How to get approved for a personal loan

getting approved for a personal loan

In order to get approved for a personal loan, you have to submit a loan application with basic personal information and meet the income and minimum credit score requirements set by the lender. Most lenders require good credit, but bad credit does not necessarily make you ineligible for a personal loan. 

There are many different types of personal loans out there and they all carry different terms, conditions, and interest rates. However, the average personal loan amount in the USA is $8,402.

Below is a guide to getting approval for personal loans, even if you have poor credit! 

What Is a Personal Loan?

A personal loan is any loan meant for personal expenses, rather than business or commercial expenses. They come in many different forms, each with its own specific purposes. Here are a few of the most common personal loans you may come across:

Personal Installment Loans

A personal installment loan is an unsecured loan (doesn’t require collateral) that many borrowers use to pay for unexpected expenses. Installment loans are generally a good alternative to high-cost payday loans or title loans because you can typically borrow more money and pay it back over a longer amount of time. 

Auto Loans

An auto loan allows borrowers to purchase a vehicle even if they don’t have enough cash on hand. You can get an auto loan through the dealership, or through a bank or other financial institution. Borrowers typically pay them off over the course of about five years. 


A mortgage is a loan for buying a house. These are some of the largest personal loans available because houses are very expensive. They typically last 15 or 30 years, and the interest rates fluctuate based on the housing market. A mortgage is different from a guaranteed home equity loan because home equity loans are meant for homeowners that have equity in their property. 

Student Loans

This is a loan for higher education like college or trade school. These loans tend to carry low interest rates. You can get student loans through the government, or from private lenders like banks or other financial institutions. 

The Difference Between a Secured and Unsecured Personal Loan

If you are looking to get a personal loan, it’s critical to know the difference between a secured and unsecured loan. A secured loan requires collateral, but there are additional features to consider. Take a look at the features of each loan option below before applying with a personal loan lender. 

FeatureSecured Personal LoanUnsecured Personal Loan
Collateral RequiredYes (e.g., car, home, or other valuable assets)No
Interest RateTypically lower due to collateralTypically higher due to no collateral
Loan AmountOften higher, based on the value of collateralUsually lower, based on creditworthiness
Approval Chances for Low Credit ScoreHigher, as the loan is backed by collateralLower, as there’s no collateral to reduce risk
Risk to BorrowerRisk of losing the collateral if defaultedNo risk of losing personal assets, but could affect credit score
Loan Processing TimeMight take longer due to valuation of collateralOften quicker as there’s no need for asset valuation
Typical LendersBanks, credit unions, online lendersBanks, credit unions, online lenders, peer-to-peer lenders

Personal Loan Fees To Be Aware Of

There are a few fees that personal loan lenders charge. If you are interested in applying for personal loans, it’s important to understand the different types of fees that you may have to pay. But understand that the type of fees and cost varies by lender. 

Application Fee

Some lenders charge application fees when you apply for funding. This type of fee covers the cost of processing your application, including checking your credit report and assessing your creditworthiness. Not all lenders charge an application fee, and the amount can vary among those that do. 

Origination Fee

An origination fee is charged by some lenders to cover the costs associated with creating a new loan. It’s typically a percentage of the loan amount. This fee can be deducted directly from the loan proceeds, meaning you’ll receive the loan amount minus the origination fee. It’s crucial to factor origination fees when determining the amount you need to borrow.

Late Fee

If you miss a loan payment or don’t pay the full amount by the due date, the lender might charge a late fee. This fee compensates the lender for the inconvenience and risk of late loan payments. Late fees can be a fixed amount or a percentage of the missed payment. However, lenders typically charge upwards of $39 per late payment.2 Continually missing personal loan payments can lead to additional fees and negatively impact your credit score.

Prepayment Penalty Fee

Some lenders charge a prepayment penalty if you pay off your loan earlier than the agreed-upon term. This is because lenders expect to earn a certain amount of interest over the life of the loan, and early repayment can reduce their expected earnings. If you think you might be able to pay off your loan early, it’s a good idea to choose a loan without early payment fees.

How to Get Approval for a Personal Loan

Any personal loan will have a few things in common when it comes to the application process. First, you’ll find a loan and a lender that suits your needs. The next step is filling out an application. Some lenders now offer online applications, so you don’t need to go to a storefront location to apply. 

After applying, the lender will let you know whether or not you’re approved. Below are some common requirements for personal loans: 

  • You’ll need to meet a minimum credit score requirement. Depending on the loan, you may need a specific credit score to be approved. But remember that bad credit loans may have lower minimum credit score requirements. 
  • You’ll need to be of a certain age, depending on the laws where you live. 
  • You may need to meet certain income requirements. For example, a lender may require a steady income. 
  • You may need to have direct deposit, in case that’s how they deposit your money. 

How to Get Approved for a Loan With No Credit

Unfortunately, there are many people that don’t have a credit score. Whatever the reason is that you don’t have one, rest assured that you can still get a personal loan. 

If you don’t have a credit score but still need money fast, it’s going to take some extra research and hard work. You’ll need to find a lender that is still willing to work with you. Your best bet will be to find a lender that considers more than just your credit score, like your employment history and current income.

Even if you do find a lender and loan, you’ll likely face high interest rates and fees. Since the lender can’t confirm your creditworthiness through a credit check, they may decide to charge more for a loan. 

Getting a Personal Loan With Bad Credit

Getting approved for a personal loan might be easier with poor credit, compared to no credit at all. While there are no credit check loans, you’ll likely face higher interest rates, and less favorable terms and conditions. 

If you’re in this situation, it will require a decent amount of research to find the right loan and a trustworthy lender. There are a lot of predatory lenders out there that rely on charging borrowers with poor credit scores extremely high interest rates and fees. So make sure to inquire with multiple lenders and compare loan terms. 

How To Improve Your Credit Score for a Personal Loan

While you do not necessarily need good credit to get approval for a personal loan, a high credit score may help you get better loan terms. Borrowers with a high credit score tend to get larger loan amounts, lower interest rates, and longer repayment schedules.

Improving your credit score takes time, but it can be done! But in order to work on boosting your credit, it’s essential to know the 5 different financial factors that affect your credit report.    

5 Factors That Affect Your Credit Score

There are 5 distinct factors that affect your credit report, and in turn, your credit score.

Payment History

A borrower’s payment history is an important factor that can affect their credit rating. A history of on-time payments can increase a FICO score and demonstrate financial responsibility. A lender is more likely to approve an applicant that has an excellent payment history than someone that has multiple late loan payments.  

In order to avoid late payments, you can:

  • Sign up for automatic monthly payments
  • Get text reminders from your lender
  • Add payment alerts to your phone calendar 

Amounts Owed

While it’s not bad to have personal debt, too much debt can negatively affect your credit. But how do you know if you have too much outstanding debt? One way to check is to calculate your debt-to-income ratio. Most financial institutions avoid working with consumers that have a debt-to-income ratio higher than 43%, although requirements vary depending on the lender and loan type. 

Length of Credit History

A long history of credit management can reflect positively on your credit report. In order to work on developing a long financial history, avoid closing any accounts. For example, if you do not use a retail credit card, it’s still a good idea to hold onto it and avoid closing the account. A short financial history may make it more challenging to get personal loan approval.  

New Credit

The number of inquiries you make can decrease a credit rating. For example, applying with multiple lenders within a short period can decrease your credit and make you appear more financially risky to a lender. Too many loan applications can be a sign of financial instability. To prevent lowering your credit, avoid applying with too many lenders. 

Credit Mix

The type of loans a person has can affect their credit. Having more than one type of loan could benefit your score. For example, you could have a mix of revolving credit accounts and installment loans. However, you should not apply for new loans just to try and improve your credit. 

Frequently Asked Questions About Getting a Personal Loan

What is a “debt to income ratio” and why is it important for a personal loan application?

Your debt to income ratio is a measure of your monthly debt payments compared to your monthly income. Most lenders use this ratio to gauge your ability to manage monthly payments and repay borrowed money. A lower ratio indicates you have a good balance between debt and income.

How does my credit score affect my chances of getting a personal loan?

Your credit score is a reflection of your credit history, including your payment history on past debts. Most lenders use it to determine your creditworthiness. A higher credit score can lead to better loan terms, while a lower score might limit your options or result in higher interest rates.

What’s the difference between a secured and unsecured personal loan?

A secured loan requires collateral, like a car or home, which the lender can take if you default on the loan. An unsecured loan doesn’t require collateral, but might have stricter credit requirements or higher interest rates.

How can I check my credit report before applying for a personal loan?

You’re entitled to a free credit report every year from each of the three major credit bureaus. It’s a good idea to review your credit report for any errors or discrepancies before applying with a bank or credit union, or online lenders.

If I have a poor credit history, are there specific lenders that might still approve my personal loan application?

Yes, some online financial institutions and financial institutions specialize in offering personal loans to individuals with less-than-perfect credit. However, these loans might come with higher interest rates.

How do secured personal loans differ from other types of secured loans?

While all secured loans require collateral, the type of collateral and loan terms can vary. For instance, a mortgage is a secured loan with a house as collateral, while a secured installment loan might use a car or other valuable asset.

What happens if I miss monthly payments on my personal loan?

Missing monthly payments can negatively impact your credit score. Additionally, if you have a secured personal loan, the lender might take the collateral. It’s essential to communicate with your lender if you foresee difficulties in making payments.

How long does it typically take for a personal loan application to be processed?

The processing time for a personal loan application can vary based on the lender. While online lenders might offer instant or same-day approvals, traditional banks or credit unions might take a few days to review your application and credit history before making a decision.

Can I consolidate multiple debts with a personal loan?

Yes, many borrowers use personal loans to consolidate multiple debts, such as credit card balances, into a single loan with one monthly payment. This can simplify your finances and potentially offer a lower interest rate than your current debts. However, it’s essential to ensure that the monthly payments and loan terms are manageable for your budget.

Do most lenders charge fees for early repayment of a personal loan?

Some lenders might charge prepayment penalties if you pay off your personal loan before the end of its term. It’s crucial to read the loan agreement or ask the lender directly about any fees associated with early repayment. If you anticipate paying off your loan early, look for lenders that don’t charge these fees.

A Note From CreditNinja on How To Get Approved for Personal Loans

CreditNinja is here to help if you want to get a personal loan. Our personal installment loans help borrowers with less-than-perfect credit get money for all types of emergency expenses, such as dental financing. We work with all types of financial backgrounds, so rest easy if you don’t have a stellar credit history.  

Apply online today to see if you qualify for a convenient and fast personal installment loan! And check out our online blog for additional information on credit scores and personal loans. 


  1. Personal Loan Statistics │ Chamber of Commerce  
  2. Do personal loans have penalty APRs? │ CNBC
Read More
how to switch credit cards
Borrowers can switch credit cards by applying for new credit products and closing their current account. Applying for a new card with the same creditor…
Best Memorial Day Sales
Memorial Day weekend is a prime time to shop for basic necessities and big-ticket items. Most stores are already advertising Memorial Day deals on all…
someone opened a credit card in my name
If you notice that someone opened a credit card in your name, you will need to report the fraudulent transactions or accounts to the credit…
non conforming vs conforming loan
Between conforming and non-conforming loans, the best home loan for you depends on a lot of factors. Before you apply for any type of mortgage,…

Quick And Easy Personal Loans Up To $2500*