What Documents Are Required For Getting a Personal Loan?

When you apply for a personal loan, your application is approved based on whether you meet requirements, including a solid credit score, a favorable debt-to-income ratio and more. To prove you qualify, many lenders require that applicants submit supporting documentation alongside their application.

Make sure you are ready to provide these documents before you apply.

[Read: Best Personal Loans.]

What Documents Are Required for Getting a Personal Loan?

Although it may vary by lender, you can expect the documents required for your personal loan application to all fall into categories of proving your credit history, identity, address and income.

“Be prepared to show pay stubs, tax returns and W-2s,” says Brandon Ashton, director of retirement security at Cornerstone Financial Services.

Proof of Credit History

According to Jason Werner, financial advisor and founder of Werner Financial, the lender will need either a Social Security number or a tax identification number to perform a credit check. Be sure to prepare for any effect of a hard inquiry to your credit score.

Proof of Identity

Banks need to ensure the person borrowing money is who they say they are, so don’t be surprised if you are asked to provide proof of identity alongside your credit application.

“Common supporting documents to prove an applicant’s identity are pretty much any government-issued photo ID,” says Ohan Kayikchyan, certified financial planner and founder of Ohan the Money Doctor.

This can include:

— Your passport

— A state identification card

— Your driver’s license

Proof of Address

Some lenders also require personal loan applicants to submit proof of address, to show they actually live at the one provided.

Typically, this involves a copy of:

— Your utility bill

— A lease agreement

— A bank statement

— Any other similar official document listing both your name and your current residential address

[Related:Best Wedding Loans.]

Proof of Income or Employment

Finally, lenders could request proof of employment or income to ensure you are able to pay back the amount you plan to borrow. Here are some examples:

— Pay stubs

— Employment letters

— Income tax returns

— W-2s

[Read: Best Online Loans]

“Self-employed individuals may need to provide additional documentation, such as business financial statements (profit-and-loss or income statement or business tax returns),” says Werner. “Also, it is more favorable for self-employed individuals to be in business for as long as possible, as it shows a strong record of being able to produce income even though working for oneself.”

Jake Hill, CEO and founder of DebtHammer, adds that Social Security and disability income are also valid sources of income for a loan application, and you could be asked to share a bank statement or income tax record to prove you have this money coming in.

What If I Am Missing a Document Required for a Personal Loan?

“If you are missing a major part of the personal loan application, such as income statements, it’s best to contact the lender or financial institution directly,” says Werner. “They may be able to provide guidance on alternative documents you can provide or alternative ways to verify your income.

It’s possible that your loan application could be denied because of insufficient documentation, though your lender is required to inform you if this is the case.

“When a personal loan application gets declined, the lenders are required by the law to inform the applicant of the reason for the decline within a certain timeline,” Kayikchyan says. “In case there are any additional documents or steps required to possibly overturn the declined status to approval, the notice will list them as well.”

Alternative Borrowing Options If You Aren’t Approved for a Personal Loan

If you don’t qualify for a personal loan, there are still options for borrowing money. Potential alternatives include:

— Credit cards

Peer-to-peer lending services

Borrowing from friends or family

Each option comes with its own advantages and disadvantages. Be sure to explore your choices before making a decision.

More from U.S. News

How to Get a $5,000 Personal Loan

What Is a Good APR on a Personal Loan?

How to Borrow Money

What Documents Are Required For Getting a Personal Loan? originally appeared on usnews.com

Update 10/29/24: This story was previously published at an earlier date and has been updated with new information.

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