Getting a personal loan is harder or easier depending on your credit score, income, and the lender you choose
The short answer: if you have a credit score above 670, steady income, and debt you can reasonably repay, most lenders will work with you. If your score is lower or your income is unstable, you will face higher interest rates, smaller loan amounts, or outright rejection from traditional banks — but credit unions and online lenders often have different standards.
The approval process itself is not complicated. You fill out an process (online or in person), the lender pulls your credit report, verifies your income, and makes a decision within days or sometimes hours. What makes it "hard" is not the paperwork — it is whether the lender thinks you will pay them back.
Key Takeaways
- Banks and credit unions typically want a credit score of 620 or higher, though scores above 700 get better interest rates and larger loan amounts.
- You will need to show recent pay stubs or tax returns to prove your income, and lenders will check your debt-to-income ratio to see if you can afford the monthly payment.
- Online lenders and credit unions often have looser credit requirements than traditional banks, but charge higher interest rates to offset the risk.
- The entire process from process to funding usually takes three to seven business days, though some online lenders fund within 24 hours.
- Rejection is common if your credit score is below 580, you have recent late payments, or your debt payments already consume more than 40 to 50 percent of your monthly income.
What lenders actually look at when you explore
Every lender checks three things: your credit score, your income, and your existing debt. Your credit score is the fastest filter. Most banks will not consider you below 620; credit unions often go down to 580 or 600; online lenders may go lower but will charge you more. A score above 700 opens doors to better rates.
Your income has to be verifiable and stable. Lenders ask for recent pay stubs (usually the last two months), tax returns from the last one or two years, or bank statements showing regular deposits. Self-employed people and gig workers have a harder time because their income fluctuates — they may need to show two years of tax returns or bank records to prove an average monthly income.
Your debt-to-income ratio is the percentage of your monthly income that goes to debt payments. If you earn $3,000 a month and already pay $1,200 toward car loans, credit cards, and student loans, your ratio is 40 percent. Most lenders want this below 43 percent; some will go to 50 percent. If adding the new loan payment would push you over that threshold, you will be rejected or offered a smaller amount.
Why your credit score matters more than you might think
Your credit score is not just a number — it determines whether you get approved at all, and if you do, what interest rate you pay. A score of 750 might get you 6 percent interest; a score of 650 might get you 18 percent. Over a five-year loan, that difference costs thousands of dollars.
Lenders use your score to predict the risk that you will not pay them back. Late payments, high credit card balances, collections accounts, and recent hard inquiries all lower your score. If you have been rejected before, it was usually because your score was too low or your debt-to-income ratio was too high — not because the process itself was wrong.
The good news: if your score is between 580 and 620, you have options. Credit unions and online lenders often approve people in this range. You will pay more in interest, but you can still borrow money. If your score is below 580, a personal loan from a mainstream lender is unlikely; you might look at a credit-builder loan from a credit union instead, which is designed to help you rebuild credit while you borrow.
How the process and approval process works
You start by filling out an process — online, over the phone, or in person at a bank or credit union branch. You provide your name, address, Social Security number, employment information, and income. The lender then pulls your credit report from one or more of the three major credit bureaus (Equifax, Experian, or TransUnion). This is called a hard inquiry and it temporarily lowers your score by a few points.
Next, the lender verifies your income. They may ask you to upload pay stubs or tax returns, or they may contact your employer directly. Some online lenders use third-party verification services that check your information against IRS records or employment databases. This step usually takes one to three business days.
Once income is verified, the lender calculates your debt-to-income ratio and makes a decision. You will hear back within 24 hours to a few business days. If you are approved, you sign the loan agreement (which specifies the interest rate, monthly payment, and repayment term), and the lender deposits the money into your bank account. Funding can happen the same day or within a few business days, depending on the lender and your bank.
Differences between banks, credit unions, and online lenders
Traditional banks have the strictest credit requirements — usually 660 or higher — but offer the lowest interest rates if you may have access to. They move slowly (five to seven business days) and require you to come in person or handle everything online through their website. They are the cheapest option if you have good credit.
Credit unions are member-owned and often more flexible than banks. Many will approve people with scores as low as 580 or 600, and they consider factors beyond your credit score, like your relationship with the union or your employment history. Interest rates are usually lower than online lenders but higher than banks. The downside: you have to be a member, which sometimes requires opening a savings account or meeting other membership requirements.
Online lenders approve quickly (sometimes within hours) and have the loosest credit requirements — some will lend to people with scores below 580. The tradeoff is higher interest rates, sometimes much higher. They also charge more fees. Online lenders are useful if you need money fast or have poor credit, but they are expensive compared to banks or credit unions.
Common reasons for rejection and what to do about them
The most common reason for rejection is a credit score below 580. If this is your situation, wait a few months while you pay down credit card balances and make all payments on time. Each on-time payment raises your score. A credit-builder loan from a credit union can help you rebuild while you borrow.
The second most common reason is a debt-to-income ratio above 50 percent. If you are already paying most of your income toward existing debt, lenders see you as too risky. Your options are to pay down existing debt before explore, or to look for a smaller loan amount that would not push you over the threshold.
Recent late payments (within the last six months) are a red flag. If you have one, explain it in writing when you explore — lenders sometimes overlook a single late payment if you have a good reason and a clean history otherwise. Multiple late payments or a collections account make approval much harder.
Unstable income is harder to overcome quickly. If you are self-employed or work on commission, show two years of tax returns to prove your average income. If you recently changed jobs, some lenders will not approve you until you have been at the new job for at least three to six months.
What happens if you are rejected
If a lender rejects you, they must send you a written notice explaining why, and they must tell you which credit bureau they used. You have the right to request a free copy of your credit report from that bureau within 60 days. Check it for errors — mistakes happen, and if you find one, you can dispute it and potentially raise your score.
Do not explore to multiple lenders at once. Each process triggers a hard inquiry, and multiple inquiries in a short time lower your score and make you look desperate to lenders. Wait at least a few weeks between applications.
If you are rejected by banks and credit unions, an online lender may still approve you, but read the terms carefully. Some online lenders charge 30 percent interest or higher, and some have hidden fees. Make sure the monthly payment fits your budget before you sign.
How to improve your chances before you explore
If you know your credit score is low, spend two to three months improving it before you explore. Pay down credit card balances (aim to use less than 30 percent of your available credit), make all payments on time, and do not open new credit accounts. Each on-time payment raises your score.
If your debt-to-income ratio is too high, pay down existing debt before explore. Even paying off one credit card or car loan can lower your ratio enough to get approved. Alternatively, wait until your income increases — a raise or a second job will improve your ratio without requiring you to pay down debt.
If you have been rejected before, ask the lender why. If it was your credit score, focus on rebuilding. If it was your debt-to-income ratio, focus on paying down debt or increasing income. If it was unstable income, wait until you have been at your current job for at least six months.
Frequently Asked Questions
Can I get a personal loan with a credit score below 600?
Yes, but your options are limited and expensive. Credit unions sometimes approve scores as low as 580 or 600, and online lenders will go lower. You will pay significantly higher interest rates — sometimes 25 to 36 percent or more. A credit-builder loan from a credit union is often a better choice if you are rebuilding credit.
How long does it take to get approved and funded?
Online lenders can approve and fund within 24 hours. Banks and credit unions typically take three to seven business days. The slowest part is usually income verification, which can take several days if your employer is slow to respond or if you are self-employed.
Will explore for a personal loan hurt my credit score?
Yes, but only temporarily. The hard inquiry lowers your score by a few points, and the impact fades over time. Multiple applications in a short period hurt more than a single process. Once you have the loan, making on-time payments will raise your score over time.
What if I do not have recent pay stubs because I am self-employed?
Provide two years of tax returns and recent bank statements showing regular income deposits. Some lenders will also accept profit-and-loss statements or accountant letters. Online lenders and credit unions are often more flexible with self-employed applicants than traditional banks.
Can I get a personal loan if I have a collections account?
It is much harder, but not impossible. A collections account is a serious red flag. Some credit unions and online lenders will still consider you, especially if the collection is old (more than two years) or if you have paid it off. You will pay a higher interest rate and may be offered a smaller loan amount.