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Key takeaways
- Many lenders require a minimum credit score, steady income, and an acceptable debt-to-income ratio to qualify for a personal loan.
- You’ll need to provide identification, proof of address, and income verification documents when you apply.
- Lenders often weigh your credit score and payment history heavily; your credit also influences your interest rate.
- You may improve your approval chances by checking your credit report, comparing multiple lenders, and applying with complete information.
People borrow personal loans for various reasons, including home renovations, debt consolidation, and major life expenses. Understanding the eligibility requirements before you apply can help you put your best foot forward and snag affordable rates. This guide covers the key requirements, documents you’ll need, and how to boost your approval chances.
5 requirements for getting a personal loan
You’ll need a sufficient credit score, steady income, an acceptable debt-to-income ratio (ideally under 35-50%), and valid identification to qualify for a personal loan. If you’re pursuing a secured personal loan, you’ll also need to put up collateral. Every lender sets slightly different requirements, so shopping around can help you find a loan that fits your situation.
Credit score and history
Lenders review your credit score and history to assess your risk as a borrower. Your credit scores range from 300 to 850, and some lenders want a “good” score of 670 or higher. Others will accept lower scores, but you may face higher interest rates and fees. Scores over 740 may qualify you for the best interest rates.
Lenders also check your credit report, which shows your credit cards and loans. Missed or late payments can be red flags that might lead to denial.
Earnings and income
Lenders want to see that you make enough money to afford monthly payments on a personal loan. Some lenders require a minimum income, such as $35,000, but many don’t disclose specific thresholds.
You’ll need to show pay stubs or other documents to verify your income or employment when you apply.
Debt-to-income ratio
Your debt-to-income ratio, or DTI, compares your monthly debt payments to your gross income. Most lenders prefer a DTI of 35% or lower, though some accept up to 50%.
Security or collateral
Most personal loans are unsecured and don’t require collateral. Some lenders offer secured loans backed by assets like your car or home, which can have easier credit requirements but put your property at risk if you can’t repay.
Origination fee
Some lenders charge an origination fee to cover processing costs. This fee typically runs 1% to 10% of your loan amount. You may pay it upfront or have it deducted from your loan proceeds.
What lenders look for when reviewing your application
Lenders evaluate how likely you are to pay them back by weighing several factors differently. Credit score and payment history typically matter most, followed by your income and debt-to-income ratio.
How lenders weigh different requirements
Your credit score and payment history show how you’ve handled debt in the past, while your income and DTI reveal whether you can afford payments right now. Some lenders might accept a lower credit score if you have high income and low debt. Others have strict credit cut-offs regardless of your earnings.
How your credit score affects your interest rate
Your credit score doesn’t just decide if you get approved – it also determines your interest rate. Here’s how it works:
- Higher scores get better rates: Lenders use “risk-based pricing” to give their lowest rates to borrowers with the highest credit scores.
- Lower scores mean higher costs: You might still get approved with a lower score, but you’ll pay more in interest over the life of the loan.
- Small differences add up: Even a percentage point difference can cost you hundreds or thousands of dollars over the life of a personal loan.
Documents you'll need to apply for a personal loan
Gathering your documents ahead of time speeds up the application process and keeps you from scrambling later. Here’s what most lenders ask for:
Identification and proof of address
- Government-issued photo ID: Driver’s license, state ID, or passport
- Proof of residence: Recent utility bill, lease copy, or bank statement with your current address
Income and employment verification
- Traditional employees: Recent pay stubs or W-2 forms
- Self-employed or gig workers: Bank statements or tax returns from the last couple of years
How to improve your chances of getting approved
As you’re preparing to apply for a personal loan, here are a few ways to improve your chances of getting approved.
Check your credit score and review your report
Know your credit before applying. You can check your FICO® score directly in the Chime app or through free credit monitoring services.1
You can also get a free credit report from AnnualCreditReport.com. Each credit bureau – Equifax, Experian, and TransUnion – offers free weekly reports. If you find any errors, dispute them before you apply for your personal loan.
Compare lenders and prequalify for rates
Check rates with at least three lenders to find the best loan offer. Many lenders let you prequalify online, meaning you can review rates and terms without a hard inquiry. Check with your local community bank or credit union, in addition to big national lenders.
Apply with complete and accurate information
Look for loans with low interest rates, few fees, and repayment terms that match your budget. Find your best option and then submit your application with complete personal and financial details. Double-check everything to avoid delays.
The lender will run a hard credit check, which might drop your score a few points temporarily. It should bounce back as your credit score updates with on-time payments.
What to do if you're denied for a personal loan
If you’re denied for a personal loan, find out the reason why so you can take steps to fix the problem.
Review your application for errors
A simple mistake in your application could cause denial. Double-check all your information and make sure you provided all the required documentation.
Ask why your application was rejected
Contact the lender to find out the specific reason why your application was rejected. Most lenders offer customer service over the phone, web chat, or email.
Check your credit report for mistakes
Credit bureaus don’t always get it right. An investigation from Consumer Reports and WorkMoney found that 44% of consumers who checked their credit report for the study found mistakes on them.
Submit an official dispute to each credit bureau – such as TransUnion, Equifax, and Experian – to remove any errors you find.
Look for ways to increase your income
Consider a side hustle, a part-time job, or asking for a raise if your income is too low. Even a modest income boost can help you qualify or increase your loan amount.
Pay down existing debts to improve your credit
Your credit score is based on your payment history and the amount you owe, among other factors. Pay bills on time and lower your debt, especially your credit utilization ratio. Paying down credit card balances can boost your score relatively quickly.
Consider applying for a smaller loan amount
Try re-applying for a smaller amount if you were denied due to insufficient income or a high DTI. Lower loan amounts tend to be easier to qualify for.
Apply with a co-signer
Some lenders let you add a creditworthy cosigner if you can’t meet the requirements alone. This can help you qualify and potentially get better interest rates. Just remember the loan will impact their credit, and they’re responsible if you can’t pay.
Get prepared and find your best loan match
Most lenders focus on your credit, income, and debt-to-income ratio when evaluating applications. If needed, take some time to improve these areas before you apply. Once you’re ready to move forward, prequalify with multiple lenders to compare offers and find a personal loan that fits your budget.
Frequently asked questions about personal loan requirements
Is it hard to get a personal loan?
It depends on your financial situation – good credit and steady income make it easier, while low credit scores or high debt can make it harder.
Can you get a personal loan with bad credit?
You can get a personal loan with bad credit, but you’ll likely pay higher interest rates. Some lenders specialize in poor or fair credit loans, or you could try secured loans that require collateral.
What credit score do you need for a $10,000 personal loan?
Many lenders prefer a good credit score (670 or higher) for larger loan amounts, though requirements vary by lender.
How long does it take to get approved for a personal loan?
Online lenders can approve and fund loans within a day, while traditional banks might take up to a week.
Do personal loan requirements vary by lender?
Yes – one lender might require a 660 credit score while another accepts 580, which is why comparing multiple offers helps you find the best fit for your financial situation.