A personal loan is an unsecured loan, which means you don’t have to put up any kind of collateral. There are many different reasons you may want to try to get a personal loan such as debt consolidation, medical expenses, or financing a wedding. What credit score do you need for a personal loan?
Your Credit Score
Your credit score is a three-digit number that gives potential lenders an idea of how well you’ve handled borrowed money. The higher your credit score, the better chance you have of being approved for a loan at the most attractive rates.
Most lenders rely on your FICO score, which can range from 300 to 850. The minimum credit score needed to be approved for a loan depends on the lender. Some lenders require a credit score of at least 660 to approve a loan while others approve loans from borrowers with a credit score of 620.
Other Factors Considered
Your credit score isn’t the only factor potential lenders look at before deciding whether to loan money to you. Some other factors that may be considered include:
- Debt-to-income ratio
- Length of your credit history
- Income and employment history
- Other income sources
- Evidence of savings
- Your other debts and whether you’ve ever declared bankruptcy or had bills that ended up in collections
Lenders also consider whether you’ve applied for a lot of credit recently. Too many inquiries showing on your credit report in a short amount of time may be an indication that you’re relying too much on borrowed money.
Loans for Less Than Perfect Credit
If you’ve had some credit missteps, that doesn’t mean there’s no chance you’ll get approved for a personal loan. You may be able to obtain a personal loan at higher rates than you’d have to pay if your credit was excellent, or you may be able to borrow a lower amount than you’d hoped.
We suggest applying for a loan from Dovly’s partner, Fiona. Fiona is an expert in finding the loan that’s just right for you, and applying won't hurt your score.
Don’t settle for loans with astronomical interest rates, such as title loans or payday loans. Your chance of being approved for a personal loan if you don’t have a good credit score or a perfect credit history can go up if you’re able to get a friend or relative with good credit to cosign for the loan. If your credit score isn’t very good, you may want to work on improving your credit score before trying to get a personal loan.
Improving Your Credit Score Before Applying for a Loan
Before trying to get a loan, make sure you know what’s on your credit report. If you’ve had late payments in the past, they’ll show up on your credit report for seven years, and bankruptcy may show for ten years. Your credit score may be lower than it should be if there’s inaccurate information being reported, such as payments showing as late that weren’t late or closed accounts showing as open.
If there are items on your credit report that need to be fixed, Dovly can help. Our automated credit repair engine can track, manage and fix your credit. Contact us to find out more today.