About to start a new role or haven’t been at your current job for long? Here’s what you need to know before you apply for a personal loan.
When reviewing a loan application, lenders check a range of factors to confirm that you aren’t too risky to lend to – part of the assessment is your employment. Most will require you to be employed (although some don’t), earn a certain income and to have been employed for a certain amount of time. This guide will take you through what criteria may apply to give you a better chance of being approved.
How long do I need to have been employed to apply for a personal loan?
|Lender||Minimum time you must have been employed (full-time)||Minimum income||Learn more|
|Even Financial||Varies by lender||No minimum|
|Prosper||No minimum||No minimum, must have proof of taxable income|
|SoFi||Must be employed, have sufficient income from other sources, or have an offer of employment to start within the next 90 days||No minimum|
|LendingPoint||A minimum of 12 months at your current job is a plus||$25,000 annually|
|LendingClub||No minimum||Must have a low debt to income ratio to be considered|
|Laurel Road||No minimum||Debt to income ratio under 43%|
|NetCredit||No minimum||No minimum|
|Bank of America||No minimum||No minimum, income is one of many factors for approval|
|BBVA||Typically requires paystubs from the previous 30 days to verify income||No minimum, one of many factors that determines the approved loan amount|
|Chase||N/A||Debt to income ratio under 43%|
|TD Bank||Must provide proof of income for the previous 2 years||Income is a factor in the approved loan amount, must have a debt to income ratio of under 49% and a credit score of 680+|
|US Bank||No minimum, just a factor in approval||No minimum, just a factor in approval of loan amount|
|Wells Fargo||No minimum, but requires all employer details for the past 3 years||No minimum|
How can I get approved for a personal loan as a new employee?
If you’ve just started a new role or are about to start, keep the following in mind before you submit your application:
- Consider applying for a lower amount. Lenders may be more hesitant to approve you for a larger loan, especially if you haven’t been at your job long. Think about how much you really need to borrow and apply for just as much as you need.
- Offer security. A secured loan is less risky for a lender and you may be more likely to be approved.
- Can you wait to apply? Waiting even a month or two may give you a better chance. Lenders consider employment probationary periods to range from three to six months, so if you are close to being employed for that length of time you may want to wait.
- Make sure you meet all of the other minimum requirements. Lenders have a range of minimum requirements you need to meet that extend beyond employment.
- Check your credit history. If you aren’t sure what’s on your credit file or how good your credit score is, it’s worth checking before you apply. Learn how your credit score is calculated and reach out to one of the three major credit bureaus – Experian, TransUnion or Equifax – to get your free annual credit report.
- Let your employer know. Lenders may want to confirm your employment with your current employer, so giving them a heads-up before this happens can help speed up the process.
- Provide as much supporting documentation as possible. If you have any assets or savings, you should provide that information with your application.
- Consider talking directly with the lender before applying. Still not sure if you’re eligible? Talk directly with the lender before submitting your application. The lender won’t be able to tell you definitely whether or not you’ll be approved, but they may be able to shed some light on their criteria in relation to your financial circumstances.
What else do lenders consider?
Lenders look at a variety of factors, which can include any of the following:
- Age of majority in your state. Lenders don’t base credit decisions on your age, but you need to be at least 18 years old to be eligible to apply.
- Employment type. You may need to be employed full-time and you may need to earn a certain amount of income to be eligible.
- Debt-to-income. Lenders will like to see that you have a steady stream of cash flow coming in, this will be a signal that you’ll be able to make payments. A rule of thumb is that your debt should be no more than 43% of your income – although lower would be better.
- Credit history. Traditional lenders such as banks and credit unions will normally require you to have good credit to be eligible. That means no negative listings such as defaults, bankruptcies or multiple credit inquiries on your file. However, there are bad credit personal loans available.
- Residence. You will usually need to be a US citizen or permanent resident to be eligible, but some lenders do consider nonresidents for personal loans. In addition, some lenders may not operate in a few states based on their licenses.