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Q: Is there a minimum credit score needed to be approved for a bank loan? Are there other qualifications I need?
A: The ease of getting a loan and the rate that will be charged differs between different kinds of loans.
Unsecured loans (ones where there is no collateral such as a car they can repossess or a house the bank can foreclose on) will often require higher scores than secured loans like financing a car. And unsecured loans tend to be for smaller amounts of money than secured loans, so they might not work for large purchases.
As with other types of credit, your credit score will not only affect whether or not you will receive the loan, but also what APR you will be charged.
Unfortunately, there is no exact credit score where you will get a loan or won’t…in fact, there isn’t even a specific range. Most Americans can score some type of credit, whether it be a personal loan, a home equity line of credit, or a payday loan.
Your best bet would be to speak with the loan officer at your bank and ask them the requirements for your specific situation. Mention the size of the loan you need to take out and what you plan to use it for, as well as your income. They may be able to tell you the minimum credit score they require. See if they will give you a ballpark answer without actually pulling your credit report.
Besides credit score, the most important factor in getting a loan may be employment. If you don’t have a job or any source of income, you’re going to have a hard time getting anyone except your parents to lend to you.
On the other hand, if you have a steady income and the loan payment plus all your other minimum payments takes up less than a third of your monthly income, you just might get that stamp of approval.
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Credit Shout is a community of personal finance experts dedicated to helping you save money and make smart financial decisions. Learn how to master your credit card rewards, improve your credit score and start eliminating your debt.