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Personal Loans

Is It Easy to Get a Personal Loan?

A personal loan can be a useful financial tool if you need help making a big purchase or consolidating high interest debt. And with the rise of online lenders competing for customers, it's no wonder that over 10% of adults in the U.S. have a personal loan, according to Experian data.

Getting a personal loan can be easy if you meet all the lender's requirements and are flexible with what interest rate you'll pay. Understanding what you need to be able to qualify for a personal loan will save you some time and energy in getting approved.

What Credit Score Do I Need to Get a Personal Loan?

While it may not be explicitly mentioned on a lender's website, it's typically easier for someone with a good credit score to be approved for a personal loan. Conventional lenders generally run a credit check to determine how likely it is you'll repay your loan. The higher your credit score, the thinking goes, the more likely you'll be to make timely payments. Even better: If you have a good credit score, you're more likely to qualify for low interest personal loans.

If you have good to excellent credit—with a FICO® Score* of 670 to 850—there are a lot of good personal loan options out there for you. Those with fair credit—with a FICO® Score ranging from 580 to 669—may be able to get a personal loan, but the chances of getting a lower interest rate are less likely compared with someone with a good or excellent credit score.

If you have less-than-stellar credit, there are options out there if you're willing to pay a higher interest rate or put your financial assets on the line. With a secured personal loan, for example, you provide collateral the lender can use as payment if you don't pay back your loan as agreed. While secured loans tend to be easier for those with bad credit to get—and may offer lower interest rates than unsecured personal loans for those with bad credit—they also come with the risk of losing your collateral if you fail to repay the loan.

Online lenders, such as Upstart, help those with lower credit scores qualify for more competitive rates by looking at alternative data that goes beyond credit scores. This can include job history, education and income.

Military members can consider specialized private lenders in addition to online lenders. These lending institutions work exclusively with military service members to apply for products such as personal loans. Although military lenders do consider applicants with lower credit scores, it may still be difficult for applicants who have a limited credit history.

How Fast Can I Get a Personal Loan?

How soon you can get a personal loan depends on the lending institution you choose. Some take hours, while others can take a couple of weeks. In some cases, you may be able to compare rates using an online loan comparison tool—you'll be prequalified with a soft credit check, which won't impact your credit scores.

Taking out a personal loan from an online lender is typically faster than more conventional options like banks and credit unions. That's because you can get preapproved and submit required information through the lender's website. After filling out an initial application form, you'll be able to see what rates you qualify for as well as how much you can borrow within a few minutes.

From there the lenders will ask you to submit more personal information, such as your mailing address and government-issued ID, and they'll pull your credit report to do a credit check. If you are approved, most online lenders will distribute loan funds as soon as the same business day, depending on the time of approval and how soon you verify your bank account information. It may take a few days for your bank to receive funds.

What Else Do I Need to Get a Personal Loan?

Almost all personal loan lenders will ask for certain types of information, including:

  • Social Security number
  • Bank information
  • Mailing address
  • Proof of income
  • Government-issued photo ID
  • Documentation such as recurring monthly expenses and other debt payments

Lending institutions may also look at your debt-to-income ratio, or DTI, to determine whether you'll likely be able to afford your payments. This number looks at the total income you earn compared with the total amount you owe each month. The higher your DTI, the more a lender may doubt your ability to take on additional loans because you're already carrying a lot of debt.

Here's how to calculate your DTI:

  • Determine your monthly gross income—the total amount you earn before taxes and withholdings
  • Add up your total monthly debt payments—including auto loan, mortgage and credit card payments
  • Divide your total monthly debt by your entire gross income

For example, if your gross monthly income is $5,000 and your total debt each month is $1,500, your DTI would be 30%.

Lenders will use all of the above information alongside your credit score to assess whether to approve you for a personal loan.

What to Do Before Applying for a Personal Loan

Understanding what lenders look for when approving a personal loan is paramount if you want to apply for one—and it will help you understand how easy the process may or may not be. Before you apply for any new credit, be sure to check your credit report. This allows you to see where you stand and gives you the opportunity to address the more unflattering aspects of your credit profile before talking to a lender.

Better yet, assess whether you can afford to take on another loan by looking at your monthly expenses and other financial considerations. Taking on extra debt is a serious financial decision, so it's best to weigh all your options before applying for a personal loan.


Editorial Disclaimer: Opinions expressed here are author's alone, not those of any bank, credit card issuer or other company, and have not been reviewed, approved or otherwise endorsed by any of these entities. All information, including rates and fees, are accurate as of the date of publication.

*Credit score calculated based on FICO® Score 8 model. Your lender or insurer may use a different FICO® Score than FICO® Score 8, or another type of credit score altogether. Learn more.

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