What Are the Requirements for a Personal Loan?

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Personal loan requirements
Credit score
Credit history
Income
Debt-to-income ratio
Documents required for a personal loan
- Proof of identity, like a government-issued ID.
- Proof of address, like a utility bill or mortgage statement.
- Proof of income and employment status, like a pay stub, tax return or W-2.
- Proof of additional income such as retirement, alimony or child support.
- Social Security or Individual Taxpayer Identification number.
Questions to ask before applying for a personal loan
Tips to qualify for a personal loan
- Add a co-signer. Adding a co-signer with strong credit and income can help you qualify for a loan or get a lower interest rate. Keep in mind that a co-signer is responsible for loan payments if you stop making them.
- Add collateral. A secured personal loan is backed by an asset like a car or investment account. These loans can have lower rates or higher amounts than unsecured loans, but the lender can take the asset if you fail to make payments.
- Take time to build credit. If you have a thin credit history, consider whether holding off on the application to work on your credit is an option. Getting a secured credit card or becoming an authorized user on someone else's credit card are two ways to build credit.
- Lower your debt-to-income ratio. You can lower your DTI by paying down existing debt. Reducing your credit utilization also helps to build your score.
How to apply for a personal loan
- Review your credit report. First, review your credit report to get an understanding of how your credit may look to a lender. This gives you a chance to resolve any errors that might be affecting your score.
- Compare lenders. Some lenders provide debt consolidation loans with features that simplify the process, while others may specialize in lending to bad-credit borrowers. Your bank or credit union may offer special rates to customers. Compare different lenders and the features they offer.
- Pre-qualify with multiple lenders. When you pre-qualify, lenders will show estimated APRs, terms and monthly payments so you can choose one that fits your budget. Pre-qualification involves a soft credit check, which means you can compare multiple loans without affecting your credit score.
- Apply for a loan. The formal application process requires submitting an application and providing documents to verify your identity and income. Lenders will also run a hard credit check, which may drop your credit score a few points. Most lenders allow you to apply online, but some banks and credit unions require in-person applications.
- Get funded. If approved for a personal loan, you'll typically receive the funds within a week. The first payment date is generally 30 days after the loan has been issued.
What happens if I’m denied?
Article sources
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