How to Qualify for Personal Loans

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How to Pre-Qualify for a Personal Loan
Pre-qualification lets you see a preview of the potential terms of the personal loan. Learn how to pre-qualify.


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Last updated on Nov 23, 2022

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Steps



Steps





The process of pre-qualifying for a personal loan is the initial stage of the loan acceptance process. It gives lenders an idea of your creditworthiness, and it also gives you a sneak preview for the loan you might receive.
Pre-qualifying, however, doesn't guarantee you the chance of getting a loan as lenders will have to verify your information before final approval.
Here are the steps you need to take to pre-qualify for an individual loan.
1. Fill out the pre-qualification form

Many lenders let you pre-qualify for a personal loan on their site by filling out a form. You'll have to submit information including:
Personal information, such as your name, date of birth along with your Social Security number.
Contact details such as your address and number.
Your income for the year and information regarding your job.
Other financial information, such as whether you have savings, retirement or investments accounts.
Your desired loan amount and loan goal.

Because rates and terms vary, NerdWallet recommends pre-qualifying for several loans in order to compare the offers of different lenders.
Pre-qualifying offers will outline your possible loan terms, like the amount you're eligible to borrow and your interest rates, however those numbers might change after you have submitted your application and the lender has a detailed understanding of your financial picture.
Check if you are pre-qualified for a personal loan that doesn't impact your score on credit.
Just answer a few questions to receive a personalized rate from our lending partners.
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The loan amount

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Find out if you're pre-qualified



2. Undergo a soft credit check

Pre-qualifying for a private loan shouldn't affect your credit score.
Once you submit the pre-qualification form The lenders will then conduct an assessment of your creditworthiness. Soft credit checks don't show up on the credit reports that lenders will see when you officially apply and so pre-qualifying with several lenders will not affect your chances of being approved for a loan.
If you receive an offer by pre-qualification, the loan provider will invite you to submit an entire application. If you accept it, the lender will confirm your financial history with a hard credit check, which will appear in your credit file for up two years. Then, it will shave the smallest amount of marks off of your rating.
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3. Find out if you're approved

Lenders look over your credit score and debt-to income ratio to evaluate your application. Cash flow and your score indicate the amount of your monthly income that you have available for loan repayments. Your credit score shows how well you've handled debt. For that reason, is the best method to increase your chances of getting pre-qualified.
Be sure to pay your bills on time, keep your balances at a minimum and strive to pay off your credit card balances completely each month to strengthen your credit score.
How do you take out a loan with poor credit
If you're worried about qualifying because of your credit score, may carry low rates and flexible terms to applicants who have lower credit scores.
Online lenders can also provide bad credit personal loans. They may also consider other parts in your request, such as your education and where you work, to help get you approved. They typically do however offer higher rates, meaning the loan will be more expensive.
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4. Formally apply to get your cash

After you've completed your pre-qualification application and have it reviewed, you'll see possible loan conditions within moments. If you're satisfied with the amount, rate and repayment term then you're now ready to sign the formal .
The process typically requires you to upload financial documents like bank statements and recent tax returns. The lender will use to verify the information you provided when you applied for pre-qualification. Once you have completed the application the lender will conduct a hard credit check.
If you're approved, some lenders will be able to pay the loan within on the following business day, depositing the money into a checking or savings account that you prefer. Most lenders can fund loans within one week.
If you're not accepted
If your application is rejected then you should be sent an adverse action notice or letter. This will include information about the credit company that provided the report, why you were refused, your current score and other factors that may have contributed to it. It will also tell you how you can obtain a free copy of your report.
This data can be helpful in helping you increase your chances of being approved for a personal loan.
How can you increase the chances of approval
If you don't get an offer through pre-qualification, the lender might inquire if you would like to apply for a co-signed joint or secured loan.
Joint and loans allow you to include a person with a better credit score on your loan application increasing your chances of approval or obtaining a lower rate. However, a co-applicant is on the hook for missed payments.
A requires you to pledge collateral such as your vehicle or savings account to secure the loan. It's typically easier to be approved for a secured loan however you could lose the collateral if you fail to make payments.
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About the authors: Jackie Veling covers personal loans for NerdWallet.


Annie Millerbernd, a private loans writer. Her work has appeared in The Associated Press and USA Today.


Ronita Choudhuri is the person who handles private loans for NerdWallet.







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