Personal Loan Requirements: What to Know Before You Apply

To qualify for an unsecured installment loan like a personal loan, you need to meet a few requirements. These can vary by lender, but they usually involve your credit score, credit history, debt-to-income ratio, age and emplyment status. You may also need to submit certain documents.

Let’s explore these requirements and the personal loan application process.

Key personal loan requirements

These are some of the categories a lender will assess when considering your personal loan application.

Credit Score

Lenders consider your credit score whenever they decide to approve you for a personal loan. While criteria for credit score may vary by lender, they typically involve factors such as repayment history, credit utilization, average age of accounts and credit mix.

A positive credit score can signal to lenders that you’re a reliable borrower. Lenders want to know that you can repay a loan and make on-time monthly payments. A history of well-managed debt– such as credit cards and student loans – can demonstrate that you’re a responsible borrower.

If approved, the interest rate you receive can also depend on your credit score. A higher credit score can mean you’re more likely to get a lower interest rate.

Debt-to-income ratio

Lenders may also look at your debt-to-income ratio (DTI) when you apply for a personal loan. Your DTI is the percentage of your gross monthly income that goes toward debt payments. Lenders use this number to evaluate your ability to comfortably afford new loan payments and decide whether you can take on more debt. As with credit score and credit history, lenders may use an applicant’s DTI to assess the likelihood they’ll repay the loan.

Employment Status

Lenders want to know if you have a stable cash flow and enough money to cover monthly payments. For this reason, they may have minimum income requirements. When applying for a loan, you may need to attach proof of employment or income, such as a W-2 or paystubs. For individuals with non-traditional income sources, such as freelancers or self-employed individuals, providing additional documentation like tax returns or bank statements may be necessary to demonstrate their financial ability.

Age

Personal loans typically have a minimum age requirement. Confirm this requirement with your lender before applying.

Documents to gather

Lenders may request you attach certain documents to your personal loan application to verify information, such as your income and identity. These documents may include:

• Proof of identity: Lenders need to confirm your identity and that you meet the age requirement. Acceptable proof of identification documents can include your passport, driver’s license, military ID or state ID.
• Proof of address: You can usually use a proof of identity document as proof of address if it shows your current address. Proof of address can also include a utility bill or a lease agreement.
• Proof of income and employment status: This depends on your employment status – whether you’re employed, self-employed or a freelancer. However, it typically involves providing recent pay stubs, a W-2 form, tax returns, and bank statements.

Applying for a personal loan

Before starting your application, research and compare individual lenders’ requirements so you can find the best fit for you and your current finances.

Once you’ve chosen a lender, the next step is filling out the application. You can usually complete the application online or in person. Make sure you’ve filled it out completely and accurately, and ensure you have all the necessary documentation ready.

Once you submit your application, you’ll typically hear back from the lender relatively quickly and, if approved, receive your funds soon after that. Citi customers with a Citi deposit account can receive their funds via direct deposit the same day. Applicants with non-Citi accounts can receive funds within two business days.¹ Or you can select to receive a check by mail in approximately 5 business days.

Improving your chances of being approved for a personal loan

There are a few things you can do to improve your chances of being approved:

• Review your credit report for mistakes: Errors may lower your credit score and hurt your ability to get a loan.
• Improve your credit: Pay off your debts and always make debt payments on time and in full.
• Increase your income: Lenders like to see that you have stable employment.
• Consider how much you want to borrow: Make sure that, whatever the amount, you know you can make payments in full and on time.

Citi offers personal loans to both existing Citi customers and new Citi customers that meet specific eligibility criteria, including an established credit and income history along with additional factors determined by Citi. If you think you could benefit from a Citi Personal Loan, apply online today.

This article is for general educational purposes. It is not intended to provide financial or tax 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. Please consult your tax advisor with any tax questions. Citi is not a tax advisor.

¹If you are approved for a personal loan with Citi, you can get your funds the same day with a Citi deposit account, or up to 2 business days for a non-Citi account when using direct deposit. Or, you can select to receive a check by mail in approximately 5 business days.