Where Does My Credit Score Need to Be for a Personal Loan?

Understanding your credit score in terms of a personal loan is important. The options you have will be expanded based on the credit score that you have, as well as the history. You want to have a better score to be approved but also to get the best interest rate from the company that is offering the loan.

It is important that you understand your credit score for many reasons, not just to borrow a personal loan. However, personal loans do have a specific set of requirements, including those with your credit, to borrow the loan from the company.

We’ve compiled all of the information you need to find out if you qualify for a personal loan based on the credit profile that you have. Not just that, but you can learn more about the other requirements you might have to meet in order to qualify for the personal loan that you’re looking to obtain.

Your Credit Score

The credit score that you have is one that should show your credit worthiness, and other loans and payments you had to make to other creditors. This should be positive, and something that the lender will want to feel good about giving you money for. This is why it is important to know your credit score and keep it in the best standing that it can.

Your credit score can range from 300 to 900, and the higher the score; the better the rates you get for loans and the chances for being accepted for the loans are much higher than those with lower credit scores.

Your credit score is what says if you’re a good credit risk that can benefit the financial institution, or if you might default on the loan that they decide to offer you. Knowing your credit score can help you determine how creditworthy you currently are to lenders who might want to work with you.

Obtaining a Personal Loan

When you want to obtain a personal loan, you have to consider your credit score and history. This is something that you can check with the major credit bureaus throughout Canada. You can also use free apps to track your credit depending on what you have available. Some of the more popular choices are:

  • Credit Karma
  • Mint
  • CreditWise
  • Experian
  • Credit Sesame 
  • Equifax

The personal loan that you are looking to get should let you know what the credit score is that you need to have to borrow the money. Generally, the higher the score, the better your chances but there is a minimum that many of the lenders have in order for you to qualify in the first place.

Understanding your credit score will be ideal for other forms of credit and lending, not just for a personal loan. Become acquainted with your credit score and history beforehand.

Most lenders in Canada require a minimum credit score of 550, but some lenders might request that your credit score is higher than this and your debt-to-income ratio is at a manageable way. This depends on the lender, and sometimes this can be increased due to the market conditions and the lender and how comfortable they feel with offering personal loans to those with lower-than-normal credit scores, as 550 is low compared to some other lenders restrictions of a credit score of 680.

Additional Requirements Needed to Obtain a Personal Loan

There are additional requirements that need to be filled to obtain the personal loan. These requirements are much more than just a credit score and include different pieces that come together to create the best credit profile that the lender is comfortable working with.

The other specifications and requirements for a personal loan include, but are not limited to:

  • Permanent address with proof 
  • Have a lower debt-to-income ratio that shows you can easily pay back the personal loan that you’re borrowing 
  • No bankruptcies, foreclosures, or repossessions on your credit history 
  • Proof of regular income 
  • Have a good credit history, not just score with no derogatory marks or delinquent accounts
  • A bank account 

Each institute is different and may require different requirements, whether more or less. This is important to ask the lenders that you are looking into to find out if you’re able to provide the right proof and meet the requirements that they have to ensure that you qualify for this type of personal loan.

At Smarter Loans, we review and qualify Canada’s best personal loan providers so that we can connect you with only the most trustworthy companies. Pre-apply for a personal loan online here!

Frequently Asked Questions About Where Does My Credit Score Need to Be for a Personal Loan?

Do I need to apply to a specific place to obtain a personal loan?

You do not have to stick with a specific place for a loan, or even a place that you’re the most familiar with. You can choose to work with any financial institution that you feel the best with. Of course, looking into repayment terms and interest rates is also something that is important when choosing a place to work with.

How hard is it to get a personal loan compared to some of the other loans?

A personal loan is harder for many to get, especially those with lower credit scores. Those who are thinking about obtaining a personal loan should consider the many different credit scores that lenders are accepting and if they qualify in the many other ways that they require.

How would I end up getting the money from the personal loan?

There are a number of ways that you can obtain the money from a personal loan. These can include the following, or use other methods depending on the lender and preference of the borrower:

  • In cash from the lender
  • Deposited into your bank account
  • Sent as an e-transfer to your account
  • Sent to another lender directly if they work with another one, or if there is a closer branch to where you live
  • On a prepaid card

There may be fees depending on the option that you choose to go with, such as the prepaid card. This is something to consider if you want to keep the extra fees that you pay on this loan down.

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Amanda Leach

Fifteen years can be a long time to work in one industry, but not when you are doing something that you love. Amanda has enjoyed the freedom of working as a freelance writer for the majority of her career. She has successfully combined her passion and skill for writing while still enjoying a life filled with travel, learning and exciting new experiences. While she loves exploring all different types of writing, her PhD in Consumer Psychology has made her a sought after writer for marketing, business and technology fields. Amanda is a regular contributor to Smarter Loans.