There are times when it might be necessary to take out a personal loan to meet a particular need. Whether you use it to make a large purchase, consolidate debt, or for something else, a loan can help you achieve life goals sooner or cover unexpected emergencies without delay.
Getting pre-approval for a loan from a credit union will help you plan accordingly, as it is a strong indicator of whether you will ultimately be approved for the loan, how much you will be approved for, what your interest rate will be, and what other loan terms you can expect.
How do you get pre-approved for a personal loan? Follow these simple steps and start the process of securing a personal loan pre-approval with a credit union today:
Why Work With a Credit Union?
It’s always wise to shop around and compare rates and terms before applying, and it’s not uncommon to find the best rates available through a credit union. Credit unions such as Mid-Hudson Valley Federal Credit Union in New York are member-owned and not-for-profit, which means they aren’t funding investors, so profits are returned to their account holders and loan recipients. These returned profits take the form of lower fees and more competitive interest rates. What you save in fees and with lower interest rates can help you repay your debt faster so you owe less in interest over the life of the loan.
If you aren’t already a member of a credit union, it’s easy to join. Often, you only need to open an account to begin receiving a host of benefits, including the best rates on a personal loan.
Before Getting Started: Am I Eligible?
Each lender will have a set of eligibility criteria to qualify for a loan. Though these requirements vary from lender to lender, below are some of the more common requirements:
- Be a US citizen or permanent resident
- Have a valid Social Security number or Individual Taxpayer Identification Number (ITIN)
- Be 18 years of age or older
- Have a sufficient credit score (this varies from lender to lender, though a FICO credit score of 690 or higher is considered good)
- Provide proof of income
- Have a low debt-to-income ratio (this also varies from lender to lender; typically, a DTI ratio of 35 percent or lower is considered good)
1. Fill Out Pre-Approval Form
Once you have chosen a preferred credit union, you can stop by a branch location for an application or fill out the pre-approval application online. Many lenders offer their personal loan applications right from their websites.
Every application is different, but you typically need to answer a few questions about your personal and financial background. Be prepared by having the following information available when filling out your application:
- Social Security number/Individual Taxpayer Identification Number
- Driver’s license, state ID, or passport number
- Proof of address
- Gross monthly income amount
- Employment status
- Financial information (savings, checking, retirement, and investment accounts and so on)
- List of other debt balances
- Co-borrower information (if applicable)
2. Undergo a Credit Check
Once you fill out and submit your pre-approval application, the lender will then check your credit history to determine whether you meet their minimum requirements and whether you are a low- or high-risk borrower. A credit check will inform the lender of your previous credit history and whether you repay debt in a timely manner.
A good credit score communicates you are more likely to make consistent payments and not default on a loan, which makes you a lower risk to the lender. Good credit scores unlock better rates and more favorable loan terms. If your credit score is less than ideal, this can affect your eligibility, and if approved, your rates may be higher and your loan terms less flexible.
The credit check you undergo during the pre-approval process is typically a soft credit check, which means it will not affect your credit score. Since a soft credit check does not appear on your credit report, you can apply to multiple lenders to compare rates without hurting your chances of approval.
3. Submit a Formal Application
If you qualify for a loan, a lender will send you a pre-approval letter, and you will get a loan offer through this pre-approval process. Note that a pre-approval letter does not guarantee you will qualify for the final loan. However, credit union personal loan pre-approval will detail the terms and conditions of the loan you may be approved for, including the maximum amount you qualify for, the interest rate, repayment terms, and the estimated monthly payment amount. If you receive pre-approval from multiple lenders, you can decide which offer best fits your needs and then submit a formal application.
A formal personal loan application requires specific documentation as well as a hard credit check (compare to “soft credit check” above). Essentially, you will be confirming the information you provided in the pre-approval process. Make sure to gather all necessary documents to speed up the process and ensure the information is accurate. Necessary documents may include:
- Personal contact information
- Employer contact information
- Copy of government-issued identification (driver’s license, state ID, or passport)
- Social Security number or Individual Tax Identification Number (ITIN)
- Recent pay stubs, w-2s, or tax returns
- Bank statements
- Utility bill to verify address
- Statements for other debt you’re repaying
Once your formal loan application is approved, you can receive money as quickly as the same or next business day.
Achieve Your Goals
Take your future in your hands with credit union personal loan pre-approval. Work with a credit union such as Mid-Hudson Valley to secure a personal loan with great rates and meet your personal and financial goals sooner.
Personal loans can be used for a wide range of expenses, including debt consolidation, medical bills not eligible for insurance reimbursement, funeral expenses, home renovations, car repairs, tuition, a dream vacation, and more. Get pre-approved and start living the life you envision now!