The Lending Criteria for Unsecured Personal Loans

Understanding the lending criteria for unsecured personal loans can help you when you apply for a loan. Getting approved for this type of loan works differently from if you were to apply for a secured loan. Here are the basics of lending criteria for unsecured personal loans.

Credit Score

The most important factor in getting approved for an unsecured personal loan is your credit score. The lender will ask for your permission to pull your credit file, and they will examine it closely. Although credit scores are important with any type of loan, they are critical with an unsecured loan. With a secured loan, the lender knows that even if they make a bad decision, they can still take the collateral and recoup their losses. They do not have this luxury with an unsecured loan. Therefore, they are going to look closely at your credit history and make sure that your credit score falls within an acceptable range. Each lender is going to have a minimum credit score that they will work with for an unsecured loan. In some cases, you might be able to get this type of loan with a credit score of 680. Other lenders might require a credit score of 700 or 720. If you do not have a good enough credit score to qualify with one lender, that does not necessarily mean that another lender would not extend you a loan.

Debt Load

The lender will also use your credit report to determine how much debt you have. The amount of debt that you currently have will play a big role in whether you can get an unsecured loan. Lenders do not like to work with those that are in over their heads with debt. Therefore, if you have what the bank considers to be an unusually high amount of debt, they will not extend a loan offer to you.


The lender is also going to pay special attention to your income level. They will want to know where you work and how much your salary is. They will call your place of employment and verify that you work there. With an unsecured loan, they are even stricter with income requirements. The lender wants to know whether you have a sufficient income to make your loan payments. They will compare your income to the amount of debt that you have and come up with a debt-to-income ratio. This ratio will play a vital role in your approval for the loan.

Size of the Loan

Another key factor is the size of the loan that you request from the lender. The more money that you ask for, the more difficult it will be for you to get approved for the loan. They will look at the amount of income that you have, your debt load and your credit history in order to determine how much of a loan that you should get.

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