• Article by: admin
• Posted: December 20, 2019

If you have struggled to be approved for a personal loan, then you’re not alone. Lenders everywhere have become more strict about lending criteria since the 2008 financial crisis — but just because things have gotten harder doesn’t mean getting a loan approval is impossible. 

There are three main types of financial institutions where anyone can apply for and potentially obtain a personal loan. Those three different types of institutions are banks, credit unions, and online lending groups and together, they offer the general public thousands of loan opportunities with varying term lengths and interest rates. As a lender, which institution you choose and what type of loan you try to apply for will depend upon various factors like your credit score, your employment history, and your preferred lending terms.

The following is a look at each of these three types of personal loans to better help you determine which one is right for you:

How to Find the Right Personal Loan for You

Traditional Banking Institutions

Brick and mortar banks continue to issue out the bulk of personal loans in this country. Such banks range from massive, multinational financial services institutions like Wells Fargo to the small local branches you might see only in your area of the country. The important thing to know about banks is that they are for-profit institutions and thus are going to be more strict on approval processes than the next type of institution. However, for those with good or excellent credit, banks have the advantage of offering some of the best interest rates available.

Generally, banks will require applicants to have a minimum credit score of 620, a minimum of a year’s history at a banking institution, work history, and current income verification. With such strict requirements, it can be hard for first-time, low-income, and/or those with poor credit scores to be approved.

Credit Unions

Unlike banks, credit unions are non-profit, community-based organizations. As a non-profit, they can charge lower interest rates and are often less strict with their guidelines — so long as you are already a member of the credit union.

In addition to being a credit union member of the specific branch you’re applying through, other personal loan requirements will typically include work history verification, proof of income, and a minimum “Fair” credit score rating. 

Online Lenders

The internet has opened the door to many new types of businesses, including online lenders. Online lenders are an excellent third option for those who are having trouble getting a personal loan approval through their bank or credit union. This is because many online lenders have opted to specialize in working with people who have poor credit or who have no credit at all but need to apply for their first personal loan. 

Online lenders typically have much less stringent personal loan requirements as the other organizations on our list. In fact, for many, a simple questionnaire on your employment history can be sufficient to get you approved. It’s important, however, to take care when shopping for an online personal loan as interest rates can vary widely. Always read through a personal loan’s term before making a final decision.  

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