 TITLE: What Credit Score Is Needed for a Personal Loan? CONTENT: Why Do I Need a Good Credit Score for a Personal Loan?\n------------------------------------------------------\nWhen applying for a personal loan, or any other type of credit, a good credit score can mean a greater range of choice for you in terms of lenders and loan offers, and more attractive borrowing terms (interest rates and fees).\nCredit scores represent your history with credit as recorded in your credit reports, and give lenders a sense of how experienced and responsible you are in handling debt. Higher credit scores correlate with lower likelihood of failing to repay debts, so lenders consider it riskier to lend money to borrowers with low credit scores than to those with high ones. They typically offer their best deals on loans and credit (lowest fees and interest rates) to borrowers with high credit scores. Lenders usually charge more to borrowers with lower scores to offset their greater chances of loan default, and if an applicant's credit score is too low, might not even offer them credit at all.\nEach of your credit scores reflects the information in your credit file at each of the three national credit bureaus (Experian, TransUnion and Equifax), as analyzed by a credit scoring system such as the FICO® Score or VantageScore® model. While their specific calculations are highly guarded trade secrets, all credit scoring systems are broadly responsive to the same basic set of factors:\n1.  Payment history: Making monthly debt payments on time, consistent with your borrowing agreement, is the single most important factor affecting credit scores. Even one missed payment can have a negative impact on your score. Payment history accounts for 35% of your FICO® Score.\n2.  Credit utilization ratio: Credit utilization is calculated by dividing the total amount of your credit card balances by the sum of all your card borrowing limits. Creditors prefer utilization rates of no more than 30%, and higher utilization can hurt your credit score. Credit utilization accounts for 30% of your FICO® Score.\n3.  Credit history length: Assuming you keep up with your bills and avoid excessive credit balances, the longer your credit history, the higher your credit score is likely to be. Credit scoring models consider the age of your oldest credit account, the age of your newest credit account and the average age of all your accounts. How long you've held credit accounts makes up 15% of your FICO® Score.\n4.  Credit mix: People with exceptional FICO® Scores often carry a variety of credit accounts, such as car loans, credit cards, student loans, mortgages and other credit products. Credit scoring models consider the types of accounts and how many of each you have as an indication of how well you manage a wide range of debts. Credit mix accounts for 10% of your FICO® Score.\n5.  New credit: The number of credit accounts you've recently opened, as well as the number of recent hard inquiries lenders have made in response to your credit applications, accounts for 10% of your FICO® Score. Too many recent new accounts or inquiries can indicate increased risk and hurt your credit scores. As long as you keep up with your bills, drops in your credit scores related to new accounts typically vanish in a few months. END