When it comes to getting a loan through a bank, the minimum credit score you need to qualify is usually between 610 and 640, according to an anonymized dataset of NerdWallet users who pre-qualified for personal loans. Credit scores typically range from 300 to 850, with 300 being considered bad credit and 850 being exceptional. Most people don't need to have a perfect credit score of 850 in order to be approved for personal loans or credit cards. However, there are other guidelines and requirements you should keep in mind before applying for a loan.
Generally, you'll need a score of at least 550 to 580 in order to qualify. Establishing a relationship with the lender can be beneficial when you need more credit, as they can assess your overall financial responsibility. Lenders that offer loans to borrowers with good credit tend to offer the lowest rates and the most favorable repayment terms. For example, with HELOCs and auto equity loans, you're putting your home or car at risk if you default on the loan.
The minimum credit score required for a personal loan can get you in the door, but those with higher credit scores tend to have better loan options. Paying off credit card debt is an important step in increasing your credit score, especially if you have large balances on your cards. Additionally, it's important to read your credit reports and notify the credit bureau if you find any errors. All three credit bureaus (Equifax, Experian and TransUnion) are legally required to provide you with a free copy of your credit report each year upon request.
This calculation is known as your debt-to-income ratio (DTI), which is the percentage of your monthly income that goes toward expenses such as rent and loan or credit card payments. Best Egg loans have a minimum term of 36 months and a maximum term of 60 months. Lenders evaluate the equity you have when you apply for large credit accounts, such as a mortgage, home equity account, or personal loan account. Using a credit card with a 0% APR introduction period could save you even more money, but you're likely subject to a shorter loan period.
Personal loan requirements vary by lender, but there are some considerations that financial institutions always take into account when reviewing applicants, such as credit score and income. Lenders look at your debt-to-income ratio (DTI) when they evaluate your credit application to assess whether you can take on new debt. Many lenders require applicants to have a minimum score of around 600 to qualify, but some lenders provide loans to applicants without any credit history. Personal loans can help you cover large expenses without having to pay as much in interest compared to other forms of credit. It includes the credit accounts you have opened or closed, as well as your payment history for the past 7 to 10 years.