Understand requirements and how they affect approval
Lenders typically consider several factors when evaluating your loan application, including:
Creditworthiness
Your creditworthiness is a key factor in determining your eligibility for a personal loan. Stronger credit may lead to a lower interest rate.
You can request a copy of your credit report for free every year, and the 3 major credit bureaus are currently offering free weekly reports. You may consider regularly checking your credit report so you know where you stand and can address any issues that might hurt your chances of approval.
Debt-to-income ratio
Lenders typically prefer borrowers with a lower debt-to-income (DTI) ratio. Your DTI ratio is the percentage of your gross monthly income that goes toward debt payments. A lower DTI can indicate to lenders that you can manage your loan payments responsibly.
Age
Personal loans typically come with age requirements. For example, Citi’s personal loans require most applicants to be 18 years of age and older.
Income
Lenders also consider your income. A stable and sufficient income may reassure lenders that you can repay the loan. Lenders may also have minimum income requirements, so it’s important to include all sources of income, such as alimony or child support.
Decide which loan you’ll apply for
Once you’ve settled on an amount, it’s time to research lenders. Some factors you may consider include:
- Lender reputation: Reading lender reviews can help you understand if you want to work with a given lender.
- Funding time: Some lenders may offer more convenient funding times once you’re approved.
- Rates and fees: Each lender has its own annual percentage rate (APR) ranges and fees associated with borrowing.
Fill out the application
Filling out a personal loan application is generally a straightforward process, and many lenders (including Citi) offer online applications. Here’s what you typically need:
- Basic personal information: Name, address, date of birth and Social Security number
- Proof of identity: Government-issued ID, such as a driver’s license or passport
- Proof of income and employment status: Recent pay stubs, tax returns or bank statements
Once you submit your application, the lender will perform a hard credit inquiry. Unlike a soft inquiry, a hard credit inquiry can temporarily impact your credit score.
What happens if you’re approved for a personal loan
It depends on the lender and how you opt to receive your loan funds. For example, if your Citi® Personal Loan application is approved, you typically receive the funds in a lump sum via direct deposit or a check.
Then, you’ll make your monthly payments according to the loan terms. Typically, that amount is the same over the life of the loan because personal loans often have fixed interest rates. Making your payments on time can help you avoid penalties and potential damage to your creditworthiness.
Citi offers unsecured, fee-free personal loans to qualified applicants. If you think you could benefit from a Citi Personal Loan, apply online today.
How to help improve your personal loan approval odds
If you’re having trouble qualifying for a personal loan or you’re worried about qualifying, there are steps you can take to help improve your approval odds:
- Pay down credit card debt: Your credit utilization, which compares your revolving credit debt to your total credit, is one key factor that impacts your credit score. The lower your credit utilization, the better it tends to be for your credit score.
- Sign up for autopay: Your payment history is another key factor that impacts your credit score. Using autopay may help you keep an on-time payment streak over time.
- Use pre-qualification: If available, personal loan pre-qualification can help you understand if you’re likely to qualify for a given personal loan, and what your terms might look like. That way, you may compare your options without harming your credit.
It can take time to improve your credit. But with patience and dedication, you may put yourself in a better position to take out a personal loan.
This article is for general educational purposes. It is not intended to provide financial advice. It also is not intended to describe any Citi product or service. You should refer to the terms and conditions financial institutions provide for various products.
