What credit score do you need for a personal loan?

What is a personal loan?

A personal loan lets you borrow money without using something like your home as security. This is often called an unsecured loan.

You borrow a set amount and pay it back in monthly instalments, plus interest, over an agreed time. Lenders look at things like your credit score, income, and whether the repayments look affordable before making a decision.

What is a credit score?

A credit score is a number that shows how you have managed borrowing in the past. Lenders use it to help judge how likely you are to keep up with repayments.

Your score is based on your credit history, such as how you have used credit cards, loans, or overdrafts. Read our guide on understanding credit scores.

What credit score do you need for a personal loan?

There is no single credit score that guarantees approval for a personal loan. Each lender sets their own rules.

In general, a higher credit score can give you more choice. This may include lower interest rates or higher loan amounts. A lower score does not always mean you will be turned down, but it can limit your options.

Lenders also look at other details, like your income and current outgoings, to check if the loan suits your situation.

Can you still get a personal loan with a low credit score?

Yes, it is possible to get a personal loan with a low credit score. Some lenders may still accept your application, depending on their criteria.

If your score is lower, the loan may cost more overall. This is because interest rates are often higher to reflect the extra risk for the lender. You may also be offered a smaller loan or shorter repayment term.

How do you get the best loan terms for you?

To get the best loan terms for you, consider taking steps to improve your credit score.

Loan companies like to see things like:

• bills and credit cards paid on time
• low balances on your credit cards
• you’re registered to vote at your current address
• your credit report is up to date and has no mistakes

You can check your score for free, and find out more about your credit profile, with credit bureaus like Experian, Equifax, TransUnion, and ClearScore.

Summary

A personal loan lets you borrow money without using an asset as security. Your credit score plays a key role in how lenders review your application, along with checks on affordability.

There is no set credit score needed for a personal loan. A higher score can open up more options, while a lower score may lead to higher interest rates or fewer choices.

Find out more about unsecured personal loans with Co-op.