What Is More Important in Getting a Personal Loan – Credit or Income?



It wouldn’t be an overstatement to say that most people are worried about their finances, one way or another. Economies aren’t exactly thriving and if you want some
financial security in the future, then living paycheck to paycheck simply won’t cut it anymore. Some turn to investments and try to make use of what little money they have in the stock market or any other endeavor to generate a little extra revenue on the side. Unfortunately, that isn’t an option that would work with a person already in debt. In that case, a personal loan is the most suitable for choices. The question is, what do you need to get one? Well, a lot of things, but the two most important factors that need your attention are your credit score and income, but which is more important?

Credit Score 

You should know that your credit score is very important when it comes to how easy it would be to take out a personal loan. Before we get into why it is that important, you need to understand the types of loans available –– secured and unsecured. When it comes to secured loans, like mortgages and auto loans, there is collateral involved, which means the banks or lenders could seize those assets if you fail to meet your payments. On the other hand, unsecured loans don’t include collateral, which is obviously why they are more popular. But you should know, though, that unsecured loans can cause all sorts of problems if you don’t meet your payments, namely, damaging your credit score. 

The problem with having a poor credit score is the fact that you are at a higher risk for lenders, which means you will be charged significantly higher interest rates. Lenders want to guarantee their payments, and because you are a risk for them, they will have you pay more than you usually would if you had a good credit score. This is why it is very important that you try to maintain a healthy credit score by making timely payments for starters, as it will affect you during the process of getting personal loans. 

Can You Still Get a Loan With a Bad Score?

Fortunately, yes, you can. It is definitely not easy, and you will have to show the lenders that you are trustworthy, but it is doable. As mentioned earlier, you will also have to pay higher interest rates because of the status of your credit score, so the trick is in
finding a personal loan that’s right for you, with the best possible interest rates for people with bad credit scores –– and some also work for those who have a low income, which might affect your personal loan process as we’ll discuss in a bit. So, shop around and get different quotes to see which will work best for your circumstances, and make sure you’re dealing with trustworthy lenders. 


So, how important is it to have a good income when it comes to getting personal loans? Well, you can say it is just as important as having a good credit score. Lenders don’t view you as much of a risk when you have a good income, because it means that you are most likely able to pay your payments on time. So, it might help you get lower interest rates, even if your credit history isn’t particularly impressive. Your income can also indirectly affect your credit score, as it impacts your ability to pay the bills you have, and those reflect positively or negatively on your score. As you can see, income and credit are quite connected, and they both make a difference in the eventual personal loan application. 

Is One of Them More Important?

Not really. To have a smooth personal loan application process, you need to have a good credit score and a decent income to show lenders that you are not a risk. But as mentioned earlier, it is possible to still get a personal loan even if you aren’t doing particularly well on those two fronts. Lenders might also look at your work history and liquid assets, as well as whether or not you are currently in debt and how much that is worth. They generally like to be on the safe side, so you can expect your finances to be thoroughly vetted.

At the end of the day, you can
get a personal loan whether or not you have a good credit score and income, but as mentioned earlier, it comes with certain complications. So, you need to be prepared for that and more importantly to look at different lenders to find the best deals. 


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