What Credit Score Do You Need for a Million Dollar Loan?

In general, a personal loan refers to a small loan that borrowers can spend as they see fit. It can be useful for making big purchases or consolidating high-interest debts.

Getting approved for a million dollar loan may seem out of reach for many borrowers. However, with good credit and strategic planning, securing financing this large is possible. In this article, I’ll explain what credit score is generally needed to get a million dollar loan along with tips to boost your chances of approval.

Overview of Million Dollar Loans

Loans of one million dollars or more are considered “jumbo loans” in the mortgage industry Jumbo loans exceed the conforming loan limits set by the Federal Housing Finance Agency (FHFA), which for 2022 is $647,200 for most areas

Outside of mortgages, business owners can secure financing up to and over one million dollars through business loans and lines of credit. Equipment financing, commercial real estate loans, and government-backed SBA loans are some options offering loans up to $5 million.

While getting approved for this large of a loan amount may seem unattainable, lenders are willing to provide the capital with the right qualifications

What Credit Score is Needed?

One of the most important factors determining loan approval odds is your credit score. The higher your score, the better likelihood of getting approved for a million dollar loan.

Here are the typical credit score requirements:

Mortgages – Jumbo mortgage lenders usually require a minimum score of 680 to 720. The best rates go to those with scores above 740.
Business Loans – A credit score of at least 650 is recommended for SBA loans over one million. Online lenders may approve scores as low as 600.
Equipment Financing – With asset-backed financing, a credit score around 500 can qualify for up to millions based on the value of the equipment.

As you can see, mortgage lenders tend to have the highest credit requirements while alternative lending sources offer more flexibility. Even scores below 700 can get million dollar financing in some cases.

Ways to Improve Your Credit Score

If your credit score falls below the recommended ranges, take the time to boost your score before applying for a jumbo loan. Here are some effective ways to improve your credit:

Pay down balances below 30% of the credit limit
Pay all bills on time and resolve any past-due accounts
Limit new credit card applications before applying for a loan
Remove any errors on your credit reports
Become an authorized user on a spouse or family member’s old account

It can take a few months of positive credit habits to significantly raise your score. Be patient and demonstrate responsible credit management, which lenders like to see.

Additional Factors Boosting Loan Approval Chances

While your credit score carries weight, lenders also assess other factors when reviewing million dollar loan applications:

Down payment amount – The more you can put down, the less risk for lenders. Ideal down payments are 20-30% or more of the purchase price.
Debt-to-income ratio – Lenders look for a DTI below 50%. The lower your existing debts, the better.
Length of time in business – Established businesses with 2+ years of operations often have the best loan approval chances.
Annual revenue/income – For home loans, an income of $100k or more is recommended. Businesses need millions in revenue.
Collateral – Hard assets you can pledge as collateral will make your application more appealing to lenders.

Meeting or exceeding requirements for these factors gives you an advantage over other high-value loan applicants.

Strategies to Get Approved for a Million Dollar Loan

If your credit or finances aren’t quite up to par yet for a jumbo loan, here are some tips that can help your chances:

Apply with a co-borrower who has a higher credit score
Offer collateral on the loan such as business assets
Get an SBA guaranty which minimizes the lender’s risk
Seek a commercial loan that uses creditworthiness over collateral
Partner with an online lender that offers higher loan amounts

Being flexible and willing to explore multiple lending sources can help you get funded for over a million dollars. Shop around with lenders to find the best loan programs and terms suited for your financial situation.

The Bottom Line

Obtaining a loan of one million dollars or more requires time and strategic preparation. Work over the months ahead to boost your credit score above 700 and meet other key lending benchmarks. This will prime your finances for approval of a jumbo loan amount. With proper planning and leveraging lending relationships, you can achieve your goals of securing a seven-figure financing package.

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How do your credit scores impact a personal loan?

Your credit scores can affect whether you qualify for a personal loan. Thatâs because in the eyes of a lender, the higher your credit scores, the less risky you are as a borrower.

Aside from eligibility, your credit scores may also impact:

Interest rate: The better your credit scores, the better your interest rate might be.
Loan amount: You may qualify for a larger loan with higher credit scores.
Term length: With a fair credit score, you may only have the option of a short-term loan.
Fees: Some lenders charge whatâs known as an origination fee to cover the cost of processing the loan application. Whether youâre charged one or how much youâre charged might depend on your credit scores.

Whatâs the minimum credit score needed to get a personal loan?

The minimum credit score required for a personal loan varies by lender. If a lender requires a fair credit score, that might mean a score somewhere between 580 and 660.

According to the Consumer Financial Protection Bureau (CFPB), having a higher credit score typically makes it easier to qualify for a loan. Higher scores may also help you get better loan terms. So itâs a good idea to work toward good or excellent credit scores by using credit responsibly over time.

How To Qualify For a 1 Million Dollar Loan

FAQ

How hard is it to get a $1 million business loan?

It is possible to get a 1 million loan, but it is not an easy process and definitely requires a substantial amount of preparation. Banks usually require a thorough review of your creditworthiness, income history and other financial documents before approving such a large amount.

How to qualify for a $1 million dollar loan?

To qualify for a million-dollar mortgage, you need to show a high income and usually make a down payment. You’ll also need to be a low-risk borrower with a qualifying credit score. A low debt-to-income ratio also helps. You can also consider a conventional high balance loan, which is not the same as a jumbo loan.