What credit scores do I need to get a personal loan?

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  • While you do not need to have a perfect credit score to get a personal loan, lenders generally see those with credit scores of 600 or above as lower risk.
  • There are a number of items to have ready for lender before you apply for a personal loan, including financial information, employment status, and your SIN.
  • Different types of personal loans include secured loans and unsecured loans. Before getting a personal loan, compare loan options to see which one applies better to your unique situation.

You don't need perfect credit scores to secure a personal loan, and there is no magic number when it comes to reaching a certain number to receive better loan rates and terms, but lenders generally see those with credit scores of 660 and above as lower risk. Those with credit scores of 560 or below are more likely to have difficulty qualifying for better loan terms.

A personal loan is a fixed amount of money that you agree to pay back over a set amount of time. One could look into personal loans when they're considering home improvements, cars, consolidating debt that carries higher interest rates, and other events when there's not enough available cash on hand. However, by agreeing to the loan, you must pay back the full amount plus interest and any fees associated with it. Personal loans are paid back through short or long-term financing plans, and by making regular payments called installments.

Your credit scores can impact what kind of personal loan options you're able to explore and the interest rates, fees or collateral that may be tied to it. However, it's important to note that your credit scores are one of many factors that lenders and creditors generally take into account when assessing your creditworthiness.

What is a good credit score?

Credit scores are calculated on a 900-point range and help determine the likelihood you will pay your bills on time. Although credit scoring models vary, generally credit scores from 660 to 724 are considered good; 725 to 759 are considered very good, and 760 and up are considered excellent.

  • 760 to 900: Excellent
  • 725 to 759: Very good
  • 660 to 724: Good
  • 600 to 659: Fair
  • 300 to 599: Poor

Credit scores help predict how likely it is that a person will pay back their loan obligations as agreed. The various credit scoring models vary, but generally use your payment history, length of credit history and credit utilization. Learn more about how credit scores are calculated here.

Some of the reasons for a poor credit score can include:

Missed payments on debt obligations

It's important to stay on top of your monthly payments. Consistency in making monthly payments is an important step towards a stronger credit profile.

Having too many or too few open credit accounts:

Too many open credit accounts can suggest to lenders that you're not responsible with borrowing money, and too few accounts may not allow creditors to have enough information on how to manage your money to draw a solid conclusion.

Too many credit applications:

If you're constantly applying for more credit, it could raise a red flag when your credit scores are calculated, as it could suggest that you are overextending your ability to repay.

Having high credit card balances:

Maxed-out credit cards could negatively affect your credit scores.

Meanwhile, showcasing multiple examples of open credit accounts that don't have late or missed payments may improve your credit scores. Learn more about what factors impact your credit scores or learn how to check your credit score here.

How to apply for personal loans

Before applying for a personal loan, there are several documents you should have ready for lenders. Each lender may require additional or different documents.

  • Your employment status or proof of regular income
  • A government-issued I.D.
  • Social Insurance Number (SIN) and date of birth
  • Your permanent address, phone number, and email accounts
  • Bank account that accepts automatic deposits

Lenders will generally check your credit report and credit scores, along with other information to evaluate your ability to repay the loan. This can impact your available loan options and terms, such as interest rates.

Types of personal loans

Before you check to see if you qualify for a loan, you should compare your loan options to see which one applies better to your unique situation, as well as what type of loan you can afford.

Two types of loans you can apply for include secured loans and unsecured loans.

Secured loan

A secured loan requires some sort of collateral — an asset you own such as a vehicle or home — to qualify for the loan.

Common types of collateral for a secure loan include:

  • Cars
  • Property
  • Recreational vehicles

By offering collateral, the loan is now less risky for the lender, as they can seize your collateral if you default on the loan. Secure loans are frequently offered to those who have experienced financial trouble in the past or have a lower credit score. Different types of secure loans include title loans, pawn loans, and secured personal loans.

Unsecured loans

Unsecured loans don't require collateral but may carry higher interest rates and higher credit scores than secured loans. Two of the main advantages of an unsecured loan are that it may offer faster approvals and less paperwork.

Comparing loan options


To compare loan options, you need the total cost of each loan to see which will be the least expensive for you in the end. However, some people may find the total cost of the loan over time to be more important, while others may find the monthly repayment amount to be a bigger priority. It all boils down to what you want and need with your personal loan.

By casting a wider net and conducting research on competitive interest rates, you can find the personal loan that's best for you.

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