Over 27 million Americans have taken out some kind of personal loan.

As long as you know what you’re doing and are able to pay the loan back, getting a personal loan isn’t a bad thing. In fact, it can be extremely helpful when you’re going through difficult financial times.

But before you can get a personal loan, you have to qualify.

How?

We’ll show you.

Keep reading below to learn more about personal loans, the common personal loan requirements, and how to apply.

What Is a Personal Loan?

A personal loan is a lump sum of money you can use for personal use. This amount can be as low as $2,000 or as high as $100,000 (although most loans don’t get that high). It all depends on the lender you borrow from.

You’ll have a set amount of time to pay this lump sum back by making fixed, monthly payments. Again, the exact amount of time depends on your lender. In some cases, you can have as long as 84 months to pay back a personal loan.

A personal loan isn’t a secured loan. That means you don’t need any collateral to get one of these loans.

All you have to do is qualify.

Most Common Personal Loan Requirements

So how do you know if you qualify?

Different lenders might look at different requirements. But in general, to get a personal loan, a lender will look at these three factors.

What Is Your Credit Score?

This is the most important part of the qualification process, so it’s what many lenders will look at first. They will use your current credit score to decide how creditworthy you are.

In other words, if you have a low credit score, lenders might consider you a risky applicant. This doesn’t mean you won’t be able to get a personal loan, but it does mean you’ll have to deal with much higher interest rates.

To get the best terms and rates, you’re credit score has to be high.

If you don’t have a good credit score, you may be able to have someone else cosign for you to lower the interest rate. This is always a preferable option to heaps of interest.

What Does Your Payment History Look Like?

Your payment history plays a big part in your credit score, which is why lenders review this as well.

Lenders want to make sure you’ll make the monthly payments in time. If you have a lot of late payments in your history, they may not find that very reassuring.

But if you have a good record of making payments on time, there’s a good chance a lender will approve you for a personal loan.

What Type of Income Do You Have?

Lenders want to know you’ll have the money to pay them back. So before they give you a personal loan, they’ll check your income to make sure.

A lender might also ask you how much money you want to borrow and how long you want your term to be.

Why?

Shorter personal loan terms mean you have to make higher monthly payments. Your income must be able to cover both the payments and the added interest rate.

They might also look at how much debt you have. Debt tends to equal payments, so they’ll want to make sure you can still pay for the personal loan on top of any other debt. If you have creditos con ASNEF, things might not look good for you.

If your current income can cover all your other expenses and the personal loan monthly payments, you might be a good candidate for a personal loan.

How to Apply for a Personal Loan

Now that you know what requirements lenders look for in personal loan candidates, you can decide if applying for one is a good option for you.

We’ll walk you through the application process step by step below.

But first, you have to ask yourself an important question.

Do You Really Need a Personal Loan?

Just because you can afford a personal loan doesn’t mean you should get one. Before you apply for any type of loan, you should always take a moment to think about why you want it.

You shouldn’t use a personal loan to make up for ongoing shortcomings. If you do, you’ll never have enough money to make up for what you need. And you’ll find yourself getting stuck in more and more debt.

Instead, try to only get a personal loan if you have a medical or financial emergency, need extra money to pay off debt or medical bills, or to help cover special one-time expenses (like a wedding or a funeral).

Step 1: Check Your Credit Score and Report

Before you apply for a personal loan, start by checking your credit score. Remember, this is the first thing lenders will look at too.

If you don’t have a good credit score, you might want to spend some time improving it before you get a personal loan.

Step 2: Find Lenders

Does your credit score look good? Then work on finding some lenders. A quick internet search should give you plenty of options.

Step 3: Get Prequalified

Once you find a few lenders, you can enter some basic information about yourself on their websites. This will tell you what kind of loans you can apply for.

You can also visit a bank branch in person to apply for personal loans.

Step 4: Compare Quotes

Spend some time comparing different lender quotes to each other and find the one that works best for your needs.

Don’t forget to read the fine print!

You don’t want to miss something important. If you do, you might end up spending more money in the long run than you expected.

Step 5: Get the Right Paperwork

When you find a lender you like, get all your necessary paperwork together so you can apply for your loan. This will include things like proof of employment, residence, income, etc.

What to Do if You Need Some Cash

If you’re in need of emergency cash to help you cover your expenses, you might want to consider a personal loan.

But before you do, it’s a good idea to know the most common personal loan requirements. Do you have a good credit score? Is your payment history clean? Can you cover the monthly payments?

If you answered yes to all those questions, you’re likely in a good spot to get a personal loan.

Not sure you’ll qualify for a personal loan?

Click here to learn five ways you can improve your chance of securing a loan!