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How To Get Approved For A Personal Loan

Victoria Araj5-minute read
UPDATED: October 06, 2023


If you’re considering a personal loan to fund credit card debt consolidation, a home improvement project or another big purchase, you may be curious about the likelihood of your application getting approved. Or perhaps your application didn’t get approved and you’re looking for ways to increase your chances of approval. You might simply ask yourself, “What do I need to get a loan?”

To get approved for a personal loan, you’ll have to check a few boxes. It’s possible you’re just shy of meeting these requirements. Strong credit and a low debt-to-income ratio tend to significantly improve your chances of approval. You also need proper documentation and may need – depending on the loan – an asset to offer as collateral.

Let’s delve into some ways to help your chances of getting approved for a personal loan.

1. Boost Your Credit Score

Most personal loan lenders look at your credit report when you submit an application. Each personal loan lender has a different minimum credit score requirement, but you usually need a credit score in the 610 – 640 range, at least, to get approved for a personal loan.

Best practices for maintaining good credit or improving your credit score include:

  • Making payments on time: Payment history is the single biggest factor in determining your credit score. Your credit can take a major hit from a late or missed payment, so do your best to make your monthly payments on time. To avoid letting due dates pass you by, consider setting up autopay wherever this option is available.
  • Keeping a diverse credit mix: A strong credit file has a mix of revolving credit (like credit cards) and installment loans (like student loans and mortgages). While having a diverse credit mix is important, it’s best to space out your credit applications.

    Creditors usually perform hard credit checks as they review applications. These types of credit inquiries can lower your score. For this reason, you should limit the number of personal loans you apply for.
  • Using 30% or less of your available credit: The Federal Deposit Insurance Corporation (FDIC) recommends using no more than 30% of your available credit. A low credit utilization ratio can boost your credit score and chances of personal loan approval.

Your creditworthiness plays a large role in your ability to take out a personal loan. Stronger credit can also help you secure better loan terms and a low interest rate.

2. Keep A Good Debt-To-Income Ratio

Your debt-to-income ratio (DTI) measures your monthly income against your monthly debt payments. Rent, loan payments and credit card payments are a few types of debt included in your DTI. Personal loan lenders tend to look for a DTI of 36% or less.

You can use our DTI calculator to determine your DTI, or use the following formula:

Monthly debt payments ∕ Gross monthly income = DTI (expressed as a percentage)

3. Have The Documents Required For A Personal Loan

Financial institutions usually require various documents for a personal loan application. These documents verify your identity and provide proof of income. They may include:

  • A driver’s license or Social Security number
  • Pay stubs
  • Tax returns
  • Bank account information

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4. Be Ready To Put Up Collateral

Lenders commonly offer two types of personal loans: unsecured and secured. Unlike unsecured personal loans, secured personal loans require collateral. Collateral can be real estate property, savings accounts, cars and numerous other assets.

While unsecured personal loans don’t require collateral, they usually come with high interest. Unsecured loans are also usually offered to borrowers with strong credit.

A secured personal loan may be a good option if you want low interest or don’t qualify for an unsecured loan. The trade-off for low interest is the lender can take possession of your collateral if you fail to pay your loan.

Bonus Tips For Getting Approved For A Personal Loan

Following the tips above can help improve the likelihood of lenders approving your personal loan application. Let’s explore some additional steps you can take to ensure your chances of approval are the highest they can be:

  • Use a co-signer. Consider asking a person you trust to cosign on your personal loan if you have doubts about whether you’ll be approved on your own. Getting a co-signer on your personal loan may boost your chances of approval.
  • Find a lender that meets your needs. A lender that caters to your situation may be key for personal loan approval. Many lenders offer personal loans, so research can help you choose the best lender for your financial situation. Certain lenders offer personal loans specifically for borrowers with bad credit, and some even have personal loan options for borrowers with no credit history at all.

How To Get Approved For A Loan FAQs

Learn more about how to get approved for a personal loan with our answers to some common questions.

What credit score do I need for a personal loan?

The required credit score for a personal loan varies by lender and whether you apply for a secured or unsecured personal loan. As mentioned above, a credit score in the 610 to 640 range usually puts you in good standing.

However, borrowers with excellent credit generally qualify for the best personal loan offers. This can mean a lower interest rate, flexible repayment terms or no origination fees.

Do I need collateral for a personal loan?

You only need collateral for a secured personal loan. The other personal loan option, an unsecured personal loan, doesn’t require collateral, but it tends to come with a higher interest rate.

How long does it take for personal loan approval?

Each lender has its own timeline for how long it takes to get approved for a personal loan. Generally, you’ll receive an answer within days of completing the application process. In some cases, you may even hear back within hours.

Banks and credit unions usually take 1 – 7 business days to approve an application. Online lenders may be quicker, sometimes giving approval in 1 – 3 business days.

How much can I get from a personal loan?

Limits on personal loan amounts vary from lender to lender. The average personal loan amount is in the $6,000 to $7,500 range. Some lenders offer personal loans for up to $100,000, though.

How much you can get from a personal loan largely depends on your financial situation.

Can I prequalify for a personal loan?

In many cases, you can get prequalified for a personal loan. The process is similar to applying for the loan, but you fill out a prequalification form instead.

Prequalification usually requires a soft credit check, which won’t hurt your credit score. If you're shopping for ideal rates, getting prequalified can prevent credit damage. Check with your lender to see if they offer personal loan prequalification.

Final Thoughts

A strong credit score and a low DTI can improve your chances of personal loan approval. Be sure to also have the right documents ready to send with your application. If you apply for a secured loan, you’ll likewise need to decide what you’ll put up as collateral.

If you think you’re ready to apply for a personal loan, you can begin the process now. Start an application online today with Rocket LoansSM.

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Victoria Araj

Victoria Araj is a Section Editor for Rocket Mortgage and held roles in mortgage banking, public relations and more in her 15+ years with the company. She holds a bachelor’s degree in journalism with an emphasis in political science from Michigan State University, and a master’s degree in public administration from the University of Michigan.