The Average Credit Score for Personal Loans | Bankrate (2024)

The average FICO credit score in the U.S. is currently 717, according to recent data from FICO. That is down a point from 2023. FICO says this is the first time in a decade the average has dropped year-over-year. Its analysts point to the toll increased consumer debts and high interest rates have taken on Americans.

To qualify for a personal loan, borrowers generally need a minimum credit score of 610 to 640. However, your chances of getting a loan with a low interest rate are much higher if you have a “good” or “excellent” credit score of 670 and above.

Key statistics

  • The national personal loan debt balance rose from $72 billion in 2015 to $222 billion in the fourth quarter of 2022.
  • The average personal loan interest rate for April 2024 is 12.24%.
  • 22.5 million people in the U.S. had unsecured personal loans in the fourth quarter of 2022.
  • Personal loans only account for 1.3% of consumer debt overall.
  • The average debt per personal loan borrower is $11,116.
  • Personal loan delinquency rates are over twice as high as delinquency rates for auto loans and mortgages.

What credit score is needed for a personal loan?

When lenders evaluate your loan application, they want to see that you have a history of paying off your debt. Your credit score is a window into your debt and repayment history. So, it is a key factor in determining if you will qualify for a loan and how much interest you will have to pay.

The most commonly used credit score system is FICO, with scores ranging from 300 to 850. Your FICO credit score is determined based on your payment history, total outstanding debt, the length of your credit history, your credit mix and any new debt you’ve taken on. Payment history is weighed the most heavily in determining your credit score, along with your total outstanding debt.

Generally, borrowers need a credit score of at least 610 to 640 to even qualify for a personal loan. To qualify for a lender’s lowest interest rate, borrowers typically need a score of at least 800.

FICO credit score and what it means for personal loans

PoorIt is difficult to qualify for personal loans with a poor credit score. If you do find a lender you qualify with, your interest rate will be high and you will likely have stricter borrowing limits.
Fair (580 – 669)Borrowers with fair credit have a better chance of qualifying for lower interest rates, but may still only qualify for low loan amounts.
Good (670 -739)Borrowers with good credit will likely receive a lender’s lower interest rates and qualify for higher loan amounts.
Very Good (740 -799)Borrowers with very good credit will qualify for a lender’s lowest interest rates and even higher loan amounts.
Exceptional (800+)Borrowers with exceptional credit will qualify for a lender’s lowest interest rates and highest loan amounts.

What is a personal loan?

A personal loan is an unsecured sum of money that you borrow from a bank, credit union or online lender.

Once you receive the loan funds, you begin making monthly payments on the loan, plus interest, over a set repayment period. Personal loans can be used for any purpose but are most commonly used to consolidate debt and refinance credit cards.

Using a personal loan to consolidate debt allows you to combine multiple outstanding debts into one loan. This means you only have to pay one monthly fee with one consistent interest rate, as opposed to dealing with multiple lenders at one time.

Debt consolidation can help borrowers stay on top of their monthly payments. It may save you money in the long run by combining all of your debt under one interest rate. Debt consolidation can also improve your credit score, particularly when you consolidate outstanding credit card debt. Consolidating your credit card debt with a personal loan allows you to lower your credit utilization rate, which improves your credit overall.

While debt consolidation and credit card refinancing are the most common uses of a personal loan, other potential uses include home improvement, major purchases, medical bills, wedding expenses, etc.

How do personal loans affect credit score?

Taking out a loan of any kind will have a slight immediate negative impact on your credit score because you are taking on more debt. However, if you use a personal loan to consolidate debt or refinance, you will likely be able to improve your credit score significantly over time. In addition, making regular on-time payments on your loan will help you improve your credit score over time. Compare the pros and cons of the affect of personal loans on credit below.

Pros and cons: Personal loans affect on credit

Building a payment history: Making loan payments on time establishes a positive payment history that will improve your credit score.Taking on debt: Every time you take out a loan, you take on additional debt. While using personal loans to consolidate debt can be a good idea, examine your financial habits and circ*mstances before taking on more debt.
Improving your credit mix: Having multiple types of credit helps improve your credit score. If you already have a line of credit or credit card, an installment loan will improve your credit mix and likely raise your credit score.Additional fees: Personal loan lenders can charge a variety of fees. Specific fees and added charges vary by lender. Some examples include late fees, prepayment penalties and origination fees.
Reducing your credit utilization ratio: Your credit utilization ratio is the measure of your available revolving credit and how much of it you’re using. The higher this ratio is, the lower your credit score will be. Since a personal loan is an installment loan, using it to pay off or consolidate revolving debt could improve your credit utilization score.Creating a credit inquiry: When you apply for a loan, the lender has to do a hard credit check on your credit report, which has an initial negative impact on your credit score. This dip in your score only lasts a few months, applying for multiple loans can hurt your credit. If you put in applications with multiple lenders, do it all within a week or two to minimize the damage to your credit.
Lower interest rates: Personal loans generally have lower interest rates than credit cards, especially if you already have good credit. This makes it easier to make monthly payments on time and keep your credit score intact.High interest rates for bad credit: While personal loan interest rates are lower than credit cards on average, personal loans often have high rate caps. Borrowers with less than stellar credit may be saddled with a high interest rate, making it more difficult to make payments.

Personal loans for bad credit

A personal loan’s minimum required credit score depends on the individual lender. Evaluate individual lender requirements before applying. If you struggle with your credit and are looking for a personal loan, look at bad credit personal loans. These loans tend to have more flexible requirements, and lenders weigh a borrower’s entire financial history with less focus on credit scores.

But beware. Lenders see a low credit score as a sign of risk. The lower your credit score is, the higher the interest rate on your loan is likely to be. The terms of your loan are likely to be less flexible than a borrower with a higher credit score.

Make sure that the loan terms you qualify for will work for you, and that you can comfortably pay back the loan. Borrowers should also look out for predatory lending by verifying a lender’s credentials before applying.

Credit considerations when getting a personal loan

Check your credit score and credit reports when applying for a personal loan. Knowing exactly where you stand will help you better determine what rates you will qualify for with any given lender.

Before you choose a lender, shop around for the best personal loan rates available. You should also read the fine print for individual lenders to ensure you know exactly what you are signing up for, including additional fees. Be sure to calculate how much your monthly payments will be before committing to a loan.

What age group takes out the biggest personal loans?

How to compare personal loans

There are many variables to consider when comparing personal loans. Factors you should look into include:

  • APR:This is the interest rate you can expect to pay, usually a percentage of the loan principal.
  • Secured vs. unsecured:Secured personal loans are often easier to qualify for, as they require collateral, which is an asset to secure the loan. Mortgages and auto loans are examples of secured debt, as the loan is secured by the home or vehicle. Unsecured debt may have a higher interest rate, but does not require collateral, which can be seized if you fail to make payments.
  • Loan term: This is the time over which you can expect to make repayments. Common loan terms for personal loans are two to five years, but some may be as long as seven years. Typically the shorter the loan term, the lower the APR.
  • Fees: Most personal loans have associated fees, which are added to your principal and increase the amount you owe. Be sure to read the fine print on your loan to understand how much you can expect to pay in origination, payment processing, late payment, and prepayment penalty fees.
  • Joint loans:If you don’t have a very strong credit history, you may be able to sign with a co-borrower for a joint loan. This loan type may increase your chances of being approved, but remember your co-borrower will be responsible for the loan too.

The bottom line

Before taking out a personal loan, make sure that you know what your credit score is in addition to having a clear understanding of your financial picture. Consider the interest rate you’re likely to qualify for, compare lender requirements and terms, and calculate your monthly payments.

To minimize damage to your credit score, apply with multiple lenders in the same two-week timespan. Go over the loan terms carefully before officially taking on the loan. For the best results, you should build up your credit before taking on more debt, or seek a type of credit-building product.

The Average Credit Score for Personal Loans | Bankrate (2024)


The Average Credit Score for Personal Loans | Bankrate? ›

Many give preference to borrowers with good or excellent credit scores (690 and above), but some lenders accept borrowers with bad credit (a score below 630). The typical minimum credit score to qualify for a personal loan is 560 to 660, according to lenders surveyed by NerdWallet.

What credit score is good enough for a personal loan? ›

Many give preference to borrowers with good or excellent credit scores (690 and above), but some lenders accept borrowers with bad credit (a score below 630). The typical minimum credit score to qualify for a personal loan is 560 to 660, according to lenders surveyed by NerdWallet.

What is the average credit score for a loan? ›

The higher the score, the better your chances are of getting approved for a loan. In general, lenders consider scores between 650 and 750 as good. It is easier to approve loans for mortgage or personal use with reasonable interest rates. Those with scores lower than 550 may need help getting approved for loans.

How much credit score is required for a personal loan? ›

Ideal credit score to avail a personal loan

The minimum CIBIL score for a personal loan is between 720 and 750. Having this score means you are creditworthy, and lenders will approve your personal loan application quickly. They may also offer you your chosen loan amount at a nominal interest.

What is the average personal credit score? ›

Most consumers have credit scores that fall between 600 and 750. In 2022, the average FICO® Score in the U.S. reached 714. Achieving a good credit score can help you qualify for a credit card or loan with a lower interest rate and better terms.

How big of a personal loan can I get with a 550 credit score? ›

Best Personal Loans for a 550 Credit Score
LenderLoan AmountsAPRs
Upstart$1,000 - $50,0006.4% - 35.99%
Oportun$300 - $18,50010.07% - 35.95%
OneMain Financial$1,500 - $20,00018% - 35.99%
RISE$500 - $5,00060% - 299%
1 more row
Aug 26, 2022

How big of a personal loan can I get with a 720 credit score? ›

You can borrow $50,000 - $100,000+ with a 720 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.

Are personal loans hard to get? ›

Personal loans generally aren't hard to get and are available from credit unions, banks, and online lenders. There are various types of personal loans to consider, depending on how much money you need to borrow.

Do personal loans hurt your credit? ›

A personal loan can affect your credit score in a number of ways⁠—both good and bad. Taking out a personal loan isn't bad for your credit score in and of itself. However, it may affect your overall score for the short term and make it more difficult for you to obtain additional credit before that new loan is paid back.

How much of a personal loan can I get with a 650 credit score? ›

Personal loan averages by credit score
Credit score rangeAverage APRAverage loan amount
4 more rows

Can I get a 50k personal loan with bad credit? ›

While some lenders might be willing to lend you $50,000 if you have bad credit, you'll likely pay a much higher interest rate to offset the lender's risk. You could also consider secured personal loans, which require you to use an item of value (such as your car) as collateral.

What credit score do I need for a $10000 personal loan? ›

To increase your chance of qualifying for a $10,000 unsecured loan, you should have a credit score of 600 or higher. Some lenders start their minimum credit score requirements at 600, however, there are some lenders that require a credit score in the high 600s or low 700s.

What is the minimum credit score for unsecured personal loan? ›

The average minimum credit score required for a personal loan is 640 to 650. Collateral or help from a co-signer can help borrowers with poor credit obtain a personal loan. However, improving your credit score can help you secure loan approval without a higher interest rate or shorter loan term.

What credit score is needed for a $5000 card? ›

A credit score of 700 or better is typically needed for a card that offers a $5,000 credit limit. This means that these cards usually require you to have good or excellent credit. You will normally need a high income and little to no existing debt to get a limit that high, too.

What is a good credit score by age? ›

How Credit Scores Breakdown by Generation
Average FICO 8 Score by Generation
Generation Z (ages 18-26)679 - Good680 - Good
Millennials (27-42)687 - Good690 - Good
Generation X (43-58)707 - Good709 - Good
2 more rows

What is a realistic credit score? ›

Although ranges vary depending on the credit scoring model, generally credit scores from 580 to 669 are considered fair; 670 to 739 are considered good; 740 to 799 are considered very good; and 800 and up are considered excellent.

Can I get a personal loan with a 600 credit score? ›

You aren't likely to get a lender's best rates on a personal loan without a good credit score, but a FICO score of 600 should allow you to qualify for one.

What credit score is needed for a $20,000 loan? ›

Requirements for a $20,000 Personal Loan

This means they'll want to see your credit score, income level and DTI ratio. Requirements vary by lender, but most lenders require borrowers to have a credit score in the good to excellent range — meaning a score of at least 670.

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

To increase your chance of qualifying for a $10,000 unsecured loan, you should have a credit score of 600 or higher. Some lenders start their minimum credit score requirements at 600, however, there are some lenders that require a credit score in the high 600s or low 700s.

What credit score do I need for a $5000 loan? ›

Requirements for a $5,000 loan vary by lender. But in general, you should have at least Fair credit, which is a score of 580 or above. Lenders may also look at other factors, such as your income and your debt-to-income ratio (DTI), during the application process.

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