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What Credit Score Do You Need For A Personal Loan?

If you're thinking of taking out a personal loan to make a large purchase or consolidate debt, you're probably wondering what you can do to get the best terms and interest rates. Of all the factors determining your ability to borrow, credit score is one of the most important.

So, what exactly is the required credit score for a personal loan? Keep reading to learn more about how your credit score affects your loan terms and what you can do to improve it if needed.

If you're not sure you have the correct credit score for personal loan approval, call the Credit Union of Southern California (CU SoCal) at 866.287.6225 today to schedule a no-obligation consultation with our friendly financial experts. They'll be able to answer any questions you may have about credit scores, personal loans, and our other banking products.

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Why Is Credit Important?

Credit is a vital part of your financial health. It allows you to pay for things after you've received them. For example, credit cards will enable you to make purchases that you'll pay off later. Installment loans, like personal loans, give you access to the cash you need now with the promise that you'll pay it off in a given time. The better you manage your credit, the better your score will be, which will make borrowing even more accessible in the future.

Your credit history lets lenders measure your creditworthiness and determines how much they are willing to let you borrow. It also helps them decide on the interest rate and terms that fit your ability to pay.

How Your Credit Score Is Calculated

Your credit score comprises a few components, including your credit history length, credit inquiries, debt burden, and payment history. These things together indicate how reliable a borrower you are likely to be and how much risk it is for a lender to offer a loan. Keep reading for more details.

Credit History Length

Your credit history length accounts for about 15% of your credit score. The longer you have had your credit accounts, like a credit card, the better a potential lender is to see how you manage debt. If you've successfully paid your credit card bill each month for several years, lenders will see you are a reliable borrower.

Credit Inquiries

Checking your credit score will actually lower it, but there are some stipulations. If you are shopping different lenders for a loan, they will need to run an inquiry. Because several checks often happen during a short period while shopping around, the FICO will only consider it a single inquiry.

Debt Burden

Debt burden means how much you currently owe on all of your credit accounts. Don't worry if you have a lot of debt each month – as long as you are meeting your payments and have a good payment history, your credit score won't drop.

Payment History

Your payment history is the most crucial element of your credit score. Essentially, payment history keeps track of whether you have been able to meet all of your payments on time each month. The more consistently you complete your payments, the higher your score will be.                             

Personal Loan Requirements

So, what credit score is needed for a personal loan? Well, credit score isn't the only factor when it comes to personal loans. Instead, you need to look at your entire creditworthiness, which considers more than just your score. Here's what you need to know about personal loan requirements.

Credit Score

Your FICO credit score will be the first thing lenders look at before they approve your personal loan application. To get the best terms, make sure your score is excellent by paying all of your debts on time and keeping hard credit checks to a minimum.

If you need some extra help improving your credit score, have a look at the CU SoCal Credit Builder Loan for a simple way to boost your credit. Need more ideas? Check out our article on how to improve your credit score.

Credit History

The longer your credit history, the better off you will be when you apply for a loan. Many lenders require a minimum of two or three years of credit history, but even longer is better. Make sure that your payment history is satisfactory, too. Otherwise, lenders might see you as a higher risk.

Debt-To-Income Ratio

To get your debt-to-income ratio, or DTI, divide your gross monthly income by your monthly recurring debt. This number indicates how much money you have coming in each month versus going out for loan or credit card payments. The lower the number, the better off you are financially and the more likely you are to get better loan terms.  

Free Cash Flow

Your DTI only accounts for official debt, not your recurring monthly payments like insurance, rent, groceries, and utility bills. To get a clear picture of your finances – and whether you can handle another loan payment each month – some lenders will look at your bank account transactions and recurring payments. The money you have left over is your free cash flow, and the more you have, the more likely an institution is to approve you for a loan.

How To Get A Personal Loan With Bad Credit

There's no specific minimum credit score needed for a personal loan, but you will get better terms with a higher score. Of course, it's entirely possible to get a personal loan with bad credit. As we mentioned above, your credit score is only one part of your creditworthiness. Making sure your debt-to-income ratio, credit history, and income are in good shape is crucial to getting a personal loan with poor credit.

Where To Get A Personal Loan

There are several types of financial institutions that offer personal loans. You'll have to do some shopping around to find one that will approve you for a loan if you have bad credit. Taking out a loan with a bank or credit union where you already have an account will be your best bet at getting reasonable terms. Here's what you can expect from banks, credit unions, and online lenders.


If you already have an account with a traditional bank, applying for a personal loan will be easy and straightforward. However, most banks tend to have higher requirements for credit score and income, so if you're worried about poor credit, this might not be the right place.

Credit Union

Credit unions can be a great option for personal loans, with more flexible terms and the lowest interest rates thanks to being non-profit institutions. Credit unions typically require that you become a Member to get a personal loan, but it's easier than you might think. For example, anyone living, working, attending school, or going to church in Southern California is eligible for Membership at CU SoCal.

Online Lender

Online lenders are becoming more popular lately. They are highly convenient and feature easy-to-use websites and mobile apps for their usersto keep track of finances. That convenience does come at a cost, though, especially if you prefer to visit a physical location to do your banking and to have face-to-face conversations.  

CU SoCal Personal Loans

Whether you need extra money to fund a wedding, buy a computer, or boost your credit score, CU SoCal has you covered. With personal loan financing up to $30,000, we're dedicated to helping our Members achieve their financial dreams. Plus, we never charge fees or prepayment penalties on personal loans.

Apply For A CU SoCal Personal Loan Today!

If you're worried about your credit score being too low for a personal loan, let us help. Give us a call at 866.287.6225 for more information on how we can assist you in getting the right personal loan for your needs. If you're ready to get started, apply online for a personal loan today!

Get Started on Your Personal Loan!

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Credit Union of Southern California (CU SoCal) is a leading financial institution empowering those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County to reach their goals and build strong financial futures. CU SoCal provides access to convenient money management services and offers competitive rates and flexible terms on auto loans, mortgages, and VISA credit cards—turning wishing and waiting into achieving and doing.


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