrowing requirements.
Joint loans. By adding a co-borrower to your application will increase your odds of being eligible for an individual loan. Some lenders do not offer this , but adding someone with good credit and a good income could help you get the lowest rate or higher loan amount. With the joint loan, your co-borrower is also responsible for making payments.
Secured loans. require borrowers to provide collateral in order to qualify for the loan. The collateral can be money in a savings account, permanent automobile or home fixture or vehicle that the lender may use if you are unable to pay back the loan. Secured loans are a great option for people with low credit scores get an loan or get a better rate than on an unsecured personal loan.
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Special offers. Lenders may offer perks like credit-building assistance, free career guidance, help with hardship or unemployment. If you've received two reasonable loan offers, make sure to look for additional benefits that might aid you in deciding which is the best fit for you.
More calculators
: Learn how much your monthly payment could be, based on your loan amount, term and credit score.
Find out how much consolidating your debt can reduce your debt.
Find out your debt-to-income ratio, and discover how lenders use it.


About the authors Annie Millerbernd, a private loans writer. Her work has been featured on The Associated Press and USA Today.


Ronita Choudhuri is the person who handles individual loans in NerdWallet.







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