While your credit history plays an important role in getting approved for a personal loan, it’s not the only aspect lenders consider. In fact, many online providers are moving away from looking at your credit in favour of other factors, such as education and employment. With some lenders, your occupation and your work history can potentially disqualify you.
While not all lenders look at every single one of these factors, many consider at least one of them, especially income.
1. How much you earn
Your income is one of the most important factors in any loan application — even payday loans. It’s standard practice for lenders to ask for proof of income when you apply in order to verify your ability to pay when you take out a loan.
How much you earn actually affects 2 parts of your application: your monthly pretax income and your debt-to-income ratio. Generally, you must have a high enough income to afford the monthly cost of the loan you apply for. But even if you meet your lender’s minimum income requirements, you could be disqualified if your recurring monthly bills add up to more than 43% of your income.
2. How many hours you work
Some lenders require you to work a certain number of hours to qualify for a loan — typically around 30. Others might only offer funding to borrowers with full-time jobs. Generally, the more hours you work, the more likely you are to get approved for a personal loan.
Others have a difficult time evaluating your income, especially if you don’t have pay stubs. If you receive pay in an unconventional manner, it might take a little bit longer for lenders to process your application — especially if they rely on an algorithm. You also might have to submit additional documents, such as recent bank statements and tax returns.
4. Your employment history
How long you’ve been in the work force is another factor that can affect your application — as well as the types of jobs you’ve had in the past. Some might require you to be at your current job for at least a year or 2. Others might only work with applicants who have worked in the same industry for a certain amount of time.
Often, these lenders will ask you to provide information about your work history in the application. For example, you may be asked to provide information about the employers you’ve had for the past 5 years.
5. Your occupation
While it’s uncommon for lenders to list certain industries as ineligible for a personal loan, what you do for a living can affect your eligibility. That’s because some occupations have a higher rate of default than others. Low-paying jobs and jobs with a high turnover rate often fall into this category.
6. Prospective jobs
Some lenders also count a job on the horizon in your favor when you apply for a loan. Typically, you need to sign the contract and have a start date before you can put it on your application. Others might require you to start within a certain time frame such as 90 days.
You live off a pension. If you’re retired, some lenders count your pension as income and will offer a loan.
You depend on your spouse. Lenders will sometimes consider household income rather than personal income when you apply for a loan.
You receive government assistance. Some lenders are willing to consider disability or other types of government benefits as income if you apply for a loan — especially short-term loan providers.
You get alimony or child support. If you receive enough from a former partner to afford your repayments, you could qualify for a loan based on this income alone.
6 more factors lenders consider
While work and income are two important aspects lenders consider when you apply for a loan, they aren’t the only ones. Here are some other factors that could affect your application:
Credit score and history. Most lenders have a minimum credit score — even if they don’t advertise it. Others might require you to have a credit history of at least 3 years to qualify.
Monthly expenses. Having high income might not be enough if your monthly bills clock in at over 43% of what you bring home.
Age. The legal age to borrow is either 18 or 19 across Canadian provinces and territories. It’s 18 in Alberta, Manitoba, Ontario, P.E.I., Quebec and Saskatchewan. However, it’s 19 in BC, New Brunswick, Newfoundland, Yukon, Northwest Territories and Nunuvut.
Legal status. Most loans are only available to Canadian citizens or permanent residents.
Where you live. Some providers aren’t licensed to lend across the country, since many provinces have their own rules for lending.
Housing. It’s common for lenders to ask if you rent or own and how much you pay for housing each month.
Your job might have more of an impact on your personal loan application than you think. From your monthly income to your time in the workforce, what you do to support yourself plays a major role in how lenders view your application. You can learn more about how it all works by reading our guide to personal loans.
Frequently asked questions
Generally, you need to be over your probation period at your job to qualify for a personal loan — around three to six months. However, some lenders are willing to offer you financing even if you haven’t started that new job yet. You can find out more with our guide to getting a loan with a new job.
It’s possible to find a personal loan with a credit score below 650. But typically, you need good credit — that’s 650 or higher — to get a competitive rate on a loan. Learn more about how your credit score affects your application with our guide to personal loans and credit scores.
Anna Serio is a trusted loans expert who's published more than 800 articles on Finder to help Americans strengthen their financial literacy. A former editor of a newspaper in Beirut, Anna writes about personal, student, business and car loans. Today, digital publications like Fundera, Business.com, and ValueWalk feature her professional commentary, and she earned an Expert Contributor in Finance badge from review site Best Company in 2020.
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