{"id":745727,"date":"2018-08-28T03:09:08","date_gmt":"2018-08-28T07:09:08","guid":{"rendered":"https:\/\/www.finder.com\/ca\/?p=745727"},"modified":"2026-03-09T18:35:45","modified_gmt":"2026-03-09T22:35:45","slug":"personal-loan-eligibility","status":"publish","type":"post","link":"https:\/\/www.finder.com\/ca\/personal-loans\/personal-loan-eligibility","title":{"rendered":"Personal loan eligibility"},"content":{"rendered":"

You may be wondering, \u201cAm I eligible for a loan?\u201d Whether it\u2019s secured or unsecured, fixed rate or variable, for $3,000 or $50,000 \u2014 you\u2019ll likely need to meet some general personal loan eligibility criteria to qualify. We discuss the general requirements set by most lenders. While every lender is different and there\u2019s no guarantee you\u2019ll be approved, making your application as flawless as possible is a good start to finding a loan that works for you \u2014 and one you may be approved for.<\/p>

The 5 main factors lenders consider<\/h3>

Every applicant is different, but many lenders want to make sure these areas are strong when determining your personal loan eligibility.<\/p>

<\/a>1. Income<\/h4>

Nearly every lender will require that you earn a steady income. This is to ensure you have the ability to make the minimum monthly repayments set by your loan contract. While some will allow any income amount, larger loans may require that you make a certain minimum amount<\/a> before you can apply.<\/p>

<\/a>2. Employment<\/h4>

Here are 5 job-related factors lenders consider when evaluating a loan application. While not all lenders look at every single one of these factors, many consider at least one of them, especially income.<\/p>

How many hours you work<\/h5>

Some lenders require you to work a certain number of hours to qualify for a loan \u2014 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.<\/p>

Who you work for<\/h5>

Being your own boss has many benefits. But it can be difficult to qualify for a personal loan if you\u2019re self-employed<\/a>. Some lenders flat-out won\u2019t work with self-employed borrowers.<\/p>

Others have a difficult time evaluating your income, especially if you don\u2019t have pay stubs. If you receive pay in an unconventional manner, it might take a little bit longer for lenders to process your application \u2014 especially if they rely on an algorithm. You also might have to submit additional documents, such as recent bank statements and tax returns.<\/p>

Your employment history<\/h5>

How long you\u2019ve been in the work force is another factor that can affect your application \u2014 as well as the types of jobs you\u2019ve 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.<\/p>

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\u2019ve had for the past 5 years.<\/p>

Your job title<\/h5>

In addition to making sure that you\u2019re employed, some lenders might ask about your job title. They do this for a couple of reasons. Some lenders cross-reference your job title with your salary as a protection against fraud.<\/p>

However, lenders also might use your job title to predict how likely you are to default on your loan repayments \u2014 and this can affect your interest rate. As an example, an engineer with the same application as a lawyer might qualify for a lower rate because engineers have a higher rate of on-time loan repayments.<\/p>

Prospective jobs<\/h5>

Some lenders also count a job on the horizon in your favour 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.<\/p>

<\/a>3. Credit history<\/h4>

A good or excellent credit score with a solid history \u2014 one that has no major dings for missed payments or loan default \u2014 is the easiest way for lenders to know that you\u2019re a trustworthy applicant, especially if you\u2019re applying at a bank. If your credit score is fair or poor, there are still loan options for you to consider, however there will be less options available than someone who has good or excellent credit.<\/p>

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\nMust read: <\/span>Best bad credit loans in Canada<\/a>\n<\/div>\n<\/article>

<\/a>4. Loan security<\/h4>

There is a major difference between secured and unsecured loans. When you apply for a secured loan, like an auto title loan or a mortgage, you\u2019re providing collateral in the event that you default. When you apply for an unsecured loan, one that has no collateral attached, your credit score becomes the main deciding factor.<\/p>

<\/a>5. Assets, debts and expenses<\/h4>

You\u2019ll be asked to list your assets, debts and expenses on your application. Lenders use your debt and income to calculate your debt-to-income ratio (DTI)<\/a>. A higher income may boost your application whereas debts, such as credit cards, lines of credit or other loans, can hinder your application. Expenses are always estimated, but lenders generally have a good idea when you\u2019re under or overestimating based on the data of other customers.<\/p>

8 other factors that help your personal loan eligibility<\/h3>

While your lender might not advertise it, there\u2019s a chance they\u2019re considering at least a few of the following factors when you apply for a personal loan.<\/p>

1. If you rent or own your home<\/h4>

\"MiniatureSure, you might spend the same on your mortgage as you would to rent, but some lenders consider whether you rent or own your home when you apply for a personal loan.<\/p>

Why do they care? It might have something to do with your debt-to-income ratio (DTI). Your DTI is how much you owe each month on credit cards, car payments and other types of debt divided by how much you earn each month. Lenders like Refresh Financial use your DTI to tell how much extra cash you have to make loan payments.<\/p>

It sounds straightforward enough, until you consider what actually counts as debt. Traditionally, lenders count mortgage payments, not rent, as debt when crunching a borrower\u2019s DTI. This means that renters might be able to get a more favorable deal on a loan even if they pay the same amount toward housing each month. To get a more accurate picture of how much money you have to spend each month, it\u2019s possible that some lenders will ask you if you rent or own on your application.<\/p>

2. How often you change phone numbers<\/h4>

You probably won\u2019t be asked how often you change your phone number on an application, but it still might be part of your lender\u2019s underwriting secret sauce. If a lender notices that you\u2019ve applied for loans or credit cards using different phone numbers over the past few years, it could be a sign that you\u2019re not settled down enough to responsibly borrow money.<\/p>

Changing your number once in a while probably won\u2019t cause your application to be rejected. But multiple changes could raise a flag to lenders. And if that\u2019s one of a few red flags, you might see less favorable rates and terms \u2014 or even be rejected.<\/p>

3. Your level of education<\/h4>

When it comes to millennials and Gen Zers, credit score and income doesn\u2019t tell a lender much about their ability to pay off loans. Especially if they\u2019ve been slaving away at med school or for an MBA \u2014 they likely haven\u2019t built credit or reached their earning potential. LendingMate, for instance doesn\u2019t consider credit score at all when evaluating loan applications.<\/p>

In an effort to open up personal loans to younger borrowers and get a more accurate idea of how much a borrower might<\/em> make in the future, some lenders ask about your level of education. So don\u2019t be surprised if you get questions about your highest degree, where and when you went to school or even your major.<\/p>

4. How often you move<\/h4>

Lenders may notice how often you change your address when they review your tax returns or credit history. Like changing your phone number too many times, lenders see frequent changes of address as a sign that you aren\u2019t financially stable enough to pay back a loan.<\/p>

Staying in one place also shows a history of paying your mortgage or rent on time. If you move a lot for work, this might not count against you if that\u2019s clear on your application. But otherwise, multiple address changes could hurt your chances of getting a good rate on a loan.<\/p>

5. Your spending habits<\/h4>

\"YoungIt\u2019s standard for lenders to ask for bank account information when you apply for a loan \u2014 it\u2019s faster and easier to send money directly to your account than mailing or picking it up in person.<\/p>

But some may also require bank statements to verify that you\u2019re making what you say you\u2019re making. Lenders may also request these documents so they can review your spending habits and determine whether you\u2019re responsible with your money. If your bank account makes you look like an impulsive shopaholic, they might be less likely to trust you with a loan at a favorable rate.<\/p>

6. Your nest egg<\/h4>

Your income is important, but your saving habits could also affect your loan application. Lenders may consider your savings, retirement accounts and investments when you take out a loan. Looking at your savings tells a lender 2 things: that you have a strong handle on your personal finances and you can probably afford to cover an emergency expense and keep up with your loan repayments.<\/p>

7. Your work-related licences<\/h4>

Like education, some lenders ask borrowers if they have any professional licences or certificates. There are a couple reasons for this. A licence or certificate puts you in a higher pay grade and makes you eligible for more jobs. It\u2019s also a sign of stability \u2014 that you\u2019ve committed to a career.<\/p>

While not having a licence or certificate might not hurt, especially if there aren\u2019t any in your line of work, having one can boost your application.<\/p>

8. If you\u2019ve tied the knot<\/h4>

While not too common, some lenders may want to know if you\u2019re married or single when you apply for a loan. Primarily, your marital status tells lenders if your salary is the only one to consider when you apply for a loan. However, this information is sometimes obtained by asking for your household income instead.<\/p>

Quick tips to increase your personal loan eligibility<\/h3>

If you\u2019re unsure about your eligibility, consider these tips to help give your personal loan application a boost:<\/p>