How To Apply For A Personal Loan

Personal loans are a great way to cover a big-ticket purchase or unexpected expense. If you have good credit, you may even receive a lower interest rate versus using a credit card. Applying for a personal loan is as simple as opening a bank account. Here’s how to do it.

Check Your Credit Score

The first step is finding out your credit score since it will determine your likelihood of approval, interest rate, and other conditions. You can order your credit report for free from There, you can check your credit from all three major credit bureaus.

Lenders typically give the most competitive interest rates to those with good or excellent credit. If your rating could be better, take steps to improve it before taking out a personal loan.

Determine What You Need

Once you have your credit score, you will know if you have a better chance of getting a loan. The next step is calculating the amount of money you can safely borrow. While lenders may extend offers for larger loans, you should only take what you know you can pay back. The trick is to avoid taking on more debt than necessary. 

As you decide how much you need to borrow, you also want to consider how much you can afford to repay every month. Assess your finances before applying for a loan. Check your budget, income sources, and be practical about the future of your financial health and how your credit score can add to the expense of a personal loan. 

Understand Your Rights As A Consumer

The Truth In Lending Act protects your rights as a consumer when you get a personal loan. It mandates lenders to inform you about any fees, penalties, the APR, complete loan payment, etc. If a lender is reluctant to pass this information along, find a new one. There are plenty of other financial institutions to choose from that are willing to protect your rights.

Collect What You Need To Begin The Application Process

Besides running a credit check on you, a lender may request other information related to your finances, such as your income and debt-to-income ratio. Other information lenders typically require on personal loan applications include:


  • Your Social Security number
  • Monthly debt payments, such as your mortgage
  • Whether you are a homeowner or renter
  • Your employer and duration of employment


When you have this information with you ahead of time — whether you’re applying online or in-person — the process will move along much more smoothly and quickly. 

If your credit is less than ideal, but you still need a personal loan, consider asking someone to co-sign for you. 

Do Your Homework To Find The Best Option For You

Researching the range of personal loans available is important because it helps protect your credit. When you submit a loan application, the lender performs a hard inquiry, which can hurt your score a bit. Before applying anywhere, do your due diligence to ensure you understand the various terms and conditions for different loans.

Additionally, check if the potential lender imposes a threshold for a particular credit score. You can call and ask or check the website to see if it’s posted online. You are more likely to receive approval if you apply for a loan at the financial institution you currently bank with.

Here are a few factors to consider as you look for a personal loan that is the best suited for your needs:


  • The size of the loan, APR, monthly minimums, and the term
  • Penalties and other charges, such as origination fees, late fees, early payment charges, and hidden dues
  • Whether the interest is fixed, variable, precomputed, or simple
  • If the loan is secured or unsecured


Consider hiring a financial advisor to discuss the fine print. This way, you can empower yourself with the information to help you find the best loan for you. 

Apply For The Personal Loan

Once you compare offers and pick the right loan, it’s time to start the application process. When you apply, try to do it in a quiet area free from distractions. Small errors and even typos can have a negative effect on your chances of approval, so you want to do everything you can to avoid those. If you apply online, you can find out whether the lender approved you in less than a day or two. 


  • Lazarony, Lucy. “How to Apply for a Personal Loan: Step-by-Step Guide.”, 22 May 2020,