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4 personal loan requirements

What you need to borrow

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Written by Jennifer Schurman
Edited by Cassidy McCants

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Lenders look at a variety of factors when deciding whether to approve a personal loan, including your credit score, income, debt-to-income ratio and credit history. They also require specific documents, including your ID, proof of address and papers that verify your income and other financial factors.

If you're considering a personal loan, it’s a good idea to start by evaluating your credit situation and gathering the necessary documents to be sure you’re ready to apply.

Personal loan documents

You typically need to submit a few documents with your personal loan application. The first is proof of identity, which must be a government-issued identification card like a driver’s license, birth certificate, Social Security card or passport. Some lenders may require two forms of ID.

You also need to show proof of address — a recent utility bill is a typical example, though a mortgage statement or lease contract could suffice — and proof of income (recent pay stubs or tax returns). The lender may require proof of employment and your employer’s name and phone number.

Your lender may ask for more documentation throughout the process, so it’s important to respond to those requests promptly to avoid delays in receiving your funding.

Personal loan requirements

Lenders have different requirements for personal loan products. Some tailor their offerings to borrowers with excellent credit; others offer loans to those with little to no credit history.

Because most personal loans are unsecured (not backed by collateral), lenders must thoroughly review each applicant’s creditworthiness. For the most part, lenders evaluate four factors: credit score, income, debt-to-income ratio and payment history. Eligibility standards vary by lender.

1. Credit score

You’ll need a FICO Score in the “good” range (between 670 and 739) to get the most options from lenders. It’s possible to get a loan with a credit score below 670, but lenders usually require compensating factors, like a higher income or lower debt-to-income ratio. If you have a lower credit score, you'll probably receive loan offers with higher interest rates.

2. Income 

Many lenders don’t disclose their income requirements, so it’s hard to tell how much you’ll need to make in order to qualify for a loan. If a lender does choose to disclose an income requirement, you should be able to find the information on its website. Some require as little as $15,000 a year, while others have higher minimums (like $45,000). You’ll likely have to provide documentation like pay stubs, W-2s or recent tax returns.

3. Debt-to-income ratio

Debt-to-income ratio, or DTI, is calculated by adding up all your monthly debt payments and dividing the total by your gross monthly income. In general, lenders like to see a DTI ratio of 36% or lower. If you have a DTI above 36%, you still might be able to find a loan option, however — especially if your credit score and income are satisfactory.

4. Payment history

A long history of on-time payments is important to a lender. If you’ve paid back your debts in the past, the lender assumes it’s likely you’ll do so in the future. Typically, payment history is linked to your credit history and report. If you don’t have a long credit history, you can look for lenders that specialize in loans for those with little to no credit. Just keep in mind they may require collateral or charge higher interest rates.

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    How long does it take to get a personal loan?

    If you apply for a loan at a bank or credit union, it could take one to five business days to receive the funds. Many online lenders advertise faster turnaround times and can deposit funds in as little as one business day after you’re approved.

    How hard is it to get a personal loan?

    Approval depends on the lender’s requirements as well as your credit score, income, DTI ratio and payment history. Some lenders disclose their approval rates based on credit score ranges, so you can check their websites for these details. For the most part, if you have excellent credit, a DTI of 36% or lower and a stable income, your chances of approval are pretty high, though the loan amount you’re approved for could vary by lender.

    Can I get a loan from a credit union with bad credit?

    Credit unions are not-for-profit financial institutions that exist to serve their members, not shareholders. For this reason, credit unions may have more flexibility in the loan products they offer. You can always meet with a loan advisor to explain your individual situation and explore loan options the credit union has for someone in your credit range.

    How much personal loan do I qualify for?

    How much you qualify for depends on your income, credit score, the lender and other variables. Lenders will look at your monthly debt payments, like car or mortgage payments, to determine how much you can afford on a monthly basis. Remember that just because you qualify to borrow a certain amount doesn’t mean you have to take out the full amount; you should only borrow what you need and can afford to repay.

    Bottom line

    If you think you’ll apply for a personal loan in the near future, you’ll first want to make sure you’re ready to apply. Your next step is to research lenders.

    Each lender has different eligibility standards for credit score, income, DTI ratio and payment history. Look for lenders that allow you to get pre-qualification or preapproval without a hard credit check. This step allows you to see how much you can borrow and at what cost. Then you can start earnestly comparing lenders.

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