How to Qualify for a Personal Loan (Without Putting Up Collateral)

 December 22, 2020
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Americans held $156 billion in personal loans midway through 2020, according to TransUnion. But this high balance doesn’t mean lenders give personal loans to just anyone.

Before lending an unsecured personal loan — or one that doesn’t require collateral — companies need reassurance about your ability to pay it back in full. To determine this, they look at factors such as your credit score and debt-to-income (DTI) ratio.

If you’re interested in borrowing a personal loan, here are seven steps to take to help get your application approved.

  1. Check your credit score
  2. Order a copy of your credit report
  3. Pay your bills on time
  4. Pay down your debt
  5. Show you have a stable income
  6. Submit a joint application with a creditworthy cosigner
  7. Find the right lender

1. Check your credit score

Your credit score is a major factor when qualifying for an unsecured personal loan. Although lenders typically don’t disclose what score they look for, most prefer good or excellent credit.

Before applying for an unsecured personal loan, make sure you know what your credit score is. You can check it out for free with services such as My LendingTree.

Some credit card companies also offer your FICO Score for free. By knowing your score, you’ll have a better idea of your chances of qualifying for a personal loan.

2. Order a copy of your credit report

Although your credit score represents your creditworthiness, it doesn’t show you the full picture. For a deeper dive into your financial past, order a free copy of your credit report from AnnualCreditReport.com.

You can get a free report annual report from each of the three major credit bureaus: Equifax, Experian and TransUnion — and during the coronavirus pandemic, this was changed to a free report every week, through April 2022. They will show any outstanding debt, along with your history of repayment and other factors that affect your credit score.

Take a close look at your credit report so you can see areas where you’re on track, as well as areas where you can take steps to improve. Also, be on the lookout for any reporting mistakes.

If you find errors, you can submit a written dispute to the credit reporting company. Fixing these errors could improve your credit score.

3. Pay your bills on time

If your credit score is low, you could try to improve it by paying your bills on time.

On-time payments will help increase your credit score and, as a result, boost your chances of getting an unsecured personal loan. If your score isn’t where you’d like it, take some time to improve it before applying around.

Even if your score is high enough to qualify for a personal loan, increasing it also could snag you lower interest rates. With higher rates, of course, you’ll pay more monthly and overall than you would if you wait to borrow until your score is higher.

4. Pay down your debt

Your debt-to-income (DTI) ratio is another major factor affecting your credit score. If you have a high ratio, paying down your debt could help boost your score.

Come up with a plan to conquer your debt, whether by making extra payments or increasing your income by taking on a side hustle.

Debt-to-Income Calculator

You also might open a new credit card to reduce your ratio, but be careful to not spend more than what you can afford just because you have access to more credit.

After all, this will increase your DTI ratio again, hurt your credit score and make it difficult to get an unsecured personal loan.

Also, keep in mind that opening too many new lines of credit in a short time could hurt your score.

5. Show you have a stable income

Your credit report and score as well as DTI ratio are imperative as you’re applying for a personal loan. But don’t forget that lenders also want to get a sense of your cash flow by examining secondary factors like your income and employment history.

While lenders look at your credit score to understand your financial past, they typically also consider your income as a sign of your financial future.

Proof of income, along with a stable employment history, shows the lender that you’ll be able to manage repayment over the life of your loan. Unstable employment, on the other hand, could hurt your chances of qualifying.

Don’t be surprised if a lender asks your salary data or even calls your employer to verify your information.

If you don’t have much money coming in, take steps to improve your employment situation before applying for an unsecured personal loan.

6. Submit a joint application with a creditworthy cosigner

Besides improving your credit score and boosting your income, another step you can take to get an unsecured personal loan is applying with a creditworthy cosigner.

If your credentials aren’t stellar, your cosigner’s credit score and income could make up for them.

Just keep in mind that when getting a personal loan with bad credit, cosigners agree to become legally responsible for repayment if you’re unable to go it alone.

Asking a relative or close friend to act as your cosigner is likely your best bet. Of course, you and your cosigner must be comfortable sharing debt.

7. Find the right lender

Although lenders look at similar factors when considering you for a loan — credit score, income, history of debt repayment — each company sets its own underwriting requirements.

You might have a better chance of approval if you have a relationship with the lender, whether it’s a bank or local credit union.

To ensure you get your best rates and terms, however, it’s wise to shop around with at least three lenders. You might compare the product offered by your neighborhood credit union with personal loans from a bank or online company that lends nationally, for example.

Peer-to-peer lenders, such as Prosper and LendingClub, are other options. Make sure you’re going with a reputable lender offering low rates.

Even if you have no trouble getting approved, it’s smart to shop around and compare personal loan offers. That way, you can find the best offer for your financial situation, as well as a personal loan with the lowest rate.

Andrew Pentis contributed to this report.

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How Student Loan Hero Gets Paid

Student Loan Hero is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). Student Loan Hero does not include all lenders, savings products, or loan options available in the marketplace.

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Student Loan Hero is an advertising-supported comparison service. The site features products from our partners as well as institutions which are not advertising partners. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.

How Student Loan Hero Gets Paid

How Student Loan Hero Gets Paid

Student Loan Hero is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). Student Loan Hero does not include all lenders, savings products, or loan options available in the marketplace.

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Student Loan Hero is an advertising-supported comparison service. The site features products from our partners as well as institutions which are not advertising partners. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.

RATES (APR)loan amount
4.99% – 19.63%1 $5,000 to $100,000
4.37% – 35.99% $1,000 to $50,000
5.94% – 35.97%* $1,000 to $50,000
99.00% – 199.00%2 $500 to $4,000
5.99% – 24.99%3 $5,000 to $40,000
9.99% – 35.99%4 $2,000 to $36,500
compare rates on Lendingtree now
NMLS #1136: Terms & Conditions Apply
1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

For when we advertise static headline rates w/ all discount (i.e. autopay and money bundle) (NON PQ RATE):

Fixed rates from 4.99% APR to 19.63% APR include a 0.25% autopay discount and a 0.25% direct deposit discount. SoFi rate ranges are current as of 11/2/2021 and are subject to change based on market conditions and borrower eligibility. SoFi Personal Loans are not available to residents of MS. Additional state restrictions may apply. Your actual rate will be within the range of rates listed and will depend on the term you select, evaluation of your creditworthiness, income, and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. Autopay Discount: The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings, checking, or other account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings, checking, or SoFi Money account. Autopay is not required to receive a loan from SoFi. Direct Deposit Discount: To qualify for an additional 0.25% APR direct deposit discount you must: (1) set up autopay with SoFi Money within 20 days of the funding of your loan, AND (2) setup payroll direct deposits of at least $1,000/mo to SoFi Money within 35 days of the funding of your loan. If you do not set up autopay with SoFi Money within 20 days of the funding of your loan, AND set up payroll direct deposits to SoFi Money within 35 days of the funding of your loan you will not be qualified for this additional 0.25% direct deposit discount. Once qualified, you will receive this additional 0.25% direct deposit discount during periods in which you have direct deposits of at least $1,000/mo turned on with your SoFi Money account.  This additional direct deposit discount will be lost during periods in which you have turned off direct deposits for your SoFi Money account. You are not required to enroll in autopay or direct deposits to receive a loan from SoFi. The Direct Deposit Rate Reduction excludes members from receiving the $100 SoFi Money® direct deposit promotional program. SoFi Money® is a cash management account, which is a brokerage product, offered by SoFi Securities LLC. Member FINRA/SIPC. Neither SoFi nor its affiliates are a bank. SoFi Money Debit Card issued by The Bancorp Bank.

For API partners when we return pre-qual offers only with all discounts (i.e. autopay and money bundle) plus direct payoff discount for those borrowers who select credit card payoff:

Fixed rates from 4.99% APR to 19.63% APR include a 0.25% autopay discount and a 0.25% direct deposit discount. SoFi rate ranges are current as of 11/2/2021 and are subject to change based on market conditions and borrower eligibility. SoFi Personal Loans are not available to residents of MS. Additional state restrictions may apply. Your actual rate will be within the range of rates listed and will depend on the term you select, evaluation of your creditworthiness, income, and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings, checking, or SoFi Money account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Autopay is not required to receive a loan from SoFi. Direct Deposit Discount: To qualify for an additional 0.25% APR direct deposit discount you must: (1) set up autopay with SoFi Money within 20 days of the funding of your loan, AND (2) setup payroll direct deposits of at least $1,000/mo to SoFi Money within 35 days of the funding of your loan. If you do not set up autopay with SoFi Money within 20 days of the funding of your loan, AND set up payroll direct deposits to SoFi Money within 35 days of the funding of your loan you will not be qualified for this additional 0.25% direct deposit discount. Once qualified, you will receive this additional 0.25% direct deposit discount during periods in which you have direct deposits of at least $1,000/mo turned on with your SoFi Money account.  This additional direct deposit discount will be lost during periods in which you have turned off direct deposits for your SoFi Money account. You are not required to enroll in autopay or direct deposits to receive a loan. The Direct Deposit Rate Reduction excludes members from receiving the $100 SoFi Money® direct deposit promotional program. SoFi Money® is a cash management account, which is a brokerage product, offered by SoFi Securities LLC. Member FINRA/SIPC.Neither SoFi nor its affiliates are a bank. SoFi Money Debit Card issued by The Bancorp Bank. If you selected credit card payoff as your loan purpose then your pre-qualified rate also includes a potential additional 0.25% Direct Pay discount. To secure this discount, you will need to select Direct Pay as an option to pay off your credit card and apply 50% or more of your loan proceeds directly to your creditors.

2 Includes AutoPay discount. Important Disclosures for Opploans.

Opploans Disclosures

Direct Deposit required for payroll.

Opploans currently operates in these states: . *Approval may take longer if additional verification documents are requested. Not all loan requests are approved. Approval and loan terms vary based on credit determination and state law. Applications processed and approved before 7:30 p.m. ET Monday-Friday are typically funded the next business day.

  1. To qualify, a borrower must (i) be a U.S. citizen or permanent resident; (ii) reside in a state where OppLoans operates; (iii) have direct deposit; (iv) meet income requirements; (v) be 18 years of age (19 in Alabama); and, (vi) meet verification standards.
  2. NV Residents: The use of high-interest loans services should be used for short-term financial needs only and not as a long-term financial solution. Customers with credit difficulties should seek credit counseling before entering into any loan transaction.

  3. OppLoans performs no credit checks through the three major credit bureaus Experian, Equifax, or TransUnion. Applicants’ credit scores are provided by Clarity Services, Inc., a credit reporting agency.

  4. Based on customer service ratings on Google and Facebook. Testimonials reflect the individual’s opinion and may not be illustrative of all individual experiences with OppLoans. Check loan reviews.

  5. Rates and terms vary by state.

3 Includes AutoPay discount. Important Disclosures for Payoff.

Payoff Disclosures

  1. All loans are subject to credit review and approval. Your actual rate depends upon credit score, loan amount, loan term, credit usage and history. Currently loans are not offered in: MA, MS, NE, NV, OH, and WV.
4 Important Disclosures for LendingPoint.

LendingPoint Disclosures

  • Loan approval is not guaranteed. Actual loan offers and loan amounts, terms and annual percentage rates (“APR”) may vary based upon LendingPoint’s proprietary scoring and underwriting system’s review of your credit, financial condition, other factors, and supporting documents or information you provide. Origination or other fees from 0% to 6% may apply depending upon your state of residence. Upon LendingPoint’s final underwriting approval to fund a loan, said funds are often sent via ACH the next non-holiday business day. LendingPoint makes loan offers from $2,000 to $36,500, at rates ranging from a low of 9.99% APR to a high of 35.99% APR, with terms from 24 to 48 months. The loan offer(s) shown reflect a 28 day payment cycle which is being offered as a courtesy as many of our customers are paid on a biweekly schedule and thus this may better align the loan payment dates with your actual income receipt schedule.
* Important Disclosures for Upgrade Bank.

Upgrade Bank Disclosures

Personal loans made through Upgrade feature APRs of 5.94%-35.97%. All personal loans have a 2.9% to 8% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. For example, if you receive a $10,000 loan with a 36-month term and a 17.98% APR (which includes a 14.32% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $343.33. Over the life of the loan, your payments would total $12,359.97. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Accept your loan offer and your funds will be sent to your bank or designated account within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes the transaction. From the time of approval, funds should be available within four (4) business days. Funds sent directly to pay off your creditors may take up to 2 weeks to clear, depending on the creditor. Personal loans issued by Upgrade’s lending partners. Information on Upgrade’s lending partners can be found at https://www.upgrade.com/lending-partners/.