Personal loans can help you cover large purchases and emergency expenses, but if you’re not a U.S. citizen, you may wonder if getting a personal loan is even an option. The good news is that it is possible for non-citizens to get personal loans. The bad news is that you may need to jump through a few extra hoops to get approved for financing.
Some lenders view non-citizens as higher-risk borrowers, since they could potentially leave the U.S. before repaying the loan in full. What’s more, they may have little to no credit history in the U.S. As a result, the process of getting approved for a personal loan may involve additional steps and requirements. Here’s what you need to know to get a personal loan as a non-citizen.
Types of Personal Loans for Non-U.S. Citizens
As long as you can meet a lender’s qualification requirements, you have access to a variety of different types of personal loans as a non-U.S. citizen. Below are some types of personal loans you can potentially take out.
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• Secured personal loan: A secured loan requires you to provide collateral, such as a car or savings account, which the lender can claim if you default on the loan. Because this lowers risk for the lender, the minimum required credit score may be lower, and other lending criteria may be less stringent.
• Unsecured personal loan: This is the most common type of personal loan and doesn’t require you to provide collateral to back up the loan. However, the loan requirements tend to be stricter than they are for secured personal loans.
• An online personal loan: Online lenders tend to have less stringent personal loan requirements than traditional banks. However, rates tend to be higher.
Eligibility Criteria for Non-Citizens
While eligibility criteria for non-citizens seeking personal loans varies depending on the lender and the type of loan, here are some common factors that lenders consider.
• Credit score: There’s no universal minimum credit score for a personal loan, but many lenders like to see credit scores of at least 580. If you’re new to the country and don’t have a longstanding credit history or good credit score, it can hurt your odds of getting approved for a personal loan.
• Cosigner: Having a U.S. citizen or permanent resident cosigner can significantly improve your chances of getting approved. The cosigner’s creditworthiness provides additional security for the lender. However, the cosigner will be financially on the hook should you miss any payments.
• Residency status: While lenders legally cannot discriminate against you because of your national origin, they are allowed to ask you about your immigration and residency status, and to request proof of that status. Those with green cards (permanent residents) generally have a better chance of approval than those with temporary visas.
• Income and employment: Demonstrating a stable source of income and employment history reassures lenders that you will be able to repay the loan.
• Debt-to-income ratio: A high debt-to-income (DTI) ratio could mean that you’re financially squeezed and can’t afford to take on more debt. Lenders typically want to see DTI ratios that are below 36%. You might still get approved if you have a higher DTI but an income on the higher end or some savings stashed away.
Recommended: Guide to Personal Loans for Beginners
Applying for a Personal Loan as a Non-Citizen
When you’re ready to shop around for a personal loan, you can take these steps as a non-U.S. citizen to get the ball rolling.
• Compile your paperwork. When applying for a personal loan, a lender may ask you for:
◦ Identification documents, such as a driver’s license or ID card
◦ A copy of your passport
◦ A copy of your visa, green card, or proof of resident status, and possibly an I-94 Arrival/Departure Record
◦ Social Security Number (SSN)
◦ Proof of U.S. address
◦ Proof of employment and income
◦ Loan amount and your expected use for the funds
• Shop for a lender. Not all lenders provide personal loans to non-U.S. citizens. You might need to expand your search beyond traditional banks to include credit unions and online lenders and platforms. Shopping around can help you find a lender that meets your particular needs and circumstances.
• Get prequalified. If a lender has a prequalification option, you can get a preliminary offer, which gives you an idea of the type of loan and rate you’ll likely get approved for after you officially apply. This typically requires only a soft pull on your credit, which won’t impact your score.
• Consider adding a cosigner or collateral. If you’re unable to qualify for the personal loan you want, adding a cosigner — preferably a U.S. citizen — to your application may increase your chances of getting approved or help you get a lower interest rate or higher loan amount. If you don’t want to use a cosigner, you may be able to improve your chances of approval by applying for a secured personal loan.
Alternatives to Personal Loans
If you find it hard to meet a lender’s personal loan requirements, or find your borrowing options are too expensive, here are some other ways you may be able to access funding.
Borrowing from Friends or Family
Getting a loan from someone close to you could allow you to borrow money at a low interest rate (or interest-free). If this is possible, you’ll want to put the agreement in writing, including the repayment terms. Just keep in mind that this type of loan, even if you pay it off in full and on time, won’t help you build your U.S. credit. And should you have trouble repaying the funds, it could strain your relationship.
Salary Advance
Some employers will let their employees borrow against their future earnings to cover a one-time emergency. If your employer offers this benefit, they might offer you anywhere from 50% to 80% of your net monthly pay ahead of schedule. The advance may be free of charge or involve a small fee or interest rate to cover the extra accounting required for advances.
Immigration Loan
You may be able to find a local credit union that offers loans specifically for non-citizens. These loans may have names like “dreamer loans,” “immigration loans,” or “DACA loans,” and are designed to help cover the cost of applying for citizenship and associated legal fees. However, you will need to become a member of the credit union.
Recommended: Opening a Bank Account as a Non-U.S. Citizen
The Takeaway
It’s possible to get a personal loan even if you are not a U.S. citizen. However, you will likely need to navigate some additional requirements. It’s important to understand the types of personal loans available, make sure you meet the lender’s eligibility criteria, and prepare all the necessary paperwork.
To find a non-citizen personal loan with the best rates and terms, it’s a good idea to explore multiple lenders and compare their offers. If a traditional personal loan isn’t feasible, consider looking into a family loan, salary advance, or a credit union loan designed for non-U.S. citizens.
Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.
FAQ
Do you need an SSN for a personal loan?
While some lenders don’t require a Social Security Number (SSN), the credit bureaus have no other way to pull your credit file. So, in effect, you do need an SSN at this time.
Can a non-citizen have a credit score?
Yes, a non-citizen can have a credit score in the U.S. The consumer credit bureaus can create credit reports using your personal identifying information, such as your name and address.
If you’ve recently moved to the U.S., however, you may not have a U.S.-based credit report or credit score. If that’s the case, you may be able to build your U.S. credit by getting a secured credit card or credit-builder loan, or by becoming an authorized user on a family member’s or friend’s U.S. credit card.
Photo credit: iStock/courtneyk
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