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Applying for a personal loan can be a little scary. After all, lenders don’t hand out cash willy-nilly, even when they’re being paid interest.

When applying for a personal loan, you will normally need to show that you have a good credit score and a high enough income to ensure that you’ll be able to handle your monthly payments (among other requirements). It’s good to note that loan qualifying criteria around minimum credit score required and sufficient income may vary between lenders and even loan programs. It is recommended that you do your research to discover which loan program offers the best fit for you.

Luckily, if your credit score isn’t quite perfect or you’re still waiting on that raise, you may be able to leverage a co-borrower to help get the personal loan you want with the repayment terms you need.

Even if you haven’t heard of a loan co-borrower before, you may have already used one. If you, for example, had your Aunt Mavis sign on as a co-borrower with you for a private student loan or as a guarantor for your first post-college apartment, you have seen the power of the co-borrower to help get your loan or lease approved.

Co-borrowers can help you secure a personal loan when your credit or income doesn’t quite match a lender’s requirements. Having a co-borrower might even help you get a more favorable interest rate on your personal loan. Here’s what to know about using a co-borrower to help secure a personal loan.

What Is a Personal Loan, Anyway?

Before we dive into tips on using a co-borrower, let’s take a step back: What is a personal loan and why might you want one?

A personal loan is an installment loan that is typically an unsecured loan. With an unsecured personal loan, you borrow from a lender with the agreement to pay it back, plus interest, in a set amount of time.

Unlike mortgages and auto loans, personal loans aren’t necessarily tied to a physical asset you put down as collateral, which is what “unsecured” means. However, personal loans can be offered as secured loans, so check the details when rate shopping.

Unsecured personal loans tend to carry slightly higher interest rates than secured loans. After all, the lender doesn’t have a secured asset to seize if you default!

Even though unsecured personal loans typically carry higher interest rates than other, secured loans or credit cards, they can be a useful financial tool to help you consolidate existing debts, fund major personal projects, and more.

And when you apply with a co-applicant (who, if you’re approved, would become your co-borrower), you may significantly increase your chances of qualifying, as well as achieving a lower interest rate or more generous loan repayment period.

What Is a Co-Applicant?

A co-applicant is an additional person who applies for a loan with you in order to help you qualify. Similar terms are “co-borrower” or “co-signer” (we’ll get into the differences below) and by having one, you may be able to secure better interest rates and repayment terms.

Whether a co-borrower or co-signer, the additional person’s credit score and financial history is considered along with yours when applying for a loan. That can be a big help if your own credit history is less than perfect, or if you’re young and haven’t had very much time to build up a robust credit score quite yet.

Differences Between a Co-signer and a Co-borrower?

Both co-signers and co-borrowers are considered co-applicants at first, but they serve different purposes. Whether you need a co-signer or co-borrower usually depends on your individual circumstances. Each type of co-applicant has specific requirements and potential benefits.

A co-borrower essentially takes on the loan with you. Their name will be on the loan with yours, making them equally responsible for paying back the loan. Co-borrowers are frequently used in situations where the loan received has benefits for both of you, whether through a business arrangement or a family arrangement.

An example: You and your partner want to take out a personal loan in order to renovate the garage into a nursery for a baby on the way. You may want to apply as co-borrowers for a loan to pay for the contractor. Because both partners’ incomes and credit scores are considered in approving the loan, this may increase your chances of approval and possibly even lower the interest rates you’re offered.

A co-signer, on the other hand, is someone who helps you qualify for a loan, but isn’t your partner on the loan, as in the case of a co-borrower. A co-signer typically is only responsible for making the loan payments if you are unable to make them, but has no usage or ownership rights. However, credit for both co-borrowers and co-signers will be negatively impacted if the main borrower misses payments.

For example, private student loans are often taken out with parents or other family members as co-signers, since most recent high school graduates haven’t built up a significant credit history.

Adding in mom’s or dad’s credit history may help these students qualify for the student loans they need to get started on their college journey, but it does mean putting their parents’ credit reputation on the line if they default.

Considerations when Applying for a Personal Loan With a Co-applicant

The biggest challenge you might face in securing a co-applicant for a personal loan is finding someone willing to sign on the dotted line. After all, if you find yourself unable to repay the lender, your co-borrower will be on the hook for payment.

That’s why many people who are looking for a co-applicant start with parents, siblings, and other family members who they feel comfortable asking. Blood runs thicker than water, after all, and your close family have likely been supporting you in one way or another since birth.

It is recommended that you have a heartfelt, upfront conversation about the responsibilities that come with being a co-borrower and be ready to present your potential ally with your plan for repayment. For instance, a co-borrower is likely to see a negative impact on their credit score if they fail to make a payment. Since a co-applicant becomes a co-borrower once a loan is funded, you’re in this together, so if paying back the loan does not go according to plan, you both would be equally affected.

If you’re looking for a co-applicant, you might already know exactly who you’ll ask. If it is a loan to benefit your family, such as making home improvements, it likely makes sense for your partner or spouse to serve in the position.

As with a co-signer, make sure to talk openly and clearly about the responsibilities that come with being a co-borrower, including the responsibility for making payments.

After you’ve found your co-applicant, make sure to research which personal loans accept co-applicants. Some lenders accept co-borrowers but not co-signers, and some lenders accept both. SoFi does not accept co-signers for personal loans, but will accept co-borrowers.

When Does It Make Sense to Take Out a Personal Loan?

Given the risks that both you and your co-applicant assume in taking out a personal loan, you may wonder if this move is ever financially savvy.

After all, the conventional wisdom is to avoid debt at all costs, and unsecured personal loans tend to carry higher interest rates than loans for which you put down collateral, like a mortgage.

However, personal loans can be a sound financial tactic, for example, for the purpose of debt consolidation. That’s when you pay off multiple existing debts with one larger loan, which can simplify bill repayment and save on interest.

For instance, if you’re making payments on two or three credit cards with different interest rates and different due dates, it might be difficult to keep track of everything—let alone get ahead.

However, taking out one personal loan large enough to pay those debts off, generally means only one monthly payment and one interest rate, which could possibly save you money in the long run as well as making your life a little easier. Personal loans can also help you fund home improvements or even cover unexpected medical bills.

If you qualify to borrow money through a personal loan with SoFi, there are no prepayment penalties or origination fees. And as a SoFi member, you’ll have access to member benefits like career counseling and community events.

Plus, we make it easy to find out if you (and your co-applicant) prequalify online. You’ll fill out a bit of personal information and SoFi will run a soft credit check (which doesn’t impact your credit score1). It takes just minutes to see what you may qualify to borrow and what your interest rate could be.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

PL18200

Imagine this: Your friends text you, let’s go skiing! And you want to say yes. Who wouldn’t want to glide down a mountain and enjoy an apres ski in a cozy lodge? And no worries, you say, I’ll just put it on the card! Or this: Your best friend plans a destination wedding to France.

Of course you’re going to RSVP yes—you couldn’t miss out on witnessing such a momentous day. And hey, when you use your credit card you’ll earn a few rewards.

Or even this: Your little sister needs a dress for prom, and asks if you’ll cover the cost. It’s a once-in-a-lifetime experience, you think as you hand over your card.

It’s easy to say yes in the moment, offer up your credit card, and think about the cost later. But the shock and stress of looking at your credit card statement after a month of spending can be overwhelming. And when your spending goes unchecked or your balance doesn’t diminish, credit card debt can rack up quickly.

When used responsibly, credit cards can provide the opportunity to do things like build credit and earn rewards points or cash back that can be used for other purchases. When used with abandon, however, careless spending on credit cards can lead to debt—which may feel insurmountable.

It’s no secret that credit card debt is a problem that plagues many Americans. According to the Federal Reserve, consumer debt in 2019 exceeded $4 trillion , over $1 trillion of which is credit card debt.

Nearly 55% of Americans who have a credit card are in credit card debt. The average credit card balance during the first quarter of 2019 was $6,028 , according to Experian. That balance can grow quickly, considering that annual percentage rates (APRs) for credit cards can be quite high (the average APR has hovered around 17% for some time).

Common Ways to Deal with Credit Card Debt

If you’re currently dealing with or have dealt with credit card debt in the past, you know how hard it can be to dig yourself out of the hole. While it can feel like an impossible problem to solve, there are strategies and resources available which may put you on a path toward eliminating your credit card debt once and for all.

When taking action on your credit card debt, it is generally recommended to put a plan in place. There are plenty of strategies that are touted for their ability to help you crush debt. Creating a debt reduction plan might provide the structure you need to meet your goal of debt repayment.

For some, the avalanche method, which organizes debts based on interest rate so the debt with the highest interest rate is targeted first, may make the most sense. For others, the built in reward of the snowball method, which targets debts with the smallest amount first may be preferred.

Regardless of the method you choose, it’s considered best practice when using these programs to try and stick with the debt repayment plan you’ve developed unless you see a compelling reason to switch. It can also be an opportunity to check in with your spending to determine what habits have gotten you into debt. You may find you’ll need to make a few changes to your spending habits to truly eliminate credit card debt from your life.

Beyond aggressively making payments on your debt, there may be other strategies worth considering. For some, it may be helpful to find a way to consolidate your credit card debt into better repayment terms.

One option for this is to use a balance transfer credit card. In concept, these are pretty straightforward. Basically, you open a new no- or low-interest credit card and transfer the balance of your existing credit card to it. You’re then able to pay off your debt with a lower interest rate as long as the balance is repaid within the given timeframe.

This, in theory, could put you on the path to pay off your credit cards in a more timely manner because you may not face high interest payments. But the low interest rate on balance transfer credit cards is usually only offered for an introductory period, commonly anywhere between six and 18 months. After that period expires, the rates usually increase.

If you can pay off the balance transfer card before the low initial rate expires, it could be an avenue worth pursuing. However, balance transfers often come with a fee—usually 3% to 5% of the total amount you’re transferring.

If it’s a large debt, you may end up paying a hefty fee, which may make this option a less attractive method. Another option is borrowing a personal loan for credit card debt consolidation. While it may seem counterintuitive to take out a new debt to help get out of an old debt, it could be worth considering.

FAQs: Paying Off Credit Card Debt with an installment Loan

For some, paying off credit card debt with a personal loan (which is an installment loan) might be a helpful strategy for getting out of credit card debt. Here are some commonly asked questions about debt consolidation loans:

Why use a personal loan to pay off credit cards?

If you have a lot of high-interest credit cards, you can rack up debt much more quickly if you don’t pay off the entire monthly balance, which ultimately might hold you back from building a solid financial future.

Carrying a balance from month to month means you’re not only paying for the upfront cost of your purchases, you may also be paying a hefty fee in interest. On average, households with a revolving balance of credit card debt paid $1,141 in interest.

If you’re in this situation, using an unsecured personal loan to pay off credit card debt can be an avenue worth exploring.

Ways to use a loan to pay off credit card debt

Instead of owing money on multiple credit cards, some people take the total amount owed among all their cards, consolidate that debt into a single loan amount to pay off the credit cards. That is what’s known as an installment loan known as a personal loan.

By doing this, you would then start making payments toward one single personal loan instead of payments to multiple cards. The hope would be that the interest rate on the personal loans would be lower than any combined interest rates on any credit cards you might have.

Is using a personal loan to pay off credit cards the right option for you?

Whether consolidating your credit card debt through a personal loan is right for you is based on different factors.

For instance, what are the balances and terms on your current credit card debt vs the terms you could obtain on a new debt consolidation loan? Try utilizing a debt calculator to help you gather some estimated numbers. If you qualify for a lower interest rate, paying off credit debt with a personal loan has a number of potential advantages. For one thing, consolidating or refinancing debt can help simplify your payment plan, turning multiple bills into one.

Taking out a personal loan to pay off debt can be one way to take advantage of better financing terms such as lower interest rates, which could help save you money in the long run.

Benefits of Taking Out a Personal Loan to Pay Off Credit Cards

Debt consolidation loans can be particularly useful for consolidating debt on multiple credit cards that may have less than favorable terms, and it’s easy to see why. Debt consolidation loans can potentially help you streamline your finances. Making a lower fixed payment on a single loan every month may also help reduce the chances of missing payments.

It is worth noting that some credit card interest rates can vary based on factors such as the type of transaction, purchase, or cash advance, whether the rate is fixed or variable, qualifying criteria, and more.

According to Bankrate.com the average interest rate on a variable credit card is running around 17% and sometimes reaching as high as 29.9% APR if you miss payments. One tool to help you understand how much interest you might be paying is our Credit Card Interest Calculator.

Personal loans, on the other hand, can typically be found at a lower interest rate. A lower interest rate could potentially reduce the amount of interest the borrower is required to repay over the life of the loan.

Depending on your circumstances, a percentage point or two off could make enough of an impact on your interest payments to place you on the path to paying off your credit cards in a more timely manner.

When you take out a personal loan it can be used for almost anything that’s a personal expense, such as general consumer/household purpose, home renovations, and debt consolidation; theoretically, you could use a personal loan to pay for anything from a wedding to an elephant (although good luck finding a low APR on that one).

Potential Considerations Before Taking Out a Loan to Consolidate Credit Card Debt

When considering a personal loan, one way to start could be by making a chart of your debts and their respective interest rates, and calculate how long it could take you to become debt-free.

Also, consider whether you have explored all options in determining how best to position your outstanding debt into better financing terms.

Once you’ve done the initial legwork, a good next step is to compare that credit card repayment plan with a personal loan, and see which is better for your budget.

Check the math and review the loan terms and interest rate to confirm you’d actually end up with a preferable repayment plan. For instance, a lower monthly payment might seem great, but if it ultimately extends the length of your repayment, depending on the rate and term, you might end up paying more in interest than you realize.

Consider your current and future financing terms: whether it’s simply peace of mind in the form of one monthly bill, or saving the maximum amount of money, what works best for one person may not be great for you. If you’re still in doubt about how to best get ahead of your debt, consider asking for help from a professional.

Those professionals could offer some valuable insight to help you create a personalized plan that can help you find the best path toward your financial goals, like living in a debt-free future.

Taking an intentional step toward tackling your debt can be challenging, but with a little creativity and discipline, you can work on managing your debt without letting it slow your financial plans for the future.

With SoFi, you may qualify to consolidate your high interest debt into one single unsecured personal loan, with loan amounts up to $100,000 and fixed interest rates with no origination fees or prepayment penalties.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

PL17107

Getting an education, driving your new car off the lot, buying a home—it can sometimes feel like every big life step comes with a little thing called debt.

And while it’s often accumulated while making investments and purchases that can help you reach your personal and professional goals and build the future you want, it’s no secret that debt also has the potential to have negative consequences.

Though your initial purchase may bring with it an initial rush of excitement and adrenaline, eventually reality sets in: You will eventually have to pay off your debt over a period of time, perhaps with variable interest, often with an added mix of financial anxiety and chest pains.

But debt repayment doesn’t have to be so stressful—sometimes it can even be empowering. It all depends on how you think about it and how you plan ahead.

Many folks may have a combination of shorter-term debts, like credit cards, and longer-term debts, like student loans and a mortgage.

Just making all the different monthly payments can become a chore that takes hours off your life, not to mention a big chunk of your paycheck. And if you’re just making the minimum monthly payments, it might seem like you’ll be repaying your debts forever.

Choosing a debt payoff strategy can ease your mind—and maybe even your wallet. A successful debt payoff strategy is typically one that helps you feel empowered and in control of your finances, while keeping you motivated to get out of debt as soon as possible.

Ahead, we’ll take a look at some popular payoff methods, including the snowball, avalanche, and snowflake strategies. We will also explore the loan consolidation strategy.

Keep in mind that each option has its benefits and drawbacks; choosing the right strategy will ultimately come down to your specific financial situation and what will most effectively inspire you to get debt-free.

The Debt Snowball Method by Dave Ramsey

The first of these snow-themed repayment methods is called the snowball method. Popularized by financial self-help guru Dave Ramsey , the concept behind this strategy is that paying off your smallest debt first (regardless of the interest rate) will give you a feeling of accomplishment that will increase your motivation to pay off your next biggest debt and, eventually, tackle all of your existing debt.

Though this method may offer a valuable morale boost that can potentially help you feel more empowered in getting your finances back on track, this method probably won’t save you as much money as paying off your debts with higher interest rates first.

Even so, it’s worth noting that a 2016 study published in the Harvard Business Review found that people using this method paid off credit card debt faster than those using other methods, for the simple reason that it’s typically easier to stay motivated when you see progress in your pursuits.

How it works: Make a list or spreadsheet of your debts (list the debt with the smallest principal balance first) along with the minimum payment amount for each of them. While making the monthly minimum payments on all debts, the strategy has you start throwing as much extra money as you can afford to spare towards the smallest of your debts.

Once you have paid this portion of your debt off, this strategy suggests you take the minimum payment you were paying on that debt and reallocate it to the minimum payment of your next-smallest debt (there’s the snowball).

The idea is that, by paying off your smallest debt and increasing the amount you’re able to put towards your next smallest debt, you’ll be able to keep your momentum going and continue repeating the process until you are debt-free.

The Debt Avalanche Method

This next method is also known as the “ladder” or “debt-stacking” method. Unlike the snowball method, which is structured around behavior and motivation, the avalanche method is about streamlining your debt repayment so that you can save the most money on interest.

The avalanche strategy can sometimes require more discipline, and the initial results may sometimes seem a bit less tangible. Even so, keeping track of how much you are saving in interest can be a great motivator for many people dealing with debt.

How it works: Make a list of all your debts by order of interest rate, from the highest percentage to the lowest. While continuing to make all your minimum monthly payments on your existing debts, the avalanche method suggests that you also “attack” the highest interest rate loan with as many extra payments as you can.

In other words, send an avalanche of extra money towards the debt that’s costing you the most.

For extra motivation, you can use an extra payment loan calculator like this one to keep track of how much you’re saving in interest.

The Debt Snowflake Method

Taking the snow metaphor even further, the “snowflake” method can be used on its own or in conjunction with another method, such as the snowball or avalanche. The snowflake method involves finding extra income on top of your usual income to help pay down your debt faster.

Side gigs and extra work are often seen as ways to afford extra purchases or make a bit of extra cash to spend on the finer things in life. But instead of using this extra money on pleasure expenses, the snowflake strategy encourages individuals to find an additional income stream that can be dedicated specifically to paying off debts more quickly.

How it works: Scrape together extra micro-payments by any means possible: using credit card rewards cash, taking those cans of spare change to the bank, selling old textbooks or collectibles online, or even taking on a few side gigs. From there, the method suggests putting the extra cash from these projects toward extra debt payments.

Consolidating Debt Under a Single Loan

One final strategy for paying down debt is converting all your various debts into a single loan, commonly referred to as loan consolidation (no snow metaphor here).

This method has the potential to dramatically simplify your loan repayment process. Instead of multiple loans and multiple interest rates, you’d have one loan and one interest rate. And ideally, this new interest rate will be close to the average of all your interest rates combined—or maybe even lower.

How it works: Start by shopping around for the best loan consolidation or personal loan offer you can find. Once you find one and are accepted, your lender will grant you a personal loan that you can use to pay off your existing qualifying loans or debts in full. Then you’d pay back the personal loan, which is just a single monthly payment.

One potential downside to consolidating your loans is that your overall repayment period may get extended, meaning you could pay more in interest over time if you only make minimum payments on your personal loan.

This said, when you take out a personal loan, you can make sure to choose a loan term that doesn’t extend your repayment period and find an option that works for you, your debt, and your financial situation.

Remember, even if you decide to consolidate some of your debt with a personal loan, you can always use the snowflake method or other strategies on the remainder of your debt.

Whatever plan you end up choosing, making consistent extra payments on your personal loan whenever possible can help you get out of debt even faster (just watch out for prepayment penalties—that’s why it’s so key to always do your research before you sign on the dotted line).

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Guest Participation: The individuals interviewed for this article were not compensated for their participation. Their advice is educational in nature, is not individualized, and may not be applicable to your unique situation. It is not intended to serve as the primary or sole basis for your financial decisions.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

PL18142

Sometimes, even careful planning and saving aren’t enough to prepare you for the expenses that lie ahead. Maybe fall is setting in and a chill is starting to set in the air. Perfect time for the furnace to break down. Or maybe summer is just around the corner and you realize the pool liner needs to be repaired.

These unplanned costs could be inconvenient and expensive. While you may not have experienced these exact scenarios, you may have felt the pinch in another way. When that happens, the pressure to make ends meet may be stressful. Taking on additional debt is not ideal, but if you don’t have the cash you need when an emergency strikes, there are options.

Personal loans, a sometimes underrated choice, are one way to pay for an unexpected expense or cover a big-ticket purchase. This type of loan may be taken out for lots of personal reasons. Personal loans are typically funded as one lump sum and could be used for things like consolidating credit card debt, paying medical bills, funding a big move or home remodel, paying for a wedding, or taking a dream vacation.

Broadly, there are two types of personal loans—secured and unsecured. A secured loan is backed by something of value, like a car or house, which is used as collateral. Should the borrower fail to make payments on the loan, the lender can seize the collateral. Usually, the borrower will receive calls and a debt collection letter as a warning before this happens.

An unsecured loan isn’t tied to an asset, which could make them riskier options for lenders. Because they’re not secured by an underlying asset, unsecured personal loans typically have higher interest rates than car or home equity loans, but lower rates than credit cards.

Of course, saving up an “emergency fund” for unexpected expenses is preferable to taking on debt. However, if you find yourself about to charge a massive sum on your credit card, and you know you won’t be able to pay it off within a reasonable period of time, a personal loan with no prepayment penalty could be a viable alternative.

Applying for an unsecured personal loan is typically pretty straightforward. But you’ll want to do your research, and you might want to make sure you have your financial ducks in a row to help your chances of approval and qualifying for the best possible terms and interest rate.

While everyone’s needs and financial picture are different, and this article is in no way a guarantee of qualifying for a personal loan, the application process can look very similar. So here’s what getting approved for a personal loan can look like:

Steps of the Personal Loan Application Process

The application process for a personal loan might seem more daunting than it actually is. Yes, you need to know a few things about your current financial situation (and your financial history).

But it really shouldn’t take long to get your facts straight. You might find it helpful to follow these steps when you start the process for a personal loan:

1. Figuring Out How Much You Would like to Borrow

First, you might want to make sure you’re realistically estimating the amount you’ll need. Borrowing more than you need might not be a great idea, since you’ll be paying interest on the lump sum you take out.

On the other hand, you wouldn’t want to borrow less than you need, only to end up resorting to using a credit card to make up for the difference. Be honest with yourself and your lender, and work with them to find the amount, interest rate, and term that works for you.

2. Checking Your Credit

Although different lenders can use various scoring models, you might want to pull your current credit score and assess how strong it is (generally, a FICO® Score above 740 is considered very good—and above 800 is “exceptional”—but broadly, many lenders consider a score of 670 or above to indicate solid creditworthiness). This might be one of the main factors lenders consider when considering you for a personal loan, so it’s good to know your score.

3. Getting Pre-Qualified

Many lenders these days allow you to quickly see if you pre-qualify for a loan. This process could show you how much the loan would potentially be approved for, what your repayment terms and your interest rate could possibly be.

You’ll often provide basic information such as your address, income, and Social Security number. Often, lenders may do a soft credit check at that time that doesn’t affect your credit score1.

Once you see a pre-qualified quote from a couple of different lenders, you could compare the interest rates and monthly payments you’re offered before choosing the best option for your needs.

These fees could add up quickly. Factoring them in now might help you avoid any surprises down the line. Understanding the true cost of the loan, beyond just the interest rate, might help you make a decision about which loan is the best fit for you.

4. Submitting Your Application

The final step is to apply for the loan. Each lender has their own requirements for documentation and qualifying.

For many lenders, you’ll need to submit things like a photo ID, proof of address, and proof of employment or income. At this stage, the lender will do a hard credit check, which involves collecting information from all three major credit bureaus and could affect your credit score.

Ways to Help Improve Loan Approval Chances

You likely want to be approved for the best loan terms and interest rate possible. And that probably means putting your best foot forward on your application. Here are some ideas you might want to consider when applying for a personal loan:

1. Checking Your Credit History

If your credit score is shaky, the time to take action is ideally before you apply for any loan.

As a first step, you might consider requesting your credit report , which you can do for free annually . You could check for any errors or problem areas you want to work on. If you find any issues, you might want to report them to the credit bureau.

There are steps you could take to help with any misinformation reported around late payments or delinquencies. Filing a credit dispute is one idea, but keep in mind that fixing issues on your credit report could take time. It may be a good idea to do your research and understand the process.

2. Keeping a Stable Job

Before issuing a personal loan, lenders consider factors like your employment and income. Essentially, a lender is taking a risk by letting you borrow money, so they want to be confident you have the resources to pay it back.

Lenders might also be looking at how much you make and how stable your job is. So if you plan to apply for a loan, this might not be the time to change careers. Normally, changing (improving) jobs or income at the same company is not an issue. So if it’s the right time at work, you could ask for a raise.

3.Adding a Co-Borrower

If you don’t have great credit or don’t make very much, adding a co-borrower to your loan might increase your chances of approval. They might also help you get a better interest rate and repayment terms.

A co-borrower is someone who agrees to pay the loan if you default, and will be responsible for any missed payments.

That’s because a co-borrower is someone who takes the loan out with you—their name is on the loan, and you both have an obligation to repay it. Adding a strong co-borrower may improve your chances of qualifying for the personal loan that fits your needs.

Ready to Apply for a Personal Loan?

If you’re on the hunt for the right personal loan, consider SoFi. Qualifying borrowers may be eligible for up to $100,000, depending on their needs. The application process can be completed entirely online, and you’ll have access to customer support seven days a week.

There are absolutely no fees required when you borrow a personal loan with SoFi—no prepayment penalty fees.

If you unexpectedly lose your job, you could qualify to pause your payments with SoFi’s Unemployment Protection Program for up to 12 months, though interest will continue to accrue.

SoFi could even help you in your job search with benefits like career services. To get an idea of what your rate and terms could look like, you can pre-qualify and see your rate in just a couple minutes.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.