Knowledge is power (and money)

A personal loan is a lump-sum installment loan you repay over a fixed period — typically one to seven years — at a fixed interest rate and fixed monthly payment. Most personal loans are unsecured, meaning no collateral is required. Once approved, funds are deposited directly into your bank account, and you begin making monthly payments until the loan is paid off. Common uses include debt consolidation, home improvements, medical expenses, and large planned purchases. Rates at Pennie Financial may start as low as 5.99% APR for borrowers who qualify. Learn more in our guide to the different types of personal loans and when each makes sense.

Minimum credit score requirements vary by lender. Most lenders look for a score of at least 600 to 660 for standard personal loans, and the most competitive rates typically go to borrowers with scores in the 700s or higher. Below 600, options narrow but don't disappear — some lenders specialize in working with less-established credit profiles, often at higher rates or with additional requirements like a co-signer or collateral. Your full application also considers income, debt-to-income ratio, and employment stability — not just the credit score. For more on how credit scores are calculated and what affects yours, see our guide to understanding credit score changes.

Getting approved usually comes down to a few factors lenders evaluate together: credit score, income, debt-to-income ratio, employment stability, and the specific loan amount you're requesting. You can improve your odds by keeping credit card balances low, making on-time payments across all existing accounts, verifying your credit report is accurate, and applying for an amount that fits comfortably within your budget. A useful first step is to prequalify — a soft inquiry that doesn't affect your credit score and shows you indicative offers before you commit to a formal application. For a full walkthrough of what happens between application and funding, see our guide to conditional loan approval.

It depends on what you're borrowing for. Personal loans typically have lower interest rates than credit cards and come with fixed terms that force actual payoff — making them a strong fit for one-time expenses or consolidating higher-interest balances. Credit cards offer more flexibility for everyday spending but tend to have higher APRs and minimum-payment structures that can extend repayment for years. For a planned, known expense, a personal loan is often more cost-effective. For flexible spending you can pay off monthly, a credit card usually makes more sense. Our article on whether personal loans are a good idea compares the two in more detail.

Debt consolidation means combining multiple existing debts into a single new loan, usually with a lower interest rate and one fixed monthly payment. People most commonly use personal loans to consolidate higher-interest credit card balances — replacing several variable-rate card payments with one predictable installment loan. It may be worth it when the new loan's rate is meaningfully lower than what you're currently paying, the monthly payment fits your budget, and you have a plan to avoid running the paid-off balances back up. It usually isn't worth it if the rate isn't significantly better or if the underlying spending habits haven't changed. For a balanced look at the trade-offs, see our guide on when personal loans help and when they don't.