credit score for personal loan
The credit score requirements for personal loan approval and competitive rates — typically 640 minimum, 720 for best rates.
Example
“A credit score of 720 qualified him for a 9% personal loan versus 24% at 620.”
Memory Tip
720 for BEST RATES — below 640 most lenders decline or charge near credit card rates.
Why It Matters
Your credit score directly determines whether you can qualify for a personal loan and what interest rate you will pay. A higher score saves you thousands of dollars in interest over the life of the loan, making it crucial to understand these requirements before applying.
Common Misconception
Many people believe that having any credit score above 640 will get them approved for a personal loan at competitive rates. In reality, 640 is typically the bare minimum for approval, and you may face much higher interest rates unless your score reaches 720 or above.
In Practice
A borrower with a 650 credit score applying for a 10,000 dollar personal loan might receive approval at 18 percent interest, costing them 1,800 dollars in interest over five years. The same borrower with a 750 credit score could qualify for the identical loan at 8 percent interest, paying only 800 dollars total, saving them 1,000 dollars.
Etymology
Modern consumer lending — credit score determines access and cost of personal loans.
Common Misspellings
Check your credit score free — no impact
Related Terms
More in credit
Other credit terms you should know
See Also
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