Compare Personal Loans（2）
What do I need to get started?
Before diving into selecting a personal loan lending partner, it’s important to understand what you’ll need so you’re fully prepared. Let’s take a look:
Credit score
When applying for a personal loan, your credit score and credit history is everything. You will need to know where your credit score falls in the typical ranges (below), and generally what your credit report looks like. This, among a few other factors like debt-to-income ratio and income, will determine what kind of rates and terms you’ll be getting from lenders. The higher your credit score, the better the terms will be.
Credit Score | Rating |
720 and up | Excellent credit score |
690 – 719 | Good credit score |
630 – 689 | Average credit score |
300 – 629 | Poor credit score |
While you can request a free credit report from any of the three major credit bureaus—Equifax, Experian, and TransUnion—they do not include your actual credit score in the report. You can, however, purchase your credit score from them. You can also check a previous loan statement, credit card, or financial institution to get your credit score.
Loan amount and loan purpose
One of the first things a lender will ask for is how much money you need in total, and what it will be for. This will help narrow your search since many lenders have a personal loan minimum and maximum amount you can apply for.
The purpose of the loan can be refinancing, a major purchase, and so on.
Repayment terms
Personal loans come with a set period of time in which you pay off the loan. This can range from 12 months to 60 months or longer. While longer repayment periods can ease the burden and lower the cost of your monthly payments, keep in mind that paying back your loan over a longer period of time means paying more in interest in the long-run.
Documents and details
We already reviewed some basic information you’ll need to have for the pre-qualification process, but there’s more you’ll want to have ready on hand when you submit your full application with a lending partner or marketplace.
Here is a list of the documents or information you will likely have to submit:
l Bank account information
l Bank statements
l Employment and income information (such as W2s)
l Personal Identification
l Collateral (for secured personal loans)
Calculate how much you can afford each month
When taking out a personal loan, one of the first things you’ll want to know is how much you can afford for your monthly payments. Luckily, many lenders and websites offer a monthly payment calculator that will let you see how the different terms can affect your monthly payment.
Typically you will need to enter things like your loan amount, the loan terms, interest rate, credit score, and income to get an idea of what your monthly payments will be.
