There’s no single rulebook for personal loans. Each lender writes its own criteria, and two lenders can look at the same application and reach different answers. That’s frustrating if you want a clear yes-or-no checklist, but it also means a “no” from one lender isn’t the final word.
What we can do is walk through the things almost every lender weighs, what they’re looking for in each, and what the law says they can’t hold against you.
A quick map of what lenders review
| Factor | What the lender is asking | Where it shows up |
|---|---|---|
| Credit history | Have you repaid debts as agreed? | Your credit reports and scores |
| Income | Can you afford the payment? | Pay stubs, tax returns, bank statements |
| Debt-to-income ratio | How much of your income already goes to debt? | Your reports plus stated income |
| Identity and residency | Are you who you say you are, and do we lend where you live? | ID, Social Security number, address |
| Collateral (secured loans only) | What backs the loan if payments stop? | Savings, a vehicle or other assets |
| Watch out for | Any lender that says none of this matters and approval is guaranteed | Ads, texts and unsolicited calls |
Credit history and scores
Your credit reports show how you’ve handled accounts in the past: payment history, balances, how long accounts have been open, recent applications and any collections or bankruptcies. Many lenders also use a credit score, though which scoring model and what minimum they use is their own decision.
You’ll see figures quoted around the web as “the minimum score for a personal loan.” We don’t repeat them because there isn’t one. Lenders that publish a minimum put it on their own sites, and those figures can change. If a specific lender’s threshold matters to you, its eligibility page is the place to check.
Before applying, it helps to know what’s on your reports. The FTC says you can check your report from each nationwide bureau “once a week for free” at AnnualCreditReport.com (FTC).
Income and employment
A lender wants to see income that can carry the new payment. That doesn’t have to mean a salaried job. Under Regulation B, a lender can’t discount or exclude income because it comes from part-time work or from an annuity, pension or other retirement benefit. If you rely on alimony, child support or separate maintenance, the lender must count it as income “to the extent that they are likely to be consistently made” (12 CFR 1002.6). Lenders can still consider how much income you have and how likely it is to continue.
Self-employed applicants usually need more paperwork, such as tax returns or bank statements covering a longer stretch.
Debt-to-income ratio
The CFPB defines debt-to-income ratio as “all your monthly debt payments divided by your gross monthly income,” and notes that “different loan products and lenders will have different DTI limits” (CFPB). A lower ratio suggests more room in your budget for a new payment. Our debt-to-income ratio guide walks through the math.
Identity, age and where you live
Expect to verify your identity with a government ID and your Social Security number (some lenders accept other taxpayer IDs; their pages will say). You also need to be old enough to sign a binding contract where you live, and the lender has to be able to lend in your state. Not every lender operates in every state.
Most lenders will also want a bank account for depositing the loan and taking payments.
Collateral, for secured loans
If you apply for a secured personal loan, the lender also looks at what you’re pledging, such as money in a savings account or certificate. Pledged collateral can make approval easier, because the lender has something to fall back on. It also means you can lose that asset if you can’t pay. We compare the two types in secured vs unsecured loans.
What lenders aren’t allowed to use
The Equal Credit Opportunity Act, through Regulation B, lists “prohibited bases” that lenders can’t use against you: race, color, religion, national origin, sex, marital status, age (as long as you can legally sign a contract), the fact that some or all of your income comes from public assistance, and the fact that you’ve exercised your rights under consumer credit protection law in good faith (12 CFR 1002.2).
If you’re denied, a lender generally has to tell you within 30 days of a completed application and either give specific reasons or tell you how to get them (12 CFR 1002.9).
If your application is borderline
A few changes can shift how a lender sees the same person:
- A smaller amount. A lower loan means a lower payment and a lower DTI after the loan.
- Lower card balances. Paying cards down before applying reduces both your DTI and the share of your limits in use.
- Time. Recent late payments and applications weigh more than old ones. myFICO says hard inquiries count toward FICO Scores for one year (myFICO).
- A co-applicant. Some lenders consider a second applicant’s income and credit. That person takes on real responsibility for the debt.
- A different kind of lender. A credit union you already belong to may look at your account history with them.
Your plan
- Pull your reports. Fix errors before a lender sees them.
- Total your monthly debt payments and calculate your DTI.
- Collect income documents: recent pay stubs, last year’s tax return, or bank statements if you’re self-employed.
- Read each lender’s eligibility page. Note any published minimums, state availability and whether a co-applicant is allowed.
- Prequalify where possible. That usually uses a soft inquiry, which the CFPB says doesn’t affect your credit scores (CFPB).
- If you’re denied, read the reasons. They point to what to change before trying again.
When you’re ready, our step-by-step guide covers the application itself, and how personal loans work explains what you’ll pay once approved.
This page explains how lenders generally evaluate applications. It isn’t a prediction of whether any lender will approve you, and it isn’t advice on whether to borrow.