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How to Get a Personal Loan from a Bank: 7 Steps to Qualify

A personal loan can provide a much-needed financial boost that lets you do something you’ve always wanted—pay for a wedding, remodel your kitchen, or even consolidate your debt. If you do it right, it can help you accomplish goals you couldn’t achieve otherwise without years of saving. 

But banks don’t lend to just anyone. They have to be sure you can pay the loan back—and the more confident they are, the lower your interest rate will be. Here’s a look at how you can stack the decks to improve your eligibility for a personal loan.


1. Gauge your eligibility by finding out your credit score

Knowledge is power, right? Before you start this process, find out your credit score.

Most lenders won’t disclose what score they want to see when doling out personal loans, but know that the higher your score, the better your chances are for loan approval and a great interest rate.

Credit scores are calculated along a range between 300 and 850. Most people’s scores fall within the 600-750 range. A credit score of 700 or above is good, and 800 or above is great.

You can get your credit report for free through AnnualCreditReport.com, the only site authorized by the Federal Trade Commission. You’re also entitled to one free report a year from the three reporting bureaus: TransUnion, Equifax, and Experian. 

2. Fix any mistakes on your credit report

Knowing your credit score is a great start. But you should also take a closer look at that report—and fix any mistakes.

Mistakes on credit reports aren’t as rare as they should be—and they can affect your credit. Review your credit report and dispute any errors by submitting a written request to the reporting company. That could measurably improve your credit score.

3. Pay down credit card debt

Having high credit card debt can hurt your credit score in several ways.

First, credit card debt is more harmful to your score than other debt. The less of it you have as a whole, the better your score.

Second, your credit score is heavily affected by your credit utilization ratio: the amount of credit card debt you have vs. the total limit on your cards. About a third of your credit score is impacted by this number. Even reducing your debt should give your score a boost, possibly within a few months. If you can, make paying off credit cards a priority. 

Looking for a personal loan? Check out our top pick for 2019. Check Rate

4. Make regular payments on your debt

Another thing that improves your credit score is making regular payments on your debt.

If you’re having difficulty making regular payments on your existing debt, now is the time to rethink things. For example, if you're struggling with student loans, it may be worth checking with your lender to see if there are options for lowering your monthly payments. Most federal student loans are eligible for payment programs that can reduce your monthly amount due.

See our current picks for the best deals in personal loans

5. Demonstrate your income

Your credit score isn’t the only thing lenders look at when they consider whether to lend to you. Another factor is your income.

Lenders want to see that your income is healthy enough to afford your monthly payments. If you’re currently unemployed or underemployed, you may want to make improving your job situation a priority before applying for a loan. And remember: side hustles count, too, as long as you can provide a paper trail. 

6. Get a cosigner with great credit

Want a fast way to improve your eligibility for a personal loan? Bring in a cosigner with a high credit score.

A cosigner is someone who agrees to take responsibility for your loan if you can’t pay, so yes, it's a big ask. But if there’s someone in your life who’s willing to go to bat for you (and who has a high score), this can improve your eligibility quickly.

7. Shop around for the best rates and terms

Once you’re ready to apply, don’t just accept the first offer that comes your way.

Look for a bank that offers the lowest interest rate, the fewest fees, and the best payment terms and perks. For instance, we like Citizens Bank because is has no origination fees, prepayment penalties, or check processing fees. Citizens Bank will also let you apply online in minutes. Like most banks, it does a “soft pull” on your credit to make an initial offer, but this won’t impact your credit score.

Best of luck!

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