What documentation is required for personal loans?

When you apply for a personal loan, lenders request several documents to verify your personal and financial information before making a decision. Some lenders set unique application and eligibility requirements, but most will ask for similar paperwork.

Knowing which documents you need and having them ready before you apply may increase your chances for approval so you receive your funds more quickly.

What do I need to apply for a personal loan?

After you start the initial application process, lenders require documents to verify all the information you provided, which helps determine the personal loan rates offered and your ability to repay. This usually includes proof of your personal details to confirm your identity and financial information. Typically, most of the paperwork can be submitted electronically through a portal on the lender’s website.

1. Application form

All lenders require you to fill out an application form to be approved for a loan. If you’re borrowing from an online lender, the process is done entirely online. If you apply for a personal loan with your local bank or credit union, you may be able to fill out the application with a bank representative in person.

The application will likely look slightly different from one lender to another, but will usually ask for information such as:

• Your full name.
• Contact information.
• Address history.
• Date of birth.
• Social Security number.

You’ll need to choose a loan amount, answer questions about the purpose of your loan and provide financial details about your monthly income, bills and debt obligations.

2. Proof of identity

Lenders must be able to verify your identity to approve your loan. Two forms of identification are usually required, and acceptable documents may include your:

• Birth certificate.
• Certificate of citizenship.
• Driver’s license.
• Military ID.
• Passport.
• Social Security card.
• State-issued ID.

The lender needs to be able to read your identification — take a clear picture with your smartphone or use a scanner to avoid delays.

3. Employer and income verification

Unsecured personal loans rely mostly on your income to determine how much you qualify for. Because lenders don’t require you to put up collateral to back the loan, you must prove you have a steady stream of verifiable income to be approved.

If you are traditionally employed, you can verify your income with a few documents, including:

• Pay stubs.
• Tax returns.
• W-2s and 1099s.
• Bank statements.
• Employer’s contact information.

If you’re self-employed, you may need any or all of the following documents:

• Bank statements.
• 1099s for the past two years.
• Tax returns for the past two years.

If you work for a regular employer, you should be able to access your pay stubs and tax forms through your payroll provider’s online database. You can also contact your human resources or payroll department. For the self-employed, you may need to work with your CPA or other tax professional — they might be able to help you provide the required tax forms.

4. Proof of address

You’ll also need proof of your current address and how long you’ve lived there. You may not qualify if you’ve moved around a lot or just relocated to a new area. While some lenders may require specific documentation, you can usually use one of the following:

• Utility bill.
• Lease or rental agreement.
• Mortgage statement.
• Proof of insurance on your home or vehicle.
• Voter registration card.
• Property tax receipt.
• Bank or credit card statement.

If you need a change of address confirmation, the U.S. Postal Service offers resources to help you confirm a change of residential address. While the fastest and easiest way to do this is online, you can also go to your local post office and complete a form in person.

Other information lenders use to approve your loan

Once you apply, lenders will consider several factors when approving your loan and determining what rate to offer you.

• Credit score.
• Loan purpose.
• Monthly expenses.
• Debt-to-income ratio.

What if you don’t have the required documents

You may not be completely out of luck. Depending on what’s missing, the lender may offer alternative verification methods.

For example, if you don’t have pay stubs handy, they may contact your employer directly to confirm income information or review your bank statements for proof of electronic deposits. Some lenders also let you sync your banking information when you apply to confirm income information electronically without the need to provide extra paperwork.

That said, not having the required documents could lead to a denial in some instances. Be sure to notify the lender right away if you’re missing documents to determine if there are ways to work around the issue.

What if you don’t get approved for your loan?

If you get denied for a personal loan, you can take a few steps to improve your odds with the next application.

Get a co-signer

A co-signer — usually a family member or close friend — also assumes legal responsibility for your loan by signing on when you apply. Adding a co-signer who meets the eligibility requirements may increase your approval odds or help you qualify for a higher loan amount.

Remember, your co-signer’s credit will be affected if you miss a payment or default on the loan.

Choose a secured personal loan

Secured personal loans are backed by collateral like a boat, car, home or RV. You’ll need to provide paperwork showing proof of ownership and the lender will need to determine what the asset is worth to lend on it.

By applying for a secured personal loan, you can reduce the lender’s risk and increase your approval chances because the lender can seize your asset if you can’t repay your loan. You may even get a lower interest rate, which could give you a lower payment to help you qualify for a higher loan amount.

Work on your credit score

If you don’t qualify now for a personal loan and don’t need the funds urgently, consider working on your credit score. Paying down your credit card balances is one of the best ways you can boost your score quickly. It lowers your credit utilization ratio, which is a major factor in how high your credit score is.

Once your score improves, you’ll increase your odds of being approved. You’ll also be more likely to get a good credit loan rate, which could save you hundreds or even thousands on interest payments.

Consider a credit card

A credit card is designed for small, everyday expenses, so it may not be the best choice if you need to cover a large expense. However, for common projects that are under $1,000 that you can pay off quickly, a credit card may be a better option. The applications require similar documents and information, and finding a credit card that fits your needs may be easier.

The bottom line

Gathering the information and documents you’ll need before applying for a personal loan can save you time and avoid potential funding delays. Make sure all your paperwork is legible and provide documents as quickly as possible to speed up the process.

Not all lenders have the same requirements, so make sure you know the general documentation criteria before applying. By being prepared, you can increase your chances of approval and receive your funds more quickly.