An unsecured loan may be more challenging to get approved for than a secured loan. But it’s still possible to qualify for one, even with minimal credit history or a poor credit score. Typically, borrowers with a solid financial footing will qualify for lower APRs and more generous terms.
When you apply for an unsecured loan, a lender typically reviews your credit profile, income and other factors to determine whether you qualify, your loan amount and your interest rate. Once approved, the lender issues you a lump sum, which you pay back in fixed monthly installments, including interest. If you repay what you borrow on time, it can help improve your credit score, as lenders generally report payments to the three major credit bureaus — Equifax, Experian and TransUnion. But if you default on the loan, it can cause serious damage to your credit.
The credit score needed to qualify varies depending on the lender. Some lenders, like SoFi, require applicants to have good credit, which is generally defined as a FICO score of 670 or higher. However, a few lenders have minimum credit score requirements below 600. If a lender approves you for a personal loan with bad credit, note that it’ll likely charge you a higher APR than someone with good credit.
Maximum loan amounts vary by lender, and the amount you can borrow if you qualify depends on various factors, such as your credit score, income and debt-to-income ratio (DTI). That said, lenders such as SoFi and LightStream offer unsecured loans up to $100,000 to well-qualified borrowers.
