How to Get Approved for a Personal Loan

Lenders approve personal loans based on three main factors: your credit score, your debt-to-income ratio, and your employment history. These factors help lenders determine whether you can afford to repay the loan. Here’s what each one means for your chances of approval.

Your credit score

This is the big one. Your credit score tells lenders how you’ve handled debt in the past. Higher scores usually mean better approval odds and lower interest rates.

Your income and debt

Lenders want to know you can afford the monthly payments. They’ll look at your debt-to-income ratio – how much you owe each month compared to how much you make. A lower ratio signals that you have room in your budget for a new loan payment.

Employment history

Steady work demonstrates to lenders that you have a reliable way to repay the loan. They might ask for pay stubs, W-2s, or tax returns to verify your income and employment status.

The loan amount you’re requesting

Asking for more money means more risk for the lender. Someone with excellent credit may qualify for a larger loan than someone who’s still building their credit history.

Am I eligible for a personal loan? Most lenders prioritize two things: good credit and steady income. Your credit score shows how reliably you repay debt, while your income proves you can handle monthly payments. Here’s how to position yourself for approval.

1. Check your credit score

Your credit score can affect how much money you can borrow, your interest rate, and your loan term. Knowing where you stand on the 300 to 850 FICO® score range helps you know what to expect.

Chime^® members can check their FICO score for free in the Chime app.¹ You can also get free scores through:

• myFICO.com
• Experian Credit Boost
• Your credit card company, if it offers a free FICO score as a member benefit

What is a “good” credit score?

FICO considers a credit score of 670 to 739 to be a “good” credit score. Here are the different credit score ranges and their ratings:

The higher your credit score, the better your approval odds for a personal loan.

2. Calculate the amount you need to borrow

Think about why you need a personal loan. Some of the most popular reasons for personal loans include:

• Debt consolidation
• Home improvements
• Large purchases, like a wedding or vacation
• Emergencies

Ask yourself how much you realistically need to borrow. Borrowing too little leaves you short, while borrowing too much means paying unnecessary interest.

Lenders typically offer loans ranging from $100 to $100,000, though your credit score affects how much you can actually borrow. A higher score usually means access to larger loan amounts.

3. Determine how much you can pay each month

Personal loans have to be repaid, so make sure the payments fit your monthly budget.

Look closely at your budget and look at how much you have left over after you cover all your monthly expenses and savings contributions. If the number is lower than you’d like, review your expenses to see if there’s anything you can reduce or cut out altogether.

Then, plug your desired loan amount into Chime’s loan calculator.

For example, a $50,000 loan at 9% APR would have a monthly payment of $1,038, assuming a five-year term. Experimenting with different loan amounts, repayment terms, and rates can give you a better idea of what you’ll pay.

4. Reach out to more than one lender

The right personal loan lender is out there for you, but you may need to compare your options to find it. Keep these factors in mind:

• Loan amounts. Your ideal lender should offer loans in the amount you need. Check the minimum and maximum loan you can get.
• Qualification requirements. Some lenders share the minimum credit score and income requirements to get approved for a personal loan on their website. Look for a lender that offers loans to borrowers with credit profiles similar to yours.
• Interest rates. Personal loan rates are typically fixed, which means they don’t change over the life of the loan. The best personal loan for you may be the one that offers the amount you need at the lowest rate.
• Fees. Lenders can tack on fees to personal loans, adding to your costs. Check the fine print for origination, application, or late fees so you know exactly what you’ll pay.

The best way to get approved is to be a qualified borrower. Check your credit, know what you can afford, and compare multiple lenders to boost your odds.

How long does approval take? It depends on the lender.

Online lenders may approve you instantly and fund within one to two days. Banks and credit unions can take up to a week. If you need money fast, online lenders are usually your best bet.

Ready to move forward? Here’s what the application process usually looks like.

Gather your documents

You’ll typically need:

• Proof of identity: Driver’s license or passport
• Proof of address: Utility bill or lease agreement
• Proof of income: Recent pay stubs, bank statements, or tax returns

Having these ready speeds up the application process.

Submit your application

Many lenders let you apply online in just a few minutes. You’ll enter your personal information, the loan amount you want, and details about your income and employment. Double-check everything before hitting submit – small errors can cause delays.

Wait for a decision

Some online lenders give you an answer almost instantly. Others might take a day or two. Traditional banks and credit unions can take longer – sometimes up to a week or more.

Get your funds

Once you’re approved, you’ll review and sign your loan agreement. After that, the lender deposits the money directly into your bank account. Depending on the lender, this could happen the same day or within a few business days.

I need a loan, but keep getting declined. Does that sound familiar? Understanding why helps you fix the problem.

Lenders typically deny loans for three reasons: poor credit, limited income, or too much existing debt. Sometimes denials occur for reasons beyond your control, such as economic downturns.

Whatever the reason, here’s how to handle a rejection and improve your chances next time.

Ask why your application was rejected

If you’re denied credit, a lender is required by law to send you a written notice explaining why. You can also call the lender and ask them to clarify their decision. This conversation could help you figure out a game plan to get approved on your next try.

If bad credit is the issue, you’ll need to work on improving your score. The upside is knowing what to fix, but the downside is that fixing your credit takes time.

Can’t wait? Consider asking someone with strong credit to cosign your loan. This can help you get approved even with a lower score.

Review your credit reports for mistakes and errors

Your credit report offers lenders a snapshot of your credit history. Errors in that report can hurt your scores.

One study found that 44% of consumers discovered at least one error on their credit reports. That’s why checking yours is so important.

You can get a copy of your credit report from each of the three major credit bureaus for free through AnnualCreditReport.com. As you review your reports, look for:

• Accounts that don’t belong to you
• Incorrectly reported payment history
• Inaccurate balances or credit limits
• Open accounts that are reported as closed, or vice versa

If you find an error, you have the right to dispute it with the credit bureau that’s reporting it. You can dispute credit report errors online for faster results or submit a dispute by phone or mail. The credit bureaus are required to investigate disputes and correct or remove errors they find.

Improve your DTI by paying off debt

If you have decent credit but are still asking, “Why can’t I get a loan?” your debt-to-income ratio (DTI) could be the problem.

Your DTI measures how much of your pretax income goes to debt repayment each month. Personal loan lenders use it to gauge your ability to repay what you borrow.

If you have debt, consider how you might pay some of it down. For example, maybe you could pay off your smallest credit card balance if you’ve got a little extra cash set aside.

Increase your income

Making more money lowers your debt-to-income ratio, which can help you get approved. Here are a few ways to boost your income:

• Take on more hours at work if you’re paid hourly.
• Get a part-time job
• Start a side hustle or try gig work
• Negotiate a pay raise if you’re a salaried employee

Seek a smaller amount

You could always try to get a smaller loan amount. A lender may be willing to work with you on a smaller loan since that poses less risk to them.

Of course, that means you may need to make up the difference elsewhere. That could mean:

• Selling things you don’t need for extra cash
• Asking friends and family for help
• Exploring personal loan alternatives

A smaller loan means smaller payments, which could be easier to manage. Repaying a small personal loan on time can help you build a positive credit history.

Consider alternative financing options

If you’re denied or approved for less than you need, consider these alternative financing options:

• Personal line of credit. A personal line of credit is a revolving line of credit that you can get from a bank or credit union. It works similarly to a credit card, in that you can draw against your limit as needed, then pay down your balance as you go.
• Peer-to-peer loans. Peer-to-peer lending platforms connect lenders and investors with borrowers. These loans may be easier to get approved for with bad credit, but they can also have higher interest rates.
• Buy now, pay later. Buy-now-pay-later (BNPL) programs let you make purchases online or in stores and pay them off in installments. Some BNPL lenders don’t require a credit check, which could make approval easier.
• Hardship and emergency loans. Emergency or hardship loans are designed for people with short-term financial needs. These loans can offer fast funding and a streamlined application process.
• Short-term loans. Payday loans, title loans, and pawnshop loans are all short-term financing options. You can get cash fast, but this type of borrowing can come with exorbitant interest rates, so it’s usually best avoided.

If all else fails, wait and apply for a personal loan later on. In the meantime, you can work on paying down debt, increasing your income, or raising your credit score.

There’s no secret to getting approved for a personal loan. It’s all about knowing what lenders are looking for and how you measure up. At the end of the day, the easiest personal loans to get are the ones that you’re most qualified for.

If you’ve done your research and you’re ready to jump in, learn how to apply for a personal loan.