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What credit score is needed for a personal loan?
How those three digits can affect personal loan approval.
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Your credit score is one of the most important factors in a personal loan application. Lenders often won’t consider you if you don’t meet their minimum credit score requirement. However, it’s only one of several factors they look at when determining your eligibility.
What credit score do I need to get approved for a personal loan?
Minimum credit score varies from lender to lender. For example, major financial institutions like banks and credit unions will want to see good to excellent credit, while online lenders can approve personal loans even if you have bad credit.
Minimum credit score to qualify with lenders
Below is a breakdown of different lenders with their minimum credit score requirements for personal loans.
| Lender | Minimum credit score | Lender type | Other eligibility requirements | |
|---|---|---|---|---|
 | 300 | Online broker | - Be the age of majority in your province of residence
- Be a Canadian Citizen or a Permanent Resident - Any currents debts must total less than 60% of your income | Go to siteRead review |
 | 540 | Online lender | - Be a citizen or resident of Canada
- Be the age of majority in your province or territory - Minimum net annual income of at least $13,000 - Must have a credit bureau - Not currently in bankruptcy or insolvency - Bank statement showing the last payroll deposited and the last 30-days activity - Valid ID showing home address | Go to site |
 | 300 | Online broker | - Be the age of majority in your province of residence
- Be a Canadian resident | Go to siteRead review |
 (Unsecured personal loan) | 560 | Online lender | - Be a citizen or resident of Canada (excluding Nunavut)
- Be the age of majority in your province or territory - Provide personal identification, secondary ID, proof of income, housing information and mortgage verification - Have an established credit history - Able to make monthly repayments on your loan | Go to site |
Loan Away | 300 | Online lender | - Be the age of majority in your province of residence
- Be a Canadian resident | Go to site |
goPeer | 600 | Peer-to-peer lending platform | - 18 or over
- Regular source of income over $15,000 per year - Hold a Canadian bank account - Have been a Canadian resident at least 3 years | Learn more about peer-to-peer loans |
| Major banks | The banks do not specify minimum credit scores, but generally, you need good to excellent credit (above 660) | Bank | – Age of majority in your province – Be a Canadian resident – Have a valid bank account – Haven’t declared bankruptcy in the last several years – Have not been declined credit in the last several months | Learn more about bank personal loans |
What credit score do I need to get a competitive deal?
You would need to have excellent credit to get the lowest rates and largest loan amounts that a lender offers. However, you can often get a favourable deal even if your credit score is considered good.
Below is a breakdown of credit score ranges according to credit bureau Equifax.
- Excellent credit: 760-900
- Very good credit: 725 to 759
- Good credit: 660 to 724
- Fair credit: 560 to 659
- Poor credit: 300-560
How to get a low interest loan
Credit score is just one factor
Although credit score plays a key role in whether or not you’ll get approved for a personal loan and how high or low your interest rate will be, it is just one of several factors that lenders examine. For example, you could have a decent credit score, but if the level of your monthly debt repayments relative to your monthly income is concerning, lenders may hesitate to approve you. Below are some important factors that lenders look at.- Income. Many lenders have minimum income requirements. Generally, the larger the loan you’re applying for, the larger the income you’ll need to qualify.
- Employment. Personal loan providers often require borrowers to have a full-time job. You might have trouble finding a loan if you’re self-employed or getting financing when you’re unemployed, though there are options.
- Credit history. In addition to your credit score, many lenders look at the length of your credit history. If it’s still relatively new — say, less than three years old — you might have trouble qualifying.
- Debt-to-income (DTI) ratio. Your DTI ratio compares your monthly bills to your monthly income and gives lenders an idea of how much money you can afford to repay each month.
- Loan amount. The size of the loan matters. For example, if you have bad credit, lenders are more likely to approve you for a $5,000 personal loan than a $35,000 personal loan.
- Collateral. Offering collateral such as your home or investments reduces risk in a lender’s eyes because if you fail to make repayments, the lender can seize your asset.
How do I check my credit score?
You can use one of the following services or methods to check your credit score. The score you receive is usually based on a soft credit inquiry, which doesn’t affect your credit rating but may not be as accurate as a hard credit pull. When lenders evaluate a loan application, they’ll do a hard pull on your credit, which will temporarily decrease your credit score.
- Online services. Sites like Credit Verify (powered by TransUnion) allow anyone to check their credit score by filling out a quick online form with basic personal information like your name, birth date and address.
- Budgeting apps. Many apps like Mint regularly check and update your credit score once you sign up.
- Credit card or bank apps. If you have an app for your bank or credit card, you can often sign up to check your credit score and get alerts when it changes.
- Account statements. Your credit score might appear on some statements for loans, checking accounts or other financial products.
- Credit bureaus. You can also go directly to the source and check your credit score with the two major credit bureaus in Canada: TransUnion and Equifax.
How can I improve my credit rating?
There are several steps you can take to improve your credit score before you apply for a personal loan:
- Check your credit report. You’re entitled to two free copies of your credit report each year — one from each bureau. Request a copy and make sure it’s accurate. Reach out to your creditors if you find any mistakes on your credit report.
- Pay down your balances. Got a lot of credit card debt? Loans? Paying off some of your balances lowers your credit utilization ratio and can improve your credit score.
- Take out a credit-builder loan. Some local banks, credit unions and other financial institutions offer inexpensive small-dollar loans designed to help you improve your credit and establish a rainy day fund. Learn more about credit-builder loans.
Can I get a personal loan with no credit score?
You can, though your options are much more limited. You might be able to qualify if you apply for the loan with a cosigner. Or consider borrowing from friends and family.
Compare personal loans for different credit types
Bottom line
You can get a personal loan with almost any credit score — or even no credit score. But you have more options if you have good to excellent credit. If you aren’t in a rush, consider taking the time to improve your credit rating so you can get an even more favorable deal.
Want to know more about how it all works? Check out our guide to personal loans.
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