Home > 5 Smart Tips for Getting a Personal Loan - OUCU Financial

5 Smart Tips for Getting a Personal Loan


A personal loan allows you to pay for just about anything. That includes unexpected emergencies, debt consolidation, a dream vacation, or a business startup. 

At OUCU Financial , we make sure you get the most favorable loan terms – including low fees and low interest! Read below for more personal loan tips to make sure you get the best personal loan for your goals.

1. Know Your Credit History

Your credit score and history are key factors in determining your eligibility for a personal loan. Generally, the higher the credit score, the more likely you are to receive the most favorable interest rate. 

The average credit score falls into the following categories:

  • 690-719: Good credit
  • 630-689: Fair or Average credit

If you’re looking to rebuild your credit or don’t have much history at all, take steps to build your credit before you apply. On-time payments and the amount of credit you use relative to credit limits have the biggest impact on your score. 

Don’t forget to fix any errors that might be dragging down your score. You can request your free credit report and dispute wrongly reported missed payments or any other inaccuracies it may contain. 

2. Maintain A Stable Income

Before considering a personal loan, remember your current employment status and income will be verified. Determine the specific loan amount you need, and avoid making the mistake of borrowing more than that limit. A larger loan amount has more interest and higher monthly payments that could strain your budget.

Like most personal loan requirements, “proof of income” can mean different things for different lenders. Confirm what documentation will be needed prior to applying. Some lenders may require a signed letter from your employer, while some will need pay stubs or W2s. If you’re self-employed, this could mean you’ll need to submit a copy of your tax returns. 

Finding yourself wanting to add a boost to your income? For qualification purposes, think about asking for a raise or picking up part-time work. Increasing your cash intake could improve your chances for the most competitive offer after applying. 

3. Compare Loan Terms & APR

Because credit unions serve the local community with a focus on individual members, they often offer more competitive loan terms than other lenders. Review the loan terms and all options for the loan repayment period. You’ll owe less money overall if you can select a shorter amount of time in which to repay your loan.

Next, review the interest rate. Federally chartered credit unions typically cap most loans at an Annual Percentage Rate of 18%. The difference between a low interest rate and a higher interest can be major. We recommend shopping around before committing to a lender, as each one weighs your application information differently.

At OUCU Financial , we do all we can to get you the best personal loan rates.

4. Cover Your Current Debt

Your debt-to-income ratio (DTI) is a ratio that compares your gross monthly income to the monthly payments you make toward your outstanding debt. This percentage is just as important as your job stability and credit history as it paints a picture of how well you’ll be able to keep up with monthly payments on any new debt. 

Since your DTI ratio doesn't include varied monthly expenses such as food, health insurance, utilities, gas, and entertainment, it’s a good idea to budget beyond what your DTI labels as “affordable” for you. Aiming below the 36% back-end target is ideal. This is especially important since DTIs count your income before taxes, not what you take home each month.

5. Add a Co-Borrower

If you don’t qualify alone, you may want to add a co-borrower. Your co-borrower agrees to pay the loan if you aren’t able to at any point in the life of the loan. Both you and your co-borrower’s name on the loan could improve your chances of qualifying for a personal loan, as this is viewed as an extra layer of repayment security.

But remember the reverse of this too – both names on the loan also mean the credit history of you and your co-borrower are taken into account for approval. Your co-borrower might see a decrease in their credit score if you ever miss a payment.

Personal Loan Tips With OUCU

To take advantage of personal loan benefits, you have to get through the approval process first. Similar to a home loan or vehicle loan, you must show your creditworthiness to be granted a loan and your financial history is a major determining factor in doing so. 

Keep reading to learn about what a personal loan is used for and the process of getting approved. 

How To Get A Personal Loan - Step-By-Step Guide

« Return to "Blog" Go to main navigation