At a Glance
The process for getting a personal loan isn’t difficult, and it can happen quickly if you’re prepared. Be ready with the right information, such as knowing how to get a personal loan depending on your credit, steps to getting a personal loan, and information you need to be approved.
How to get personal loans with excellent credit
Excellent credit typically means a credit score of 720 or higher. The higher your score, the better the interest rate on your personal loan, and you’ll also qualify for better terms.
Good credit, typically between 680-719, can still qualify you for competitive rates and terms, but you should strive to have the best credit score possible.
It’s relatively easy to get a personal loan when you have excellent credit. Simply compare different lenders to find the best interest rate and terms available to you, and apply either online or through the local branch. You shouldn’t have any problem getting approved as long as accurate information is provided.
How to get personal loans with fair credit
Fair credit, between 640-679, won’t get you the best rates or terms and it may be a little more difficult to be approved, but there are still lenders who will work with you.
You may have fewer options through banks and credit unions, but online lenders may offer better opportunities. Be prepared for higher interest rates and you could potentially be subject to fees. It’s important to be able to show you have an income and regular cash flow. You may also have better luck if you use a cosigner.
How to get personal loans with poor or no credit
Whether you have poor credit (below 640) due to past financial decisions or you haven’t had the chance to build a credit history and score yet, you likely won’t have the best options available for securing a personal loan.
That said, there are online lenders who are willing to cater to those with poor or no credit. The bad news is you’ll likely see much higher interest rates and you may be required to provide a cosigner or collateral through a secured personal loan. Just be careful because if you don’t pay back the loan, you could lose your collateral, which could be an asset like your house or car.
The best thing you can do is to take steps to improve your credit score, such as paying your credit card bills and other debt payments on time and in full if possible, correcting any errors on your credit report, and lowering your debt-to-income ratio.
These steps can take time, but will be worth it to improve your chances of being approved for a personal loan and securing a lower interest rate.
7 steps to get a personal loan
When researching the best personal loan options and deciding whether it’s right for you, it can help to know the steps involved for securing one.
Check your credit score
Since it’s easier to get a low interest rate and better terms with an excellent credit score, the first step in getting a personal loan is to know what your credit score is. If it could use improvement, take steps now to increase it. Otherwise, you can use this information when prequalifying or estimating rates.
Compare estimated rates
Once you know your credit score, also have a clear understanding of the loan amount you need and how long you want to have the loan for (the term). Start researching different lenders and comparing estimated rates based on your credit score and loan amount.
You can also use a personal loan calculator to compare personalized estimates.
If your estimated rates are too high, now is the time to consider a cosigner or secured personal loan.
Get prequalified for a loan
To help you compare more personalized rates and terms, prequalify for the loan if the lender allows it. This gives you the opportunity to preview your specific estimated rate before you apply. This will only trigger a soft credit check, so it will not affect your credit score. It does not automatically qualify you for a loan and your actual rate could differ, but it will give you a good idea for comparison.
Shop around and compare lenders
Do your research with different lenders, as each offers different rates, terms, fees, customer service ratings and reviews, and types of loans. Consider what you need the loan for (such as debt consolidation, for a wedding, or for medical bills) and find a lender that offers loans designed for your specific needs.
Prequalify for loans with different lenders, including banks, credit unions, and online lenders, to find the best rates.
Read the fine print
Once you’ve narrowed down your options, make sure you carefully read the terms and get answers to any questions you would have. In particular, pay attention to:
- Prepayment penalties, late fees, and origination fees
- Automatic withdrawal payment options
- Total APR (which includes fees), not just interest rates
- Limitations on what you can use the loan for
- Customer-friendly loan features, like reporting payments to the credit bureaus, changing payment dates, or how using the loan for consolidation works
You don’t want any surprises once you apply for the loan.
After selecting a lender, it’s time to apply for the loan. Most lenders allow you to do this online, but some require or request you to come to a physical branch and apply in person.
Regardless, the application requirements may vary, but you’ll typically need:
- Identification, like a driver’s license, passport, state ID, or Social Security card
- Proof of address, like utility bills or lease agreement
- Proof of income, like a W2, pay stub, bank statement, or tax return
Answer all the questions accurately and provide all of the documentation requested to expedite the approval process. Once you submit the application, the lender will run a hard credit check (which can decrease your credit score for a short period of time).
Get approved and accept the loan
If you’re approved, the lender will notify you and you’ll need to finalize loan documents and accept the terms. Once completed, the loan funds will be deposited into your bank account or you’ll be sent a check in as little as one to two business days, but sometimes up to one week.
You’ll have to start making payments as soon as you receive the loan, so make sure you know what your monthly payment is and when it’s due. Consider setting up an automatic withdrawal payment from your bank account so you never miss a payment.
Information to have before applying for a loan
You will need certain information and documentation to apply and be approved for a personal loan. In addition to proof of identification, address, and income, you may need:
- Bank account information, including your routing number and account number
- Proof of employment
- A cosigner, if your credit score requires one
- Personal information like name, address, phone number, date of birth, and Social Security number
- Information about the loan, including your desired loan amount, purpose of the loan, and desired term
If you’re using the loan to consolidate debt, you may need those account numbers and balances.
Where can I find the best personal loan rates?
Start by using a personal loan calculator to estimate interest and APR rates before you start your research. Then, when comparing lenders, get prequalified when you can to get personalized estimates of loan rates.
The important thing is to shop around and compare different lenders. You can also use comparison sites to see different lender information side-by-side.
Should you apply for a personal loan?
Personal loans can be used for just about anything, including debt consolidation, paying for expenses like moving costs, a wedding, medical bills, or home renovations, or for emergency funds. If your credit score is high enough that you’ll get a lower interest rate, and you’re able to afford the monthly payment and pay on time each month, a personal loan may be right for you.
What is an installment loan?
Sometimes, personal loans are referred to as “installment loans,” and they mean the same thing. When you get a personal loan, you’ll pay it back over time, and each payment is called an installment. You’d owe that installment, or payment, each month for a certain number of years until the loan is completely paid back.
What is a personal loan payment calculator?
A personal loan payment calculator is a free tool you can use to get personalized estimated interest rate, monthly payments, total principal, and total interest. You can enter your credit score, the loan amount, and loan term to see what your estimates will be.
Factors that will affect your interest rate
Factors that will affect your personal loan rates include your credit score, debt-to-income (DTI) ratio, the loan term, and whether or not you have a cosigner. The higher your credit score, the better interest rate you’ll be offered.
How to prequalify for a personal loan?
Most lenders let you prequalify online by answering a few questions and providing some information like your desired loan amount and term. This only takes a few minutes and does not affect your credit score since the lender will only run a soft credit check. Keep in mind prequalifying does not guarantee you will be approved for the loan.
Tips for speeding up the loan application and approval process
The best way to speed up the application and approval process is by providing all of their information and documentation required during the application process. If the lender has to come back to you for clarification or more information, it can slow the approval process down.