What Credit Score Do I Need for a Loan in 2025?

When applying for a personal loan, one of the key factors lenders look at is your credit score. In 2025, knowing the right credit score for different types of loans can help you secure the funds you need.

Whether you’re after a personal loan, mortgage, or debt consolidation loan, the credit score needed for each can help you prepare and boost your chances of approval. In this blog, we’ll break down the typical credit score ranges required for a loan. So you can make informed decisions and take charge of your financial future.

What are the Credit Ratings for Each Credit Reference Agency?

Each credit reference agency uses its own scoring and rankings. Here’s how they break down.

What Credit Score Do I Need for a Loan in the UK?

There’s no universal minimum credit score required for loans or mortgages because each lender has its own criteria. However, a higher credit score usually signals to lenders that you have a solid history of managing credit responsibly. This can lead to more favourable loan terms, such as lower interest rates and higher borrowing limits. On the other hand, a lower score could restrict your borrowing options and lead to higher interest rates.

Lenders use the three major UK credit bureaus, TransUnion, Equifax, and Experian, to assess people’s creditworthiness.

TransUnion

TransUnion, one of the leading credit reference agencies in the UK, provides credit scores ranging from 0 to 710. Typically, a credit score above 604 is considered good, while a score above 628 is regarded as excellent. A higher score improves your chances of loan approval at competitive rates.

Equifax

Equifax, a prominent credit reporting agency in the UK, offers credit scores on a scale of 0 to 1000. A score above 531 is considered good, above 671 is very good, and a score above 811 is excellent. These higher scores increase the likelihood of being approved for loans with better terms.

Experian

Experian, the largest credit reference agency in the UK, provides credit scores from 0 to 999. Generally, a score above 881 is considered good, and above 961 is excellent. A score below 720 is viewed as poor, which can limit your borrowing options.

While lenders often set minimum credit score requirements, they may accept lower scores. However, your credit score isn’t the sole factor in loan approval. Lenders also consider other aspects. For example, your debt-to-income ratio, employment status, and overall financial situation.

Factors behind a poor credit score

The main factors behind a poor or bad credit score are often related to borrowing or spending habits.

Opening too many accounts can make your credit history look fragmented. This can make it harder for lenders to assess your financial habits. If you reach your credit limit, lenders may see this as a sign that you are stretched thin and unable to take on more debt.

Applying for multiple credit accounts in a short time can hurt your score. It can suggest you’re trying to take on more debt than you can manage. Late or missed payments also damage your credit score. It shows lenders that you may have difficulty managing your current financial duties.

Borrowing more than you can afford is another key factor that can harm your credit score. Lenders often view this as an indication of poor financial decision-making and irresponsibility.

Lenders may be cautious when considering applications from people with a short or non-existent credit history. Without sufficient information, lenders are unable to make an informed decision about your ability to repay loans.

What activities do not affect my credit score?

Activities that do not affect your credit score include:

• Making purchases with cash.
• Renting a home or apartment.
• Taking out student loans.

These activities aren’t reported to the credit bureaus and don’t directly affect your credit score. However, some credit reference agencies allow you to link certain activities, like utility payments, to your credit file. This gives you a chance to build a credit history without using traditional credit.

Even if you don’t use these services, maintaining a good payment history with utilities can still contribute to your overall financial health, even though it doesn’t directly impact your credit score.

Inquiries made by lenders, such as when you apply for short term loans or credit cards, are noted on your credit report. However, if the inquiry is a “soft search” (used to check eligibility), it won’t affect your credit score. Similarly, credit inquiries you make to monitor your own credit information also do not impact your score.

Strategies for improving credit scores.

The following strategies can help you get a good credit score.

Make all payments on time and in full

To maintain your credit score, prioritise paying bills on time. Doing this consistently will gradually increase your credit score.

Lower credit utilisation

This calculates how much of your available credit you use. So having a high percentage can lower your score. To improve your credit score, pay off existing debts. You may be able to transfer balances from multiple cards to one with a lower rate. This may help improve your minimum score if you repay more quickly.

Dispute errors and inaccuracies

Errors or inaccurate information on your credit report can drag down your score. It’s useful to review your credit report regularly if you can – at least once a year. Look for any discrepancies and contact the reporting bureau if needed to dispute them.

Use Experian Boost

This feature offered by Experian helps users boost their scores. It takes into account positive financial behaviour that isn’t usually reported. This includes mobile phone bills and utility payments.

A credit score is an important factor when it comes to getting loan applications approved. Lenders use it to assess your financial stability, creditworthiness, and overall risk. If you have a poor credit history, you may be able to improve your credit score.

However, it’s not all about credit scores. At Lending Stream, we understand that your financial situation can change, and your credit score may not reflect that. As a result, we look at your income and expenses before making a decision.

FAQs

Disclaimer: The information given above is provided for reference only. This is not financial advice.