Step-By-Step Checklist to Getting a Personal Loan

Get Ready to Apply for a Personal Loan

• Decide how much money you need. Try not to borrow more than you need, since you'll be on the hook for the entire amount whether you use it all or not.
• Check your credit score. If your FICO^® Score^☉ is 670 or higher, you'll be able to choose from more lenders and get better loan terms and lower interest rates. If your credit score lower, take steps to improve it quickly:
  • Pay down credit card balances.
  • Pay any past-due amounts and make all payments on time going forward.
  • Don't apply for other new credit.
  • Sign up for Experian Boost^®ø for free to get credit for on-time telecom, utility and Netflix^® payments.

    If you can't improve your credit score quickly and need the loan fast, consider getting a cosigner (if the lender allows one).

• Review your credit report. Negative marks such as bankruptcy, collection accounts and late payments could make it harder to get a personal loan. If you believe any information on your credit report is incorrect, dispute it with the appropriate credit bureau. Even removing one incorrectly reported late payment could help your score.
• Assess your DTI. Your debt-to-income ratio (DTI) measures how much debt you're carrying relative to your income. The lower your DTI, the more attractive you are to lenders.
  • To calculate your DTI, divide your total recurring monthly debt (credit cards, mortgage, auto loan, student loan and so on) by your gross monthly income before taxes and withholding.
  • Lenders prefer a DTI of 36% or less, but may approve borrowers with higher ratios. If your DTI is too high, pay down some of your debt before applying for a personal loan.
• Research personal loan interest rates. The interest you'll pay on a personal loan is expressed as an APR (annual percentage rate) and includes fees and other costs. Lenders generally publish their current APRs as a range, such as 5.99% - 18.25%.
• Estimate your monthly loan payments. A personal loan calculator can help you calculate monthly payments as well as the total interest you'll pay over the life of a loan.

• Decide what size loan payment you can afford. Review your budget to see how much you can afford to pay each month.
  • You can reduce monthly payments by getting a longer-term loan, but you will pay more in interest over time.
  • You will save on interest by taking the shortest-term loan with payments you can afford.

Decide Where to Apply for a Personal Loan

• Shop around. Every lender considers factors such as your income, credit score and credit history differently. Comparing multiple loan offers will help you get the best loan.
• Start with your current bank. As an existing customer, you may get better loan terms from your bank than you would elsewhere. You can also research personal loan offers from other banks.
• Research credit unions. Credit unions may offer more lenient loan terms than traditional bank lenders. However, you need to be a member of the credit union to apply for a loan, which usually involves opening a deposit account.
• Research online lenders. Online lenders can offer easier applications, faster approvals and more flexible qualification requirements. You can use Experian CreditMatch™ to compare loan offers from several online lenders.

  Here are some online lenders and marketplaces to consider:

  • SoFi: Loans from $5,000 to $100,000, good credit or better recommended
  • Marcus: Loans from $3,500 to $40,000, best for those with good credit
  • Payoff: Loans from $5,000 to $35,000, can only be used for credit card consolidation, good credit or better recommended
  • Upstart: Loans from $1,000 to $50,000, may not require credit history, fair credit considered
  • LendingClub: Loans from $1,000 to $40,000, good for debt consolidation, fair credit considered
  • LendingPoint: Loans from $2,000 to $36,500, fair credit considered
  • LendingPoint: Loans from LendingPoint to LendingPoint, fair credit considered
• Compare loan terms from different lenders. Get the following information for each lender:
  • Interest rate (APR) range
  • Estimated monthly payment amount
  • Loan terms available
  • Any restrictions on use of money
  • Fees and penalties
  • Discounts or special offers
  • How soon you can receive funds
  • Some lenders offer prequalification for personal loans. Once you're prequalified, you'll get more details about loans you qualify for.
• Decide which lenders to apply to. Based on your research, select several lenders that seem appealing. Applying for a loan can generate a hard inquiry on your credit report. Too many hard inquiries may lower your credit score, but hard inquiries for the same type of credit within a short time are generally considered one hard inquiry.

Apply for a Personal Loan

In most cases, you can apply for a personal loan online.

• Be ready to provide basic identification information:
  • Name
  • Birthdate
  • Address
  • Phone number
  • Email address
  • Social Security number
• Also have the following information at hand:
  • Desired loan amount, term and purpose. Some lenders charge an origination fee that may be rolled into your loan or taken out of your loan amount. Take this into account when requesting a loan.
  • Driver's license or other government-issued identification
  • Employer name and contact information
  • Gross monthly income and sources of income
  • Monthly rent/mortgage payment
  • Total monthly debt payments
• After you submit your application, the lender may want documentation such as:
  • Recent pay stubs or W-2 forms
  • Most recent tax returns
  • Most recent bank statements
  • Proof of residence such as a utility bill
  • ID card
  • Social Security card