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A high credit score and income are very important to qualify for low rates on a personal loan.
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Improving your score before applying for a personal loan can help you secure a lower rate.
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Shopping around for the best rates with at least three lenders or on a marketplace like Bankrate allows you to compare multiple offers.
Low interest personal loans are offered by banks, credit unions, online lenders and marketplace lenders to highly creditworthy borrowers. They come with competitive annual percentage rates (APRs) with the national average personal loan rate of 12.26% until March 4, 2026, and often below 10%.
To qualify for the best personal loan rates, you’ll generally need:
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FICO credit score above 740 (or 800 for the best rates)
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Annual income above a certain annual threshold
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A clean credit record
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Established credit history
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A bank account for automatic payments
While each lender has different criteria and minimum requirements, you can increase your chances of getting approved for a low-interest personal loan by following these seven steps.
Lenders generally consider you to have a good credit score if it is between 800 and 850. A higher score reflects your ability to manage credit responsibly, giving you a better chance of getting lower rates. Your bank or credit card issuer may offer free access to your credit score, or you can purchase it from a credit bureau.
Before applying, check your credit report and scan it for any errors that might negatively affect your score. You can get a free copy of your reports once a week from all three credit bureaus — Equifax, Experian and TransUnion — by visiting AnnualCreditReport.com.
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If there are no errors on your report but your score is not in the 800 mark, try paying off a significant amount of revolving credit to lower your credit utilization ratio. If you recently applied for new credit, your score may need a month or two to recover from the hard inquiry.
Aside from payment history, your credit utilization ratio has the biggest impact on your credit score, and therefore your ability to qualify for a lower rate. Carrying even a small balance can lower your score enough to put you out of the running for the lowest personal loan rates.
If you’ve recently used a rewards card to earn cash or travel rewards, pay off the balance and give yourself a month or two to rebuild your credit score. Check your credit report to make sure the balance is zero before applying for a low interest personal loan.
When you apply for a loan—or any credit product—lenders will look at your debt-to-income (DTI) ratio to determine whether you can make your potential monthly payments. To calculate your DTI, add up your monthly debts that appear on your credit report — including credit cards, loans, and other regular debts — and divide it by your pretax monthly income. Your DTI is the final number, expressed as a percentage.
In general, the higher your DTI, the higher your rates will be and the lower your chances of approval. Most lenders are looking for maximum DTIs of 50%, but to get the lowest available rates, you’ll need a DTI below 36%.
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To qualify for a personal loan, you need to have a stable income. Salary or full-time hourly income will be the easiest to document. Whether you’re self-employed, earn variable commission income or are a seasonal worker, getting a low-interest personal loan can be difficult.
Lenders typically offer the lowest available rates for terms of three years or shorter. Plus, interest takes less time to accumulate over shorter repayment periods, lowering your total interest costs.
Use a personal loan calculator to make sure your budget can handle the higher payment that comes with a shorter repayment period. If the payment is too high, consider reducing the amount you borrow.
Personal loan rates and terms may vary significantly between lenders. While borrowing from your current financial institution may be an easy option, you could be leaving money on the table – other lenders may offer you a lower rate.
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Online Lenders: Usually, they give you a complete digital experience with access to higher loan amounts than you find at banks or credit unions.
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Local and National Banks: Your local bank may be a good choice if you are an established customer, and banks may be a good choice if you prefer personal customer service.
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Federal Credit Unions: If you qualify for membership, federal credit unions are known to offer some of the lowest loan rates on the market.
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Online marketplaces, such as Bankrate: If you want to save time by using the fine print on lender websites, you can apply on a marketplace platform like Bankrate and get offers from multiple lenders with a single application.
Narrow down your list by reading personal loan lender reviews and testing the lender’s customer service by calling with questions.
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Watch out for principal fees, which can be as high as 12% of your loan amount. Any origination fees will be automatically deducted from the funds you borrow before you receive them.
Interest rate discounts can be a great way to break the tie between two lenders that you are considering. You can shave 0.25 to 0.50 percentage points off your rate by enrolling in automatic payments, adding an eligible co-borrower or using the funds to consolidate the loan.
Ask about other perks, such as an extended grace period or the option to adjust your due date. You won’t know if you have access to them unless you ask.
Most lenders allow you to check your rates through pre-qualification before you formally apply for a loan. This step will not hurt your credit, as it only requires a soft credit bridge. While you won’t get a formal loan offer, you can use pre-qualification to estimate the rate you’ll get and eliminate lenders who aren’t a good fit.
Pre-qualify with at least three lenders to get a clear idea of the rates you qualify for. If you use a marketplace site like Bankrate, you’ll typically get three or more offers based on the information you provide.
If you have a high credit score and stable income, you may qualify for one of the lowest personal loan rates on the market.
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Lenders evaluate several factors to determine whether you qualify for a low-interest personal loan, including your credit score, employment status and debt-to-income ratio.
Your credit score plays an important role because it tells lenders how well you’ve managed your loans and other financial products in the past. The FICO score, which most lenders and borrowers use to make lending decisions, ranges from 300 to 850. The lowest rates are generally reserved for borrowers with a good credit score of over 800, as the risk of defaulting on payments is low.
You can still get approved with a low credit score, but it may be more difficult. You can also expect higher interest rates and more fees.
A good credit score, steady income and a low debt-to-income ratio are the keys to securing a low-interest personal loan. But if your finances aren’t in the best shape, consider taking a step back to improve your credit score and lower your utilization before applying.
If you can’t wait and need the funds quickly, you can apply with Cashier or try signing up for an automatic payment discount to get a better deal. Most importantly, shop around for the best low interest personal loan for your credit situation, prioritize if possible and compare your options before taking out a loan.
