No matter what you need money for, applying for a personal loan can be a daunting task. At People Driven Credit Union, we want to make the process as smooth as possible. Here are some application tips for personal loans to help you make your application as strong as it can be.
Why Your Personal Loan Application Matters
Whether it’s an unexpected emergency or a well-planned vacation, personal loans can be a smart way to get you some much-needed money. Unlike a credit card, a personal loan has a lower interest rate, and installment loan payoff dates over a predetermined period. At PDCU, we offer a variety of options, rates, and terms to make sure you are getting the best loan for your situation. In order to make sure you are getting the right fit, putting in time to perfectly craft your application is essential.
Your Loan Starts Here
Begin your path to financing your dream. We'll help you turn your financial goals into reality.
Quick Steps to Strengthen Your Application
1. Review Your Credit Score and Report for Accuracy
Your first step should be to take a look at your credit score using PDCU’s Credit Score & Score Simulator. This free tool, included in both the PDCU mobile and desktop online platforms, allows members to check their current credit score, as well as access a breakdown of all the activity that led to the score. This includes loan history, credit inquiries, payment patterns, credit utilization, and public records. You can also use the interactive score simulator to understand the way your credit score would change by taking different steps, including paying off a credit card balance or applying for a new loan.
Even if your credit score is not quite where you want it to be, at PDCU, we want to help our members improve their financial well-being—and we can help you work to get the loan you need.
2. Reduce Your Debt-to-Income Ratio
As a rule of thumb, your debt-to-income ratio should not exceed 50%, meaning your monthly debt payments should be less than half of your monthly income. To make sure your application has the best chance of succeeding, ensure your ratio is as good as possible by paying off credit card balances or prior loans, by increasing income, or both.
3. Gather Essential Documents Before Applying
Before you begin your application, make sure you have all necessary documents on hand. Necessary documents include a valid photo ID (like a driver’s license or passport), proof of income (like a pay stub or recent tax return), employer information, and details on any current debts.
4. Consider Applying with a Co-Borrower or Co-Signer
This step can be especially helpful for borrowers who have lower credit scores. Bringing on a co-signer with a strong credit history can help lower rates and improve your chances of getting approved. However, the co-signer must agree to take responsibility for the loan if you default, and missed payments will affect their credit rating as well as yours. Make sure they understand the stipulations in that agreement before they sign on.
5. Avoid Common Mistakes That Delay Approval
A handful of different factors can delay approval of your loan. Some of these are obvious, but some are less so.
Examples of an obvious delay would be to not have the proper documentation for a loan application (as listed above), or to be unfamiliar with your credit score or any fixable errors in your credit history.
An example of a less obvious issue would be making a drastic change to your financial situation in the midst of the application process, like changing jobs or making a large purchase.
6. Use Pre-Qualification to Understand Your Options
While you can quickly and easily apply for a loan online through PDCU’s website and banking apps, it may make your process smoother to talk with one of PDCU’s experts over the phone beforehand to ensure you meet the basic minimum requirements for a personal loan, or to ask any questions about the process you may have. To reach an expert, our number is 248-263-4100.
How Credit Unions Evaluate Personal Loan Applications
The most basic information that a loan expert will take into consideration is your credit score, your income and employment, and your debt-to-income ratio.
Additionally, the lender will need to know the purpose of your loan. When you are ready to begin the application process, being clear about what you will use the money for makes it easier on the lender and helps you avoid overextending your finances.
When to Apply—and When to Wait
Sometimes there is no time to wait to apply for a personal loan, like when money is needed for emergency medical bills, unexpected car maintenance, or a sudden, time-sensitive move. In those cases, apply when you need to.
However, there are other cases—like home renovation projects or a vacation—where a bit of extra time can improve your chances of getting a loan approved. If you can wait until you pay off a prior debt, or until your expected raise at work goes through, your improved debt-to-income ratio can be very helpful in the loan application process.
Use PDCU’s Personal Loan Options Page to Estimate Loan Terms That Fit Your Budget
PDCU has a variety of tools to help you plan for your financial future, including the personal loan payment calculator.
You can enter a loan amount, an annual percentage rate, and a payment timeline to see what your payments would look like with a given set of variables, and tinker with those figures until you can find the loan terms that best suit your needs.
Final 24-Hour Checklist Before You Submit
Before you apply for your personal loans, remember to take the following steps:
- Review your credit score
- Gather the necessary documents
- Discuss the terms with your co-signer, if applicable
- Brainstorm your preferred payment plan with the loan calculator tool
- Reach out to a PDCU representative if you have any final questions
Reach out to your local PDCU branch or call us at 248-263-4100 to begin the process of applying for your own personal loan.
Your Loan Starts Here
Begin your path to financing your dream. We'll help you turn your financial goals into reality.
Frequently Asked Questions
What credit score do I need for a personal loan at a credit union?
Bad credit is typically defined as a FICO score under 580, but each lender has its own criteria. PDCU is more flexible than a traditional bank, looking beyond your credit score and taking your financial situation into account, and has options for members with less-than-perfect credit.
Does applying for multiple personal loans hurt my credit score?
Yes, applying for multiple loans of any kind can negatively impact your credit score. However, consistent, on-time payment of loans will improve your credit in both the short and long term.
Can I get approved for a personal loan with bad credit?
Yes. PDCU will work with members to get them the loan they need, even if their credit score is not where they want it to be. Some strategies to work around credit issues include opting for a secured loan, applying for a smaller amount, and adding a co-signer.
How can People Driven Credit Union help me improve my credit before applying?
PDCU has a variety of avenues for improving credit. These avenues include debt consolidation loans to help manage current debt, and credit builder loans, which can improve your credit while establishing a savings account as a stepping stone to better future loan terms. PDCU has also partnered with GreenPath Financial Wellness to help our members get back on track with their finances and credit. Please call GreenPath at 877-337-3399 and let them know that you are a PDCU member if you would like to make an appointment with a rep.
How do I check the status of my loan application?
You may give us a call at 248-263-4100 to speak with the loan department.
