When you apply for a personal loan, the lender you choose sets the criteria for what documentation you’ll need. Fortunately, the documentation requested is usually similar across lenders. Below is a list of personal loan documents and information your lender may require.
Questions you should be prepared to answer
Come prepared to your personal loan application by thinking through your loan purpose and eligibility.
1. What do you need to borrow this money for?
While most lenders aren’t too concerned with exactly how you’ll use the loan, understanding its purpose may help the lender recommend the best loan product for your needs. Different loan purposes may also open up different interest rates or loan amounts.
2. How much can you afford to borrow and for how long?
Ultimately, the lender will determine how much it is willing to lend based on an analysis of your financial health and a determination of what you can afford. However, you should go into the loan process with a solid idea of the payment you know you can afford and how long you’ll need to repay it. Don’t borrow more than you need, even if you’re approved to do so. Remember, you’re paying the lender a fee (via interest) on every penny you borrow.
3. What is your credit score?
Once you’ve initiated the loan application process with a lender, it will do a hard pull of your credit score. However, it’s wise to know your credit score beforehand. If your credit score is not high enough to qualify, the lender may be able to tell you that upfront.
You may be able to take advantage of a tool called prequalification. This lets you know if you’re qualified for a loan with only a soft credit pull — which won’t have any impact on your credit score.
Personal loan documents your lender may require
During the initial application and during the verification process, you may have to provide your lender with a few documents — most of which can be submitted electronically.
1. Loan application
Each lender will have its own application to initiate the loan process, and this application can look different lender to lender. For example, if you’re borrowing from an online lender, the application process is often done entirely online. If you’re borrowing from a traditional bank or a credit union, the applications can typically be completed either in person or online.
This initial application is usually basic — it will often ask for your basic personal information, desired loan amount and loan purpose.
2. Proof of identity
Aside from obvious reasons like identity theft, lenders must be able to verify your identity to determine if you’re a United States citizen or permanent resident and if you’re at least 18 years of age. You’ll typically need to present two forms of identification, such as:
- Driver’s license.
- State-issued ID.
- Certificate of citizenship.
- Birth certificate.
- Military ID.
3. Employer and income verification
Unsecured personal loans are different from many other types of loans, like mortgages or auto loans, in that there is no collateral backing the loan. This increases the lender’s risk and makes it even more important for it to verify that you have a steady source of income to repay the loan.
If you are traditionally employed, you can usually verify your income with the following documents:
- Tax returns.
- W-2s and 1099s.
- Bank statements.
- Employer’s contact information.
If you’re self-employed, you can usually verify your income with the following documents:
- Bank statements.
- Income tax returns.
4. Proof of address
Proof of your living situation can help a lender determine how stable your lifestyle is. You can usually use one of the following:
- Utility bill.
- Lease or rental agreement.
- Proof of insurance on your home, lease/rental or vehicle.
- Voter registration card.
If you need a change of address confirmation, the U.S. Postal Service offers resources to help you change — and confirm — a change of residential address.
Applying for a personal loan doesn’t have to be stressful. Be prepared to answer questions and provide the required documentation, and you’ll likely have a smooth experience borrowing the funds you need. But don’t forget, you won’t just owe the lender the amount you borrowed; you’ll also owe all of the interest that accrues during your repayment period, so be sure to shop around for the best lender offering you the best interest rate and the lowest fees.