How do you qualify for Personal Loans

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How do you qualify for a Personal Loan
Pre-qualification gives you a preview of the possible terms of you personal loan. Find out how to apply for pre-qualification.


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Updated on November 23rd, 2022.

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Steps



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Pre-qualifying for a personal loan is the first stage in your loan decision-making process. It gives lenders an idea of your creditworthiness, as well as it provides a glimpse what kind of loan you may be eligible for.
Pre-qualifying, however, does not guarantee you the possibility of a loan The lender will check your information before final approval.
Here are the steps you need to take to pre-qualify for a personal loan.
1. Fill out the pre-qualification form

Some lenders let you pre-qualify for a personal loan on their website by filling in a form. You'll have to submit information including:
Personal details, like your name, birth date and Social Security number.
Contact details like your address and phone number.
Your annual income and details about your employment.
Other financial data like whether you have savings, retirement and investment account.
Your desired loan amount as well as loan reason.

Because rates and terms are different, NerdWallet recommends pre-qualifying for multiple to compare offers among lenders.
Pre-qualifying offers will outline your potential loan conditions, such as the amount you qualify to borrow and your interest rates, though those numbers might change after you apply in a formal manner and a lender has a detailed understanding of your financial picture.
See if you pre-qualify for a personal loan -- without affecting the credit rating.
Answer a few simple questions to get personalized rates of our lenders.
Loan purpose Select your option Debt Consolidation Home Improvement Medical Car Consolidation Credit Cards Motorcycle Major Purchase Launch a Business Education IRS Tax Other Debt

The loan amount

Credit score Choose your choice Good Good Fair Poor

Your employment status Choose your option Full-time Part-time Self-employed Unemployed Military Retired Other



Find out if you're pre-qualified



2. Undergo a soft credit check

The process of pre-qualifying for a personal loan will not impact the credit rating.
Once you submit the pre-qualification application, lenders will do an assessment of your creditworthiness. The soft credit check won't appear on the credit reports that a lender will see when you officially apply and so pre-qualifying with several lenders will not hurt your chances of receiving a loan.
If you get an offer via pre-qualification, the lender will then invite you to fill out a full application. When you do it, the lender will confirm your credit history using an investigation of your credit report and will show up in your credit file for a period of up to two years. Then, it will shave the smallest amount of points off your score.
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3. Find out whether you've been approved

Lenders review your cash flow, credit score, and debt-to-income ratio when assessing an application. The cash flow and your credit score determine the amount of income you're able to make loan repayments. Your credit score is a reflection of how well you've handled the burden of debt. That's why, it's the best method to increase your likelihood of pre-qualifying.
Make sure you pay your bills on time, keep your balances at a minimum and strive to pay your credit card balances completely every month to improve your credit profile.
How do you get a loan with bad credit
If you're worried about qualifying because of your credit score, may have low rates and flexible terms for those with lower credit scores.
Online lenders also provide bad-credit personal loans. These lenders might also take into consideration the other elements of your application, such as your education level and the place you work, to help get you approved. However, they generally have higher rates, which means the loan is more costly.
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4. Formally apply to get your cash

Once you submit the pre-qualification form and you'll be able to see the potential loan terms within minutes. If you're satisfied with the rate, amount and repayment period and you're ready to apply for a loan .
The procedure typically requires you to upload financial documents like bank statements , recent tax returns, which the lender uses to verify the information you provided during pre-qualification. When you've completed your application the lender will conduct an investigation of your credit.
If you're approved by the lender, lenders will be able to fund the loan within the next business day. They can deposit 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, you should receive an adverse action notification or letter. This will include information about the credit agency that provided the report, why you were rejected as well as your score at the moment and factors contributing to it. It will also tell you how you can get a free copy of your report.
This data can be helpful in helping you improve your chances of getting accepted for personal loan.
How to boost approval odds
If you don't receive an offer via pre-qualification, the lender might ask whether you want to apply for a co-signed secured or joint loan.
Joint and loans permit you to add someone with stronger credit to your application, which can increase your odds of approval or obtaining a lower rate. However, a co-applicant is responsible for missed payments.
A requires you to pledge collateral such as your vehicle or savings account to secure the loan. It's usually easier to get approved for secured loan however, you may lose the collateral if do not pay your loan.
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Authors: Jackie Veling covers personal loans for NerdWallet.


Annie Millerbernd works as a personal loans writer. Her work has appeared on The Associated Press and USA Today.


Ronita Choudhuri is the person who handles personal loans in NerdWallet.







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