Personal Loan Eligibility Criteria You Need to Know Before You Apply

March 14, 20217 min read
Personal Loan Eligibility Criteria You Need to Know Before You Apply

Thinking about a personal loan? For whatever reason it might be—consolidating credit cards, making a big purchase, working on home renovations, or paying down debt faster—it’s important to find a loan that not only meets your needs, but one you have a good chance of qualifying for. Here’s what you need to know about personal loan eligibility and personal loan requirements before applying for a personal loan.

  • What Lenders Look For

  • Common Questions About Eligibility

  • Tips for Qualifying

  • The Bottom Line

What Lenders Look for in Determining Personal Loan Eligibility

From your credit score to your assets, key pieces of your finances will play a big factor in whether you’re approved for a loan, how much you qualify for, and what rate of interests and terms you’ll receive. Here’s what a lender looks at when they review your personal loan eligibility.

Credit Score

Do you show a history of paying your debt on time? Though credit score requirements vary from lender to lender, a good credit score is one of the leading factors in determining eligibility. Most lenders prefer extending credit to borrowers with good or excellent credit scores—670 and up. Below that range, loans can often still be approved, but interest rates may be higher.

Keep in mind a high credit score doesn’t automatically mean you’ll get a low interest rate, but it does help.

Payment History

While payment history is the biggest factor in determining your credit score, it is also something lenders may look at in more detail when reviewing your loan application. From the lender’s perspective, how well you paid your debts in the past is a good indicator of how you will make loan repayments.

Before you begin the application process for a loan make sure all of your debts are current. If you have any past due balances, address those immediately. It won’t erase the past — any missed payments remain on your credit report for seven years — but it can help show lenders you’re working on improving your financial situation. Once you’ve got all your accounts current, set up automatic bill pay or automatic payment reminders so you never miss a deadline. Over time, your payment history (and credit score) could improve.1

Income

Income is a crucial factor in eligibility because it gives lenders confidence you have the means to pay back the new loan. Most lenders set a minimum income limit for loan approvals, depending on the asking amount. If you have full-time or part-time income, plan on sharing your last two or more paystubs. If you’re a gig worker or freelancer without a steady paycheck, many lenders will still be willing to work with you. However, you may need to supply additional proof of your income or average out your pay into a month-by-month basis. To save time, get your tax returns, 1099s, and balance sheets together. All of these documents can help prove irregular income.

Every lender is different, so don’t get discouraged if you’re denied based on income by one company. Shop around to find one that works for you.

Current Debt

Lenders look at your current debt as it compares to your income, also known as your debt-to-income-ratio. Often, lenders look for a DTI under 40%—if you’re above that mark they may see you as a higher-risk borrower.

To calculate your DTI, add up your monthly debts and divide that total by your gross monthly income. For example: If your monthly debt payments are $1,000 and your gross monthly income is $5,000, your debt-to-income ratio is 20%. Keep in mind, monthly payments like insurance, utilities, taxes, and recurring home expenses are generally not used to determine debt.

If your DTI is higher than 40%, you can bring the number down by paying off some (or all) of your debt. As you work to lower your DTI, postpone adding any large purchases to your credit cards, as that might cancel out your hard work.

Common FAQs About Eligibility for a Personal Loan

If you’ve just started exploring personal loans, you probably have a ton of questions. Here are some of the most common.

How old do you have to be to get a personal loan?

You have to be at least 18 years old to apply for a personal loan, though it’s important to keep in mind most lenders factor in age, job, and work experience when determining eligibility. If you’re applying for a personal loan before you turn 21, make sure to include a job history.

Are personal loans hard to get?

Getting a personal loan is simple as long as you meet the lender’s requirements for eligibility and are generally flexible with personal loan interest rates. However, you want to make sure you’re getting the best rates and terms on your personal loan. Be sure to compare the APR’s offered against several lenders before you sign up. Some lenders, for example, charge application fees and prepayment penalties while others, like LendingClub, do not, which can affect your overall cost.

Will lenders look at my assets?

Most personal loans are unsecured, meaning you don’t have to use your assets—like your home, car, or savings account—as collateral. While your lender may ask about your available liquid assets, such as the funds in your checking and savings account, they generally won’t review all of them. If you opt for a secured personal loan, however, you will have to use your assets as collateral (most are backed by a savings account).

Where can I get a personal loan?

Several financial institutions offer personal loans. You can use your flagship bank or credit union or opt for a marketplace or online lender. Comparing rates from both online lenders and traditional banks can help you find the best offer for your needs.

What if my personal loan application is denied?

Each lender sets their own requirements for personal loan approvals, so it helps to compare. However, if you are struggling to qualify for a personal loan you may want to take a step back and see what improvements you can make. If you can, work on your personal finances for a few months—pay down debt or boost your credit score—and then apply again. Just because you were denied the first time, doesn’t mean you will be a second time.

6 Tips to Qualify for a Personal Loan

If you think a personal loan is right for you, start by assessing how much you need and come up with a repayment plan to pay it back. Once you’ve checked the criteria for different lenders, do these six things to help you qualify for the lowest rates and best terms.

1. Improve your debt-to-income ratio

Your debt-to-income ratio is a huge factor in determining your loan eligibility. By paying down some of your debt first to improve your ratio, you increase your chances of getting a loan and at a more favorable rate. Start by creating a weekly or monthly budget for expenses and come up with a plan to beat back some debt in advance of applying for a personal loan. If your time allows, a side gig could allow you to make extra payments and help you pay down your debt faster.

2. Precheck your eligibility

While credit inquiries aren’t a huge factor in your credit score—accounting for just 10% of your FICO score—applying for several loans or credit cards at once could signal to lenders that you’re headed for financial trouble. Instead, try checking your rate for a personal loan online with a few different lenders first. Checking your rate online is easy, won’t affect your credit score, and can help determine who is willing to offer you the best rates and loan terms.

3. Compare different lenders

Research is the key to securing a good loan with a favorable interest rate. Take the time to learn the difference between loan offers with different lenders to find the one best for you. In addition to checking with your local community bank, keep in mind that online lenders, online banks and lending marketplaces are the rise and might offer a more cost-effective solution for your needs, especially when you consider interest rates, APRs, and the added fees associated with some of the more traditional banking institutions. Each type of lender—whether that be a local flagship bank or online lending marketplace—will offer different rates, fees, and terms. Compare your options before making a decision.

4. Increase your credit score

If your credit score is lower than 630, focus on increasing it. Do this by making at least the minimum payment on all your bills on time and make sure your credit report is free of any errors that might be affecting your score. If you do find errors, file a dispute with the credit bureau immediately.

5. Don’t ask for more than you need

Keep in mind, you can only qualify for a personal loan you can comfortably afford. If your income isn’t high enough to easily repay the monthly payments, you may struggle to get your loan approved. Try lowering the total amount you are asking for. Once you’ve paid off or paid down your loan — or if you receive an income boost — you can always reapply for a second personal loan. In fact, many LendingClub members focused on debt consolidation are repeat borrowers.

6. Consider a joint personal loan

If you need a loan now and your credit history, score or income is not where it needs to be, consider a joint personal loan. With these loans, you and a co-borrower (typically a spouse, partner, or family member) will apply for and sign the loan together. You’ll both be responsible for payments and will both have access to the funds, which can be great if you’re using the loan for something you both need, like home repairs. Many LendingClub members also apply for a joint personal loan to help consolidate and pay down debt. By applying together, the lender will consider both you and your co-borrower's qualifications, which can help push you over the threshold for qualification or get you a larger loan amount than if you applied only on your own.

The Bottom Line

Understanding the factors that determine personal loan eligibility can help get you in the best situation for approval before you apply. This lets you research the companies that would work best for you without you needing to apply for too many loans, which can maximize your chances of a favorable rate and loan amount. By bringing borrowers and investors together, LendingClub has transformed the responsible way people can access credit. Applications take less than two minutes to apply, and borrowers can receive up to $40,000 in 48 hours, which has allowed millions of people take control of their debt and invest in their future in an ethical, responsible way.2


  1. Reducing debt and maintaining low credit balances may contribute to an improvement in your credit score, but results are not guaranteed. Individual results vary based on multiple factors, including but not limited to payment history and credit utilization.

  2. Between April 2021 and June 2021, personal loans were funded within 48 hours after loan approval, on average The time it takes for a loan to be funded is not guaranteed and individual results vary based on multiple factors, including but not limited to investor demand.

You May Also Like

Related Resource Center
If you receive a cash windfall, using the money to clear debt ahead of schedule can save on interest. However, if your loan terms include a prepayment penalty or you're in the process of rebuilding your credit history, you may want to think twice.
May 20, 2023
6 min read
The Pros and Cons of Paying Off a Personal Loan Early
When you apply for a loan or credit card, many lenders may use the 5 Cs of credit—character, capacity, collateral, capital, and conditions—to determine your eligibility and the terms of your financing agreement. The 5 Cs of credit are measures of how you handle your current credit obligations and your ability to repay a loan. Understanding how each of these factors impacts a lender’s decision-making can potentially increase your odds of getting approved and scoring more favorable rates and terms.
Feb 5, 2023
6 min read
5CsOfCredit
Credit scores are three digit numbers ranging from 350 to 850 calculated from credit bureau reported data that represent a snapshot of your credit health and history. A high credit score is an indicator to potential creditors there’s a higher probability you’ll repay your debt. Lenders generally offer lower interest rates on personal loans, lines of credit, auto refinance loans, and home mortgages to borrowers they believe are most likely to pay them back—typically those with credit scores in the Very Good to Excellent (about 760-850) range.
Nov 3, 2022
7 min read
Twenty20-294-1110x453
Using fixed, low-interest credit to refinance variable, high-interest credit card balances can be a smart financial move. This practice, known as debt consolidation, can simplify your monthly finances, make your payments more predictable, and save you money on the cost of borrowing. If you’ve consolidated debt with a personal loan once and liked the results, you may be wondering if you should get a second (or a third) debt consolidation loan. Here’s what you need to know about obtaining multiple debt consolidation loans.
Oct 31, 2022
4 min read
blog consolidatedebt
There are many reasons to consider a joint personal loan, including sharing the payment obligations, securing better financing terms, and improving your odds of approval. So, if your credit history is holding you back from getting favorable interest rates and terms on your own, having a co-borrower could help you qualify for a personal loan.
Oct 11, 2022
5 min read
How to Apply for a Joint Personal Loan
Related Impact
From groceries and diapers to Halloween costumes for pets, nearly 60% of American consumers prefer to shop online for everyday items that make life more convenient, comfortable, and enjoyable. And with rising prices showing no signs of stopping anytime soon, we’re pleased to introduce StackitTM from LendingClub Bank—a new browser extension that automatically finds and rewards eligible members with coupons and cash back for extra savings at more than 15,000 favorite online retailers.
Nov 13, 2022
2 min read
blog header stackit 765x430 v1-1
Even in today’s low-yield, high-inflation environment, it’s essential to keep a certain amount of money in an easy-to-access checking or savings account for things like daily household and emergency expenses, or to meet short-term financial goals.
Oct 2, 2022
5 min read
LendingClub Rewards Checking Nationally Certified as Trusted, Afforda
Since 2007, LendingClub has been on a mission to deliver a world-class experience to all our members. This month we took a moment to reflect on the more than four million members who have chosen LendingClub as their partner to help them reach their financial goals.
Apr 19, 2022
2 min read
Illustration of large number 4 and letter M made up of colorful, tiny illustrations of ethnically diverse people
In March 2022, we hosted our first quarterly webinar where we celebrated our one-year anniversary as a digital marketplace bank. 
Mar 6, 2022
less than a minute read
Blog-post
LendingClub completed the acquisition of Radius Bank in February 2021. At that time, in addition to the direct-to-consumer deposit business, we inherited a fintech partner program, and several lending businesses. As we reach the one-year anniversary of the acquisition, and in conjunction with the conclusion of a strategic review of our business operations, we have made the decision to discontinue certain businesses that don’t fit our mission.  
Jan 2, 2022
2 min read
Man in blue button up shirt and glasses smiling
Related FAQ's
To qualify for a lending product with LendingClub Bank, you must...
Jun 7, 2023
less than a minute read
It depends on how you plan to use your loan.
Jun 7, 2023
2 min read
At LendingClub Bank, we care about your financial health. We make it easy for you to make payments that keep your account on track.
Jun 7, 2023
5 min read
Your annual percentage rate (APR) is the overall yearly cost of your loan, including fees and interest. The APR on LendingClub Bank loans ranges from 6.34% to 35.89%.
Jun 7, 2023
less than a minute read
If you're ready to pay off your loan, congratulations! That’s a big financial step.
Jun 7, 2023
less than a minute read
Related Glossary
{noun} A type of credit that allows the borrower to make charges and payments against a set borrowing limit, paying interest only on outstanding balances.
Sep 6, 2023
4 min read
{noun} The amount of unpaid interest that has accumulated as of a specific date, either on a loan or an interest-bearing account or investment. 
Mar 21, 2023
4 min read
{noun} The total annual cost to borrow money, including fees, expressed as a percentage.
Mar 21, 2023
3 min read
A debt that is written off as a loss because the financial institution or creditor believes it is no longer collectible due to a substantial period of nonpayment.
Feb 7, 2023
3 min read
{noun} An interest rate that remains the same for a set time, usually for the life of the loan.
Feb 4, 2023
3 min read
Change Your Money, Change Your Life
Join our monthly newsletter for tools, tips, and insights to improve your financial health.
  

LendingClub Bank and its affiliates (collectively, "LendingClub") do not offer legal, financial, or other professional advice. The content on this page is for informational or advertising purposes only and is not a substitute for individualized professional advice. LendingClub is not affiliated with or making any representation as to the company(ies), services, and/or products referenced. LendingClub is not responsible for the content of third-party website(s), and links to those sites should not be viewed as an endorsement. By clicking links to third-party website(s), users are leaving LendingClub’s website. LendingClub does not represent any third party, including any website user, who enters into a transaction as a result of visiting a third-party website. Privacy and security policies of third-party websites may differ from those of the LendingClub website.

Savings are not guaranteed and depend upon various factors, including but not limited to interest rates, fees, and loan term length.

A representative example of payment terms for a Personal Loan is as follows: a borrower receives a loan of $19,854 for a term of 36 months, with an interest rate of 10.29% and a 6.00% origination fee of $1,191, for an APR of 14.60%. In this example, the borrower will receive $18,663 and will make 36 monthly payments of $643. Loan amounts range from $1,000 to $40,000 and loan term lengths range from 24 months to 60 months. Some amounts, rates, and term lengths may be unavailable in certain states. 

For Personal Loans, APR ranges from 9.57% to 35.99% and origination fee ranges from 3.00% to 8.00% of the loan amount. APRs and origination fees are determined at the time of application. Lowest APR is available to borrowers with excellent credit. Advertised rates and fees are valid as of July 11, 2023 and are subject to change without notice. 

Checking a rate through us generates a soft credit inquiry on a person’s credit report, which is visible only to that person. A hard credit inquiry, which is visible to that person and others, and which may affect that person’s credit score, only appears on the person’s credit report if and when a loan is issued to the person. Credit eligibility is not guaranteed. APR and other credit terms depend upon credit score and other key financing characteristics, including but not limited to the amount financed, loan term length, and credit usage and history.  

Unless otherwise specified, all credit and deposit products are provided by LendingClub Bank, N.A., Member FDIC, Equal Housing Lender (“LendingClub Bank”), a wholly-owned subsidiary of LendingClub Corporation, NMLS ID 167439. Credit products are subject to credit approval and may be subject to sufficient investor commitment. ​Deposit accounts are subject to approval. Only deposit products are FDIC insured.

“LendingClub” and the “LC” symbol are trademarks of LendingClub Bank.

© 2023 LendingClub Bank. All rights reserved.