Credit history
Both your credit score and your credit history play a crucial role in determining your eligibility for a personal loan. A low score or bad marks on your credit report may cause lenders to see you as high risk, which could result in a denied application.
Minimum credit score
Most personal loans require a minimum credit score to qualify for a personal loan. Minimum credit scores usually vary by lender, but you’ll typically need a good credit score or better, or a FICO score of 670 to 850, to qualify for a loan. However, some lenders may accept fair credit scores, or FICO scores ranging from 580 to 669.
Positive credit history
Lenders want to see a positive credit history. If you have negative items on your credit report, such as missed payments, a loan in default, credit card debt or bankruptcy, this can impact your approval for a personal loan. When lenders review your credit report, negative items may cause lenders to see you as a high-risk borrower.
Income and employment
When applying for a loan, most lenders require a minimum monthly or annual income. The amount needed will vary based on the loan and lender requirements. Not only do you need enough income to repay the loan, but your income needs to be consistent to prove to lenders that you have the ability to make your payments.
To verify the details on your application, lenders require that you provide proof of income when you apply. This may include two months of pay stubs from your job, a copy of last year’s W-2 or a copy of your most recent tax return.
Other income sources
Lenders consider more than just your job income. If you have other income sources, such as Social Security, alimony or investments, you can report that on your application to improve your odds of approval. For self-employed or alternative-income borrowers, lenders may accept bank statements as proof of income.
Debt-to-income ratio
Your debt-to-income ratio is the amount of your monthly gross income that goes toward debt payments. You can calculate your DTI ratio by dividing your monthly debt payments by your monthly gross income.
Calculate your DTI by dividing your total monthly debt payments by your gross monthly income.
For example, if you make $6,250 per month (about $75,000 per year), and your total monthly debt payments are around $2,300, your DTI ratio is about 37%.
This is an important metric for lenders to evaluate whether you can keep up with your current debt payments while adding on a personal loan payment. In general, keeping your DTI below 36% shows lenders that you can afford monthly payments and haven’t taken on too much debt. However, some lenders may accept higher DTI ratios.
How to lower your DTI ratio
Lenders may deny you a personal loan if too much of your monthly income goes toward your debt. If this happens, you’ll need to find ways to lower your DTI. Some ways to lower your DTI include:
- Paying off debts with the highest payments
- Refinancing your debts for lower payments
- Increasing your income
- Negotiating lower payments with your lender
Documentation
When applying for a personal loan, you’ll need to submit both personal and financial documentation to qualify and complete the application process.
Documentation that’s typically required includes:
- Full legal name
- Date of birth
- Email address
- Phone number
- Physical address
- Social Security number or individual taxpayer identification number (ITIN)
- Employment information
- Gross monthly income amount
- List of income sources
- List of debts and payment amounts
- Proof of income, such as pay stubs, W-2s or tax returns
- Copy of a utility bill to verify your address
- Copy of your photo ID and Social Security card
Requirements for secured personal loans
If you’re applying for a secured personal loan, you’ll be required to pledge collateral to qualify for the loan. Collateral is something valuable you agree to let the lender take if you don’t repay the loan. If you stop making payments and default on a secured personal loan, your lender has the right to seize your collateral and sell it to recover their costs.
When you apply for a secured loan, you’ll need to sign over the rights to your collateral as part of the loan agreement. Acceptable personal loan collateral may include:
- Boats or RVs
- Cash savings
- Certificates of deposit (CDs)
- Fine art, antiques or collectibles
- Insurance policies
- Precious metals, such as gold, platinum or silver
- Stocks or bonds
- Valuable jewelry
- Vehicles
- Your home
When you pledge collateral, your lender will consider the fair market value of the item to approve you for a specific loan amount.
» MORE: Best secured personal loans
FAQ
Who is eligible for a personal loan?
In the U.S., most lenders require a personal loan applicant to be at least 18 years old, have a qualifying income and credit score, and be either a U.S. citizen or a legal resident with valid identification, such as a Social Security number or ITIN. Lenders will also review your credit history, credit score, income sources and other factors to determine if you’re eligible for a personal loan.
Is it hard to get approved for a personal loan?
You’ll generally have the best odds of approval for a personal loan if you have a good credit score or better, a steady income and a low DTI ratio.
What happens if you get denied a personal loan?
If you get denied for a personal loan, the lender is required to provide a reason for the denial. Negative items on your credit report, such as missed payments or bankruptcy, may lead to loan denial. Likewise, if your credit score is low or if your income is inconsistent, lenders may see you as a high-risk borrower.
How can I improve my chances of getting a personal loan?
To improve your chances of getting approved for a personal loan, you’ll want to first review your credit report and credit score. Look for any negative marks on your credit report, such as late payments or debts in collections. Address those instances quickly, and work to get the negative marks removed. Then, you’ll want to pay down your debts and make sure your DTI ratio stays below 36%, if possible. Also, make sure you have a steady income that you can verify with pay stubs, a tax return or bank statements.
Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
- Consumer Financial Protection Bureau, “What Can I Do if My Credit Application Was Denied Because of My Credit Report?” Accessed May 19, 2026.
