Can I use household income for a personal loan?
You cannot simply list a spouse's income with, or instead of, your own if you apply in your name alone. However, you can list their income if your spouse agrees to become a “co-borrower” on the loan.
If you're part of a two-income household, getting a mortgage together usually means you can qualify for a larger home loan. However, if your spouse isn't on the loan with you, your lender won't consider your spouse's income when determining how much you'll qualify for.
Employer and income verification
Unsecured personal loans rely mostly on your income to determine how much you qualify for. Because lenders don't require you to put up collateral to back the loan, you must prove you have a steady stream of verifiable income to be approved.
Your spouse's income can count on your individual credit card application. You must have reasonable access to your spouse's income, such as sharing a joint bank account or splitting finances. If you are currently unemployed, you can use your spouse's income alone on your application.
An income-based loan is a type of personal loan, which can be used for debt consolidation and a variety of expenses and purchases. Most personal loans are unsecured and approved based on your credit score, but with income-based loans, lenders instead prioritize how much money you make.
In addition to credit scores, lenders will look at your income to see if it's high enough to qualify for the loan you're seeking. If your income isn't high enough to snag that mortgage, and you need your spouse's income factored into the equation, then you'll have to apply for that loan jointly.
If your spouse has a bad credit score, it will not affect your credit score. However, when you apply for loans together, like mortgages, lenders will look at both your scores. If one of you has a poor credit score, it counts against you both. You may not qualify for the best interest rates or the loan could be denied.
The reasons for loan denial can vary based on your unique situation. Common factors that prevent you from getting a personal loan can include a low credit score, insufficient credit history, a high debt-to-income (DTI) ratio or requesting too much money.
In general, lenders extend $30,000 loans to borrowers with good to excellent credit, which is typically 670 and higher. But there may be lenders who lend to borrowers with bad credit. If you're having difficulty qualifying, you may consider getting a cosigner or co-borrower to help you get approved for the loan.
Some of the easiest loans to get approved for if you have bad credit include payday loans, no-credit-check loans, and pawnshop loans. Personal loans with essentially no approval requirements typically charge the highest interest rates and loan fees.
What is considered household income?
Household income is the total gross income received by all members of a household within a 12-month period. This figure comprises the earnings of everyone under the same roof who is age 15 or older, whether they're related or not.
FALSE. Married couples are not required to apply for credit jointly. You can still apply for individual accounts without your spouse co-signing or being otherwise involved. If one partner has higher credit scores, applying individually – not jointly – for an account may be one option.
For those age 21 and older
According to an amendment to the Card Act, borrowers over 21 can list any income to which they have “reasonable expectation of access.” This broad definition includes: Personal income. Income from a spouse or partner.
| Company | APR | Annual Income Requirement |
|---|---|---|
| Discover | $25,000 household income | $2,500 - $40,000 |
| 60MonthLoans | $30,000 | $2,600 - $10,000 |
| LendingPoint | $35,000 | $2,000 - $36,500 |
| Upgrade | $50,000 | $2,000 - $36,500 |
Banks vet personal loan applications based on many different criteria, including your credit score, your income and your debt-to-income ratio. If your personal loan application is denied, your credit score or income may be too low or your debt-to-income ratio may be too high.
The general rule is that you can afford a mortgage that is 2x to 2.5x your gross income. Total monthly mortgage payments are typically made up of four components: principal, interest, taxes, and insurance (collectively known as PITI).
Some lenders allow both partners to apply for a mortgage together. This may help you and your partner qualify for a larger mortgage because your incomes are combined. If one partner has a weak credit score, the lender may base their lending decision on the lower credit score.
You'll typically need a credit score of 620 to finance a home purchase. However, some lenders may offer mortgage loans to borrowers with scores as low as 500. Whether you qualify for a specific loan type also depends on personal factors like your debt-to-income ratio (DTI), loan-to-value ratio (LTV) and income.
Lenders determine what's called the "lower middle score" and usually look at each applicant's middle score. For example, say your credit scores from the three credit bureaus are 723, 716 and 699, and your partners are 688, 657 and 649. Lenders will then use the lower of the two middle scores, which is 657.
Lenders use both partners' credit scores, but a common myth is that they take the scores and average them, which isn't the case.
What happens when I marry someone with bad credit?
Marrying someone with poor or damaged credit does not affect your credit scores. But if you and your spouse plan to seek credit jointly, their low credit score could affect your ability to get a loan, or lead to higher interest charges than you'd get if you applied yourself.
Generally, loans are more costly for borrowers with bad credit. Lenders that offer bad credit loans may offset their risk by charging a higher origination fee and interest rate, resulting in a higher annual percentage rate (APR). For example, say you want to borrow $10,000 and repay the loan over three years.
- Upgrade. : Best for poor credit.
- Prosper. : Best for peer-to-peer lending.
- LendingPoint. : Best for long repayment terms.
- Upstart. : Best for thin credit.
- Avant. : Best for fair credit.
- Oportun. : Best for small loans.
- LendingClub. : Best for co-borrowers.
- SoFi. : Best for discounts.
What Is A Hardship Loan? A hardship loan is a type of financing that helps people dealing with a financial crisis caused by an emergency expense or an income shortfall. You can use a hardship loan to cover everything from a surprise medical or car repair bill to necessities like food and rent.
In some cases, a lender might ask for your bank account number to know where to send the loan funds after your application has been approved. Some online lenders may ask you to connect a business bank account to analyze and verify your revenues to see whether you qualify for an online loan.
