From application to approval: how to get a personal loan that fits your needs

By Anna Davies

Reviewed by Kimberly Rotter

Apr 20, 2023 - Updated May 29, 2023

Read time: 5 min

Young adult woman sitting with fresh flowers from her garden on the steps of her house

Key Takeaways:

  • Make sure to check your credit score and improve it if necessary to increase your chances of approval and get better rates.

  • Prepare the necessary documents, such as proof of income and employment, before applying for a personal loan to speed up the process.

  • Know your loan's terms, like interest rates and fees, to avoid problems and know how much you can pay.

Imagine you’re planning a road trip. You know your destination, and now all you need is gas in the tank. A personal loan can be like gas in the tank to help you reach your financial goals. It can give you the money you need to cover major expenses that come up. 

We’re breaking down personal loans. How they work, how to know if it’s the right choice, and what factors to consider if you decide to compare loans. Take a look. 

How to determine whether you need a personal loan

First, here’s what we mean when we talk about personal loans.

  • A personal loan is given to you in a lump sum. You receive the full loan amount all at once when the loan is approved. 

  • Most personal loans have a fixed interest rate. That means the loan’s cost won’t change for the life of the loan. 

  • The payment amount is the same for the entire life of the loan, which helps you manage your monthly budget.

  • Most personal loans are unsecured, meaning you don’t have to sign over anything of value to the lender.

There are many great reasons to consider a personal loan. You can use one to cover just about any big-ticket item, like home maintenance, a move, or a wedding. It’s also a great way to pay down medical debt or consolidate higher-interest credit card debt.

Let’s explore ways to decide whether a personal loan is right for your situation.

Decide how much you need to borrow

How much should you borrow with a personal loan? That depends on your needs. Personal loan amounts can range based on what expenses you need to cover and what you can afford. 

Because you'll be paying interest on the loan, it’s a good idea to ballpark how much money you’ll need and avoid borrowing (and paying interest on) more money than necessary. The amount you can borrow will depend on the lender and your overall credit profile.

Check your credit 

You can (and should) check your own credit. Doing so will alert you to any credit reporting errors that could negatively affect your ability to get a loan. It’ll also help you understand what factors you might need to focus on to improve your credit score.

Your credit report 

Once you’ve determined how much you wish to borrow, check your credit report. A federal law entitles you to one free credit report from each of the three credit reporting bureaus each year. The only website authorized to provide your free annual credit reports is 

Check to make sure your credit reports are accurate and that there’s nothing off (like an account you don’t recognize) about the information. If something is incorrect, you can dispute it with the credit bureau furnishing the report and ask for it to be removed.

Your credit score

Many banks and credit card issuers provide free credit scores when you log into your account online. Discover and Capital One offer free credit scores to anyone, even if you’re not a customer. 

A lender will use your credit score as part of their decision to offer a personal loan. In general, the higher your credit score is, the better your chance of approval. They’ll also use your credit score to determine what interest rate you qualify for.

Many lenders offer an opportunity to check your rate without triggering a hard credit check. Instead, they’ll do a soft credit check (one that doesn’t hurt your score) to let you know where you stand. You’ll still have to submit a formal application if you decide to move forward. The lender will do a hard credit check at that time, and you could temporarily lose a few points off your credit score.

If your loan offers aren't what you were hoping for, you may want to pause for a few months and work on building your credit score. Your credit score changes regularly. On-time payments, paying more than the minimums, and lowering your balances can all increase your credit score. 

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Shop for a lender

Once you’ve checked your rates, it’s time to pick the loan that best suits your needs. Interest rates aren't the only consideration.


Most personal loan lenders charge an origination fee. This is a one-time fee for processing the loan. It’s often a percentage of the total loan amount and is deducted from the loan before the money is released to you. When there's no origination fee, the interest rate is usually higher. 

For example, if you’re approved for a $15,000 loan that has a 4% origination fee (or $600), you’ll get $14,400 but will still be responsible for paying back $15,000.

Ask about other fees. Some lenders charge an early termination fee (also known as a pre-payment penalty) if you pay off the loan ahead of schedule. Most lenders charge a late fee if you miss your payment deadline. Being aware of fees can help you make a smarter decision.

Customer service

Pay attention to how you’re treated when you chat with the loan advisor and go through the loan application process. If they’re hard to work with at the early stages, you might not be able to reasonably expect good customer service later on. Also, check reviews on reputable websites online, like TrustPilot or the Better Business Bureau, to learn about others’ experiences. Just keep in mind that people who have bad experiences are more likely to leave reviews than people with good experiences, so you should expect every lender to have at least a few negative comments.

Loan amounts

What’s the maximum loan amount? Will it cover your needs? If you need a bigger loan and you’re a homeowner, you might want to explore home equity loan options, which typically have higher limits. 


Does the lender offer ways to get discounts off the interest rate? Discounts could make one loan more competitive when compared to another. Be aware that the offer you receive when you pre qualify for the loan might not include discounts that you qualify for, so be sure to ask. 

Here are some ways you may be able to lower your cost:

  • Add a qualified co-borrower

  • If you are using the loan to consolidate debt, allow the lender to pay off your creditors directly

  • Show proof of sufficient retirement savings

Gather necessary information and apply

Once you’ve chosen a lender who is a good fit, it’s time to apply for a personal loan. Your lender will verify the information you share, so it’s important to be truthful. You may be asked for documentation such as tax returns, pay stubs, or employment verification.

Accept your loan and begin your trip to better financial destinations

Your personal loan is like gas in the tank, and now you’re ready to hit the road. Once you’ve accepted your loan, funding is usually pretty quick (generally within a week, and sometimes as soon as the very next business day). Have a plan ready for how you’ll use the funds. 

If you’re using the money for upcoming expenses, consider moving it to a different account than the one you use for everyday expenses to reduce the chance that you’ll dip into it unintentionally. 

Your personal loan can give you the fuel you need to go the distance toward your personal finance goals.

Anna Davies

Anna is a contributing writer for Achieve. She has specialized in writing personal finance content for over a decade, including writing for Fortune 500 finance clients as well as writing personal finance content for magazines and outlets including Forbes, Refinery29, Nasdaq, Yahoo Finance and others.

kim rotter 2022 2

Kimberly is Achieve’s senior editor. She is a financial counselor accredited by the Association for Financial Counseling & Planning Education®, and a mortgage expert for The Motley Fool. She owns and manages a 350-writer content agency.

Frequently asked questions

You can apply for a personal loan if your credit score is fair or better and you have enough income to afford the monthly payment on the loan. 

If you qualify, you can apply online and potentially have the money in your bank account the next day. You’ll need to document your income.

Some lenders make same-day decisions and fund loans within 24 to 72 hours of approval. If the lender requires additional documentation, your application could take longer.

At Achieve, you can apply for a personal loan if your credit score is 620 or higher, but some lenders offer loans specifically designed for people with lower credit scores. Check your rates with lenders who do a soft credit check to get a sense of whether you qualify. If a personal loan isn’t an option at this point in time, you can explore other options. If you’re a homeowner, a home equity loan often has more flexible credit requirements. If you’re overwhelmed with debt and looking to streamline your monthly payments, you might be a good candidate for a debt resolution program.

A personal loan has the advantage of having a fixed interest rate and payment amount. Credit card debt has a variable interest rate that can change anytime; however, a personal loan can provide a more predictable and stable payment plan. Additionally, a personal loan can have a lower interest rate than a credit card, reducing the amount of money you have to pay each month.

You cannot pay your credit card bill directly with a personal loan. However, you can use a personal loan to pay off your credit card debt, which is a useful way to simplify your debt and lower your interest rate. With a personal loan, you'll have a fixed interest rate and payment amount, making it easier to manage your payments.

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