Your credit score is one of the first things a lender checks when you apply for a personal loan — it shapes whether you’re approved, how much you can borrow, and the interest rate you’ll pay. So what number do you actually need? This guide breaks down the minimum credit score for a personal loan in Canada, how the requirement changes by lender type, where you fall on the credit score scale, and how to boost your score before you apply. For the bigger picture on qualifying, see our guide on how to qualify for a personal loan.
Key Points
1. You typically need a credit score of at least 660 to qualify for a personal loan from a bank or traditional lender — though exact minimums vary by lender.
2. Borrowers with bad credit can still qualify through alternative lenders like online or private lenders, but usually at higher interest rates.
3. Your score isn’t everything — lenders also weigh your income, debt-to-income ratio, employment stability, and collateral.
What Credit Score Is Needed For A Personal Loan?
To qualify for a personal loan in Canada from a bank or traditional financial institution, you’ll usually need a minimum credit score of 660. The best rates and largest loan amounts are typically reserved for scores of 720 and above.
That said, the exact credit score required depends on other factors too, like your income, debt, and collateral. Different lenders set their own requirements — and as you’ll see below, alternative lenders will often approve scores well under 660.
What Is A Personal Loan?
A personal loan lets you borrow a lump sum of cash that you pay back in installments over a set term, with interest. The terms vary depending on the lender, your credit score, and your overall finances.
Credit Score Ranges In Canada
Before you can tell whether your score is “good enough,” it helps to know where it falls on the scale. In Canada, credit scores from Equifax and TransUnion range from 300 to 900. Here’s how the tiers break down and what each means for a personal loan:
| Credit Score Range | Rating | What It Means For A Personal Loan |
|---|---|---|
| 760–900 | Excellent | Best rates, highest amounts, most lenders compete for you |
| 725–759 | Very Good | Strong approval odds at banks; competitive rates |
| 660–724 | Good | Meets most bank minimums; standard rates |
| 560–659 | Fair | Often declined by banks; alternative lenders are a better fit |
| 300–559 | Poor | Banks will usually decline; expect higher-rate alternative or private lenders |
Here’s the interesting part: since the average Canadian credit score sits around 6791, the typical borrower lands in the “Good” range — just over the 660 bank minimum. If your score is below that average, you’re not alone, and you still have solid options through alternative lenders.
Minimum Credit Score By Lender Type
The credit score you need depends heavily on who you borrow from. Banks are the strictest; private lenders are the most flexible. Here’s a rough guide:
| Lender Type | Typical Minimum Score | Trade-Off |
|---|---|---|
| Bank (Traditional) | 660+ | Lowest rates, but strict approval |
| Credit Union | ~620+ | Competitive rates; must become a member |
| Online Lender / Platform | ~550+ | Fast and flexible, but higher rates |
| Private Lender | No strict minimum | Most accessible; highest rates and fees |
| Trust Company | Varies | Less common for personal loans; more flexible than banks |
If your score isn’t where a bank wants it, you don’t have to give up on borrowing — you may just need to look at how to get a loan from a bank versus a more flexible lender.
Can You Get A Personal Loan With Bad Credit?
If your score is under the 560 mark, you may need to apply for a bad credit personal loan with an alternative lender — such as an online lender, private lender, or credit union — rather than a traditional financial institution.
Alternative lenders have more lax credit score requirements, though personal loans from these types of lenders will likely come with higher interest rates.
Can You Get A Personal Loan With A Zero Or No Credit Score?
Yes, you can still get a personal loan even without a credit score. Alternative lenders are available who look at other factors in lieu of your credit score, such as your income, employment status, and collateral. Keep in mind that these come with higher interest rates and lender fees.
Personal Loans: Good Credit Scores Vs. Bad Credit Scores
Your credit score plays an essential role in determining both your loan interest rate and your odds of approval. Here is how good and bad credit may impact each factor:
| Factor | Good Credit Score | Bad Credit Score |
|---|---|---|
| Interest Rate | Good credit can generally help you qualify for lower rates because you’re considered less risky by lenders. | Borrowers with bad credit may pay higher interest rates to offset the lender’s increased risk. |
| Approval Odds | A good credit score increases the likelihood of loan approval because it shows a history of good financial habits. | A bad credit score can lower the chance of loan approval or lead to less flexible lending terms. |
| Loan Terms | Since good credit indicates you’ll repay your debt on time, lenders may be more willing to lend you more money and for longer terms. | Since bad credit indicates you’ve had trouble paying your debts on time, lenders may be hesitant to lend you large amounts and may only offer short terms. |
How Much Do Credit Scores Matter When Applying For A Personal Loan?
Credit scores play a significant role when applying for a personal loan, as they can impact your chances of approval and the interest rate on the loan. That said, your credit score matters more when you apply with a bank, and may not hold as much weight if you apply with an alternative lender.
Applying With Traditional Lenders
Lenders like banks place a lot of weight on credit scores to gauge your creditworthiness. A high credit score significantly increases your chances of personal loan approval, while a bad credit score hampers your ability to get a personal loan with a bank.
Banks also use your credit score to determine the interest rate to offer you and the loan amount to provide. If you have a high credit score, your interest rate will likely be lower, and you may qualify for larger loan amounts.
That said, banks consider other factors too, such as your income, employment history, and debt levels, though a high credit score is a key factor in your ability to get a loan at an affordable rate and favourable loan conditions.
Applying With Alternative Lenders
Alternative lenders, such as private lenders and credit unions, may not place as much emphasis on your credit score compared to traditional lenders. Instead, they look at your overall financial situation. If you have bad credit, you may still be able to get approved, as long as you meet their income, employment, and/or collateral requirements. A credit union, for example, often weighs your full financial picture rather than your score alone.
That said, a low credit score will likely mean less flexible terms and a higher interest rate.
Why Do Credit Scores Matter So Much?
Your credit score represents your likelihood of paying your debts on time, which lenders use to evaluate the risk of lending you money. Credit scores are calculated using factors such as:
- Payment history
- Debt amount
- Age of credit history
- Credit types used
- New credit checks
A higher score indicates a lower risk for lenders, which can lead to higher approval chances, lower rates, and better loan terms.
Other Personal Loan Factors That Affect Approval
Several other factors besides your credit score impact your ability to get approved for a personal loan, including the following:
- Income: Your income affects loan approval because it indicates your ability to repay the loan. A higher income often means higher approval chances and better loan terms.
- Debt-To-Income (DTI) Ratio: Your DTI ratio shows lenders how much of your income goes toward debt payments, and how much is available to make loan payments. A lower DTI indicates a better ability to repay the loan.
- Employment Stability: The stability of your job shows how reliable your income source is. If you have stable work, you’d be considered a lower risk for loan default and have a better chance of getting approved.
- Collateral: If you secure your personal loan with a valuable asset, this provides security to the lender, which reduces their risk. This can lead to easier approval and possibly lower interest rates.
- Your Loan Request: Lenders evaluate whether the loan amount you request is reasonable based on your financial situation. Unusually large loan requests might make it more difficult for you to get approved.
When you’re ready, you can apply for a personal loan online and compare offers in one place.
How To Increase Your Credit Score To Get Approved For A Personal Loan
With a higher credit score, you have a better chance of getting approved for a personal loan with a lower rate and better terms. If your credit score is a little on the low end, consider taking some time to give it a boost. Here are a few steps you can take:
Make Your Bill Payments On Time
Your payment history is a common and often crucial component of your credit score calculation. Paying your bills on time can help increase your credit score. Debt payments and service bills — including certain cellphone provider bills — can contribute to your payment history.
Keep Your Credit Card Balances Low
Your credit card balances directly affect your credit utilization ratio, which commonly plays an important role in your credit score calculation. By keeping your balances low, you can increase your credit score by reducing your utilization ratio — showing that you’re only using a small amount of your available credit.
Use Credit Building Tools
If you’re looking for extra ways to build your credit, consider using a credit building tool, such as the following:
KOHO Credit Building Program
The KOHO Credit Building program includes a small line of credit that you can make monthly payments towards, which are reported to the credit bureaus. This reporting of timely payments helps you improve your credit score. The program does not require a hard credit check and guarantees approval.
Spring Financial Credit Building Program
Spring Financial’s credit building program, The Foundation, helps you build credit by making small payments over 12 months. These payments are reported to the credit bureaus while also automatically saving a portion for you. Upon successful completion, you’ll have up to $750 saved, and you’re guaranteed a $1,500 Evergreen Loan.
Is “Credit Score” The Same As “Credit Rating”?
Both credit scores and credit ratings measure how trustworthy you are as a borrower, but they function differently. A credit score is a 3-digit figure determined by factors such as payment history and credit utilization. A credit rating combines letters and numbers and is assigned to each specific account listed on your credit report.
Bottom Line
Having a good credit score significantly increases your chances of getting approved for a personal loan with a lower rate and favourable terms. With the average Canadian score sitting near 679, most borrowers clear the 660 bank minimum — but if yours is lower, you can still secure a personal loan through an alternative lender that specializes in bad credit. Just expect to pay more for your loan without good credit.
Credit Scores For Personal Loans — FAQs
References
- Borrowell. (2026). Canadian credit score study: Average credit score in Canada. Borrowell. https://borrowell.com/blog/highest-canadian-credit-score-study
- Equifax Canada. (2026). Credit scores and credit reports — What is a good credit score? Equifax Canada Co. https://www.equifax.ca/personal/education/credit-score/
- Financial Consumer Agency of Canada. (2025). Credit report and score basics. Government of Canada. https://www.canada.ca/en/financial-consumer-agency.html
