What Documents Are Required for a Personal Loan?

Different lenders may require additional documents and information depending on your situation. Before a potential loan approval, you might also be asked about your credit score, employment details, existing debts, loan purpose and desired loan terms.

These inquiries help lenders assess your creditworthiness, income stability and loan repayment ability. Providing accurate information enables lenders to make informed decisions and offer you suitable loan terms.

Credit Score

Your credit score is a number that represents your credit history and payment behavior, helping lenders assess your creditworthiness. A higher score typically signifies a history of responsible borrowing and timely repayments, which makes you a more attractive borrower. This generally leads to more favorable loan terms, including lower interest rates and higher borrowing limits. 

Your lender will run a credit check to determine your credit score. However, you might consider finding out your credit score before you start the application process, as this can give you a better idea of where you stand. Credit reporting agencies like Equifax, Experian and TransUnion are required to provide free annual credit reports through AnnualCreditReport.com. Many credit card companies and select online platforms also offer free credit scores.

Loan Purpose

Most lenders will want to know your intended use for the loan. Purposes may vary widely from debt consolidation, covering medical expenses, making home improvements or addressing unforeseen financial emergencies. Lenders might ask for additional information or paperwork regarding the purpose of your loan. For instance, if you seek a personal loan for home improvement or education, you may need to provide documentation related to that purpose, such as estimates from contractors or admission letters from educational institutions.

Desired Loan Terms

When seeking a loan, you can expect to be asked about your desired loan terms, which include the loan repayment period and payment method. The term lengths for personal loans typically range from two to five years, but that can vary. Keep in mind that you are likely to pay more interest the longer the length of the loan. Lenders will want to know how you plan to make your monthly payments (online, automatic payments, etc.). Sometimes, lenders may even offer a discount for setting up automatic payments.