Credit Score Needed for a Bank Loan: What Really Matters

Ever checked your credit score and wondered if it's good enough for a bank loan? You're not alone—it’s honestly one of the top questions people ask before talking to a lender. Most banks look for a credit score of at least 670 if you want a personal loan without sky-high interest rates. But that’s not a magical number. Some banks set their bar at 640, while others might go up to 700 or more, especially if you’re asking to borrow a large amount.

If your score’s lower than you hoped, all isn’t lost. Some lenders have options for folks with less-than-perfect credit, but the offers aren’t always as friendly. You’ll probably see higher rates, stricter rules, or be asked for a co-signer. Still, knowing where you stand lets you play smarter—sometimes a small boost in your score can save you a ton of money over the life of a loan.

• Breaking Down Credit Score Ranges
• How Banks Decide on Your Loan
• Low Credit? Here's What You Can Do
• Tips to Improve Your Chances

Breaking Down Credit Score Ranges

Let’s be real—most of us don’t really know where our number fits on the scale. Credit scores in the U.S. usually run from 300 to 850, and these numbers sort you into groups that banks pay a lot of attention to. Here’s how they break it down:

Here’s a tip: the average American credit score hit a record 718 in 2024, according to Experian. That lands most folks in the "good" zone, which is generally enough for a standard bank personal loan. If you’re below the average, it doesn’t mean you’re out of luck—but you might pay more in interest until you move up a bracket.

• Banks usually set their cutoff for approval somewhere around 670. Go a little higher, and you’ll start seeing better rates and bigger offers.
• Scores above 740 really open doors. Think lower monthly payments and more lenders fighting for your business.
• If you’re in the “fair” range, focus on a few quick wins before applying, like paying down card balances or checking for errors on your credit report.

Knowing your exact number means you can predict what kinds of loan deals are actually possible—and avoid surprises when you apply.

How Banks Decide on Your Loan

Banks don’t just glance at your credit score and hand over money. There’s a whole checklist they run through, and yes, sometimes it feels a bit nosy. Here’s what really goes down behind those bank doors when you ask for a personal loan.

First up, your credit score grabs their attention because it’s an easy shortcut for judging your money habits. On average, folks with a score above 670 have a shot at better rates, but your story doesn’t start and end with that number. Banks also pull your full credit report, which shows all your loans, credit cards, and if you’ve missed payments in the past. They look for patterns—regular late payments can be a red flag.

Next, the bank looks at your debt-to-income ratio (DTI). This is how much you owe every month compared to what you earn. Most banks want your DTI under 40%. If your monthly debts (like credit card and loan payments) eat up more than that, your application might stall right there.

But there’s more than just numbers. They want to see proof that you’re steady—like having a job or stable income. Most want pay stubs, tax returns, or bank statements from the past few months. If you switch jobs a lot, or if you own a business and your income bounces up and down, they may flag your application for a closer look.

Here’s a quick breakdown of the main things most banks check:

• Credit score and full credit report
• Current debts and monthly payments
• Income (pay stubs, tax returns, bank statements)
• Employment history
• How much you want to borrow vs. your income
• Any past bankruptcies or foreclosures

Check out this table for a snapshot of what banks typically consider for a personal loan approval in 2025:

One thing most people miss: banks often use their own scoring systems on top of your regular credit score. That means two people with identical credit scores can get very different answers from two different banks. If you’re hit with a denial, don’t be afraid to ask why—they’re required to tell you, and that info can help you fix things for next time.

Low Credit? Here's What You Can Do

So, your credit score isn’t where you want it to be. Don’t panic. Plenty of people get personal loans with credit scores under 670—it just means you need to be a bit more strategic. Let’s talk about what actually helps in this situation.

First, know your options. Some banks work with lower scores, but they might not offer their best rates. Credit unions and online lenders usually go easier on folks with less-than-stellar scores. Some even specialize in loans for people trying to rebuild their credit history. Here’s a quick rundown of how credit score ranges affect loan approval odds:

Not thrilled by those high interest rates? Totally fair. There are ways to improve your odds or land a better deal:

• Check your credit report first. Look for mistakes—around 1 in 5 reports has an error that could be dragging you down. Disputing and fixing errors can give you a fast boost.
• Consider a co-signer. If someone with a strong credit history vouches for you, lenders loosen up. They just want reassurance the loan will get paid back.
• Offer collateral if you can. Secured personal loans use something valuable (like your car) to reduce risk for the bank. You’ll often get better rates this way.
• Shop around. Compare offers from banks, credit unions, and online lenders. Some do a “soft credit check” so your score doesn’t get dinged just for looking.
• Borrow only what you need. Smaller loans are easier to approve, especially if your score is shaky.

Boosting your score, even by a few points, can mean the difference between paying double or triple the interest. Remember, you’re not at the end of your rope—just detouring for now. It’s all about knowing your options and using them smartly to score that personal loan you want.

Tips to Improve Your Chances

If you want to boost your odds of getting a better deal on a bank loan, you don’t have to play guessing games. Banks look for specific things, and sometimes a few simple moves can push your credit score into a new range. Here’s what actually works:

• Pay bills on time, every single month. Even one late payment can drop your score by 50-100 points, and late payments stick around for seven years. Set up reminders or automatic payments to stay on track.
• Keep your credit card balances low. Credit experts say using less than 30% of your credit limits is ideal. If your card has a $1,000 limit, try to keep what you owe under $300.
• Don’t apply for a bunch of new credit in a short time. Every new card or loan application can ding your score by a few points, and too many in a year looks risky to banks.
• Check your credit reports for errors. According to the FTC, about 1 in 5 people find mistakes when they pull their credit report. You can get a free copy every year at annualcreditreport.com. Dispute anything that doesn’t look right.
• Add a co-signer if needed. Some banks will approve your loan—and even offer a better rate—if you have a co-signer with a strong credit history. Just make sure that person trusts you, because they’re on the hook, too.

If you want to know how your situation stacks up, check out this table. It spells out how typical credit score ranges affect your chances of getting a personal loan from a bank:

Remember, improving even by 20-30 points can move you into a better bucket and save you hundreds or thousands in interest. If you’re not in a rush, take a few months to clean up any trouble spots before applying. It’s worth the effort.