How to Get a Personal Loan: A Step-by-Step Guide

Whether you need to consolidate high-interest credit card debt, cover an unexpected expense or finance a big home project, a personal loan can put a lump sum of money in your account at a fixed rate. The process can be straightforward, but getting the best terms takes a little prep work.

Most lenders look at the same core factors: your credit score, your income, how much debt you’re already carrying and what you need the money for. The good news is that if your score is in decent shape, you have real options. And if it’s not quite where you’d like it to be, there are steps you can take before applying that can improve both your approval odds and your rate.

This guide covers everything from the requirements lenders check to next steps to take if you get a loan to what to do if you’re denied.

Are You Ready to Apply? What Lenders Look For

Before you shop for rates, it helps to know where you stand. Lenders evaluate a few key factors when deciding whether to approve you and what rate to offer. Here’s what they’re looking at:

Credit Score

Most lenders require a minimum score of 580 to 660 to qualify. You’ll access more competitive rates at 670 and above, and the best rates typically go to borrowers at 740 or higher. The average FICO score is 714, according to FICO’s Spring 2026 Credit Insights report — meaning most borrowers are in or near the “good” range. LendingTree’s marketplace data shows the average credit score among borrowers who received at least one personal loan offer in 2025 was 653.

Credit Score	Range	Typical APR Estimate	Best Lender Type
Poor	Below 580	~25–36%+	Specialized online lenders; limited options
Fair	580–669	~18–25%	Online lenders and credit unions
Good	670–739	~10–18%	Banks, credit unions and online lenders
Very Good	740–799	~7–12%	All lender types; competitive rates
Exceptional	800 and above	~6–9%	Any lender; best rates available

APR ranges are estimates only. Your actual rate depends on the lender, loan amount, term and your full financial profile. Verify rates directly with lenders.

Debt-to-Income Ratio

Your debt-to-income ratio measures the share of your gross monthly income already going toward debt payments. Most lenders prefer a ratio below 36%, though some will approve borrowers up to 50%. But expect higher rates.

To calculate yours: add up all your monthly debt payments (minimum credit card payments, car loans, student loans, etc.) and divide by your gross monthly income, then multiply by 100. If the result is above 40%, paying down one or two balances before applying can improve your approval odds.

Income and Employment

Lenders want to see stable, documented income. Most prefer at least two years of consistent employment history. Self-employed borrowers can typically qualify but should be prepared to provide additional documentation. Things like 1099s, two years of tax returns and profit-and-loss statements are common requests.

Income minimums vary by lender. Some set a specific floor while others assess income in relation to the loan amount and your existing debt load. For example, Discover sets an income minimum of $25,000 for an individual or household. 

Required Documents

Gather these documents before you start shopping. Having them ready can speed up your approval and funding by a full business day or more:

• Government-issued photo ID (driver’s license or passport)
• Social Security number
• Proof of address (recent utility bill or bank statement)
• Proof of income (recent pay stubs, W-2 forms or, for the self-employed, tax returns)

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Where to Get a Personal Loan

You have three main options: online lenders, banks and credit unions. Each has trade-offs depending on your credit profile, how quickly you need the money and how much you want to borrow.

Online Lenders

Online lenders are generally the most accessible and the fastest. Many serve borrowers with fair credit (580 and above), and some use non-credit factors like income and employment history to evaluate applicants with thin credit files. Funding may come through within one business day of approval.

The trade-off: origination fees are common, typically 1–8% of the loan amount, deducted from your disbursement. Compare the APR — not just the interest rate — to account for these fees. 

Best for: borrowers who need funds quickly or have fair-to-good credit.

Banks

Traditional banks tend to offer lower rates to existing customers with strong credit (670+), and some allow you to start the process entirely online. The approval and funding timeline may be slower — typically one to five business days. Banks usually have stricter credit requirements than online lenders and may require an in-person visit at some institutions.

Best for: borrowers with excellent credit who want a large loan and have an existing relationship with their bank.

Credit Unions

Credit unions are member-owned nonprofits, which means they typically offer lower rates than banks and online lenders for the same credit profile. They’re also more likely to consider your full financial picture rather than relying solely on your credit score. You must become a member before applying, but membership is usually quick and easy, often requiring just a small deposit.

Best for: rate-conscious borrowers who can take a day or two to establish membership before applying.

	Online Lenders	Banks	Credit Unions
Funding Speed	Same-day to next business day	1–5 business days	1–3 business days
Min. Credit Score	Often 580 or lower	Usually 670+	Flexible; varies by institution
Origination Fees	Common (1%–8%)	Less common	Rare
Apply Online?	Yes	Often yes; may require branch	Often yes; membership required
Best For	Fast funding, all credit types	Large amounts, strong credit	Rate-conscious borrowers

How to Get a Personal Loan: Step by Step

Once you know where you stand and which lender type fits your situation, here’s the full process from start to funded.

Step 1: Check Your Credit Score and Report

Pull your free credit reports at AnnualCreditReport.com before doing anything else. All three bureaus — Experian, Equifax and TransUnion — are included. Look for accounts that aren’t yours, balances listed incorrectly or late payments that were actually on time. A single error can drag your score down significantly, and disputing errors is free. Correction typically takes 30 to 45 days, so doing this before you need the loan gives you the best chance to benefit from any changes.

Use the score to calibrate your expectations. If you’re at 620, you can qualify — but your rate will reflect that. If you’re at 680, you’re in a stronger position.

Step 2: Decide How Much to Borrow

Borrow only what you actually need. Overborrowing raises your monthly payment and the total interest you’ll pay over the life of the loan. And don’t forget origination fees: if a lender charges a 5% origination fee on a $10,000 loan, you’ll receive $9,500 but owe $10,000. If you need the full $10,000 in hand, borrow enough to account for a 5% fee.

Step 3: Calculate What You Can Afford

Use a personal loan calculator to estimate your monthly payment before committing to a loan amount. The key question: does this payment fit your budget without pushing your debt-to-income ratio above 36%? A loan that technically gets approved but stretches your monthly cash flow thin isn’t a good outcome.

Play with different loan terms in the calculator. A 36-month term means a higher monthly payment but less total interest paid. A 60-month term lowers the payment but costs more overall. Pick the shortest term your budget can comfortably support. 

Step 4: Compare Lenders

You can use marketplaces like AmOne for this step. Get quotes from at least three lenders before picking one. Look for a bank, a credit union and an online lender in your comparison set — rates can vary substantially across lender types even for the same credit profile.

When comparing offers, focus on the APR (which includes fees), not just the stated interest rate. Also check the origination fee, the loan term, whether there’s a prepayment penalty and how fast the lender typically funds.

Step 5: Get Prequalified

Prequalification uses a soft credit inquiry, so it doesn’t affect your score. You’ll see estimated APRs, loan amounts and terms before you commit to anything. This is the comparison-shopping stage, and it’s important. Don’t skip it to save time. A difference of even 2 to 3 percentage points in APR can add hundreds of dollars in interest on a $10,000 loan over three years.

It’s a good idea to get prequalified with multiple lenders before formally applying anywhere.

Step 6: Gather Your Documents

Once you’ve identified the lender you want to apply with, gather everything before starting the formal application. Get your photo ID, Social Security number, proof of address and proof of income. If you’re applying online, have digital copies (PDFs or high-quality JPEGs) of any paper documents ready to upload. Having everything organized before you start can cut your funding time by a day or more.

Step 7: Submit Your Application

The formal application triggers a hard credit inquiry, which typically causes a small, temporary drop in your score — usually fewer than five points and only lasting about a year. If you’re applying with a cosigner, both parties will need to provide documentation and agree to the hard pull.

Most online lenders return a decision within minutes to a few hours. Banks and credit unions may take one to two business days.

Step 8: Review the Offer and Accept

Read the full loan agreement before signing. Confirm the APR, the monthly payment, the total cost over the life of the loan, all fees and whether there’s a prepayment penalty. If the terms differ from what you saw during prequalification — or if the rate is higher than expected — you’re not obligated to accept. Your prequalification gave you alternatives, and you can still apply with another lender.

This step is worth taking slowly. A loan you accept and later regret is harder to fix than one you declined.

Step 9: Get Funded

After signing, most online lenders deposit funds directly into your bank account within one to three business days. Some offer same-day or next-business-day funding, particularly if your verification documents were submitted and approved quickly. Banks and credit unions typically take one to five business days from signing to disbursement.

Tips to Improve Your Approval Odds

If you’re concerned about qualifying or want to improve the rate you’re offered, these steps can help:

• Improve your credit score before applying. Even a 20 to 30 point increase can move you into a better rate tier. Pay down revolving balances, dispute errors and avoid opening new credit accounts for at least a few months before applying.
• Lower your debt-to-income ratio. Pay off or pay down one or two existing balances before applying, especially small loans you’re close to finishing.
• Apply to lenders that match your credit profile. Prequalify first so you’re not guessing. Applying for a loan you won’t qualify for adds a hard inquiry without any benefit.
• Consider adding a cosigner. A cosigner with stronger credit can significantly improve your odds of approval and your offered rate. Both parties need to understand that the cosigner is legally responsible for the debt if you don’t pay.
• Don’t apply for multiple loans at the same time. Multiple hard credit pulls in a short window signal financial stress to lenders. Pick the best one or two options after prequalifying and apply to those specifically.

What to Do If You’re Denied

A denial isn’t the end — but applying again immediately usually isn’t the right move. Most lenders are required to send you an adverse action notice explaining why you were declined. Read it carefully; this is your roadmap.

Common denial reasons and what to do about each:

Debt-to-income ratio too high: Pay off one or two existing debts before applying again. Even eliminating one small balance can shift your ratio enough to qualify.

Credit score below minimum: Don’t reapply with the same lender until your score improves. Dispute any errors on your credit report, pay down revolving balances and check back in three to six months.

Income too low or unverifiable: Consider applying for a lower amount, or add a cosigner with a stable income. Self-employed borrowers may need to provide more documentation to verify income.

FAQs About Getting a Personal Loan