What does it mean if my LendingClub loan was funded but denied?

Personal loans affect your credit score in the short-term and in the long-term. In the short-term, a personal loan may damage your score because it causes a hard credit inquiry and increases your debt load. But in the long-term, a personal loan can either help or hurt your credit, depending largely on whether or not you pay the bills on time. Ultimately, it’s up to you how much impact the personal loan will have.… read full answer

How a Personal Loan Affects Your Credit Score:

• Does temporary damage with an initial hard inquiry. When you first apply for a personal loan, your credit score will immediately take a small hit. That’s because applying for a personal loan triggers a hard inquiry into your credit history. But this shouldn’t drop your score by more than 5 points or so, and you should be able to bounce back quickly.
• Adds to your overall debt. If you’re approved for a personal loan, you will immediately have a higher debt load, which may cause your credit score to drop in the short-term. That’s because the more debt you have, the riskier it is for banks and credit unions to lend to you.
• Reports to the major credit bureaus monthly. The banks, credit unions and online lenders that issue personal loans report payment information to the major credit bureaus on a monthly basis. If you make on-time payments, you can expect your score to increase. But if you are late or don’t pay altogether, your score will drop.
• Improves your credit mix. Proving yourself capable of managing multiple types of loans and lines of credit responsibly is good for your credit score. It shows you can be trusted to repay what you borrow in a variety of situations. So if you only have one or two other types of accounts on your credit report, such as credit cards or student loans, your score may benefit in the long run from getting the personal loan.
• Could help reduce credit utilization. Personal loans give you a lump sum up front, which you pay back in monthly installments. This is different from a credit card, where you can borrow up to a certain amount any time you want. Credit cards are known as “revolving credit,” and a big part of your credit score is how much of your revolving credit you use up each month, or your “credit utilization ratio.” Personal loans don’t count toward this ratio, so if you use them to pay off revolving debt, you can lower your ratio and improve your score.

In conclusion, as long as you’re sure to pay on time each month, a personal loan should eventually increase your score by a lot more than the initial inquiry caused it to fall. You can also avoid wasting hard inquiries by getting pre-qualified for a loan first. Pre-qualification only uses a harmless soft inquiry. And while it doesn’t guarantee approval, it will let you know if your odds are good.

Major personal loan requirements include being at least 18 years old, having a bank account, having a good credit history, and having enough income or assets to afford monthly loan payments. Specific personal loan requirements vary by lender, however. Avant requires a credit score of 600 or higher, for example, while … read full answerProsper sets the bar at 640 and SoFi asks for 680. Most lenders don’t disclose annual income requirements, but two exceptions are LendingPoint ($20,000+) and Citibank ($10,500+).

Some personal loans may have additional requirements, such as collateral to secure the loan. Lenders will also look at plenty of other factors when you apply, including your existing debt, employment status and housing payments.

Personal Loan Requirements

18+ Years Old

A loan is a binding contract, and most states won’t let you enter into a binding contract unless you are at least 18. Lenders generally do not offer loans to minors as a result.

SSN and U.S. Residency

Many (but not all) lenders will only make loans to U.S. citizens and permanent residents. You may be required to have a Social Security number. Some lenders allow applicants to use an Individual Taxpayer Identification Number or a Visa instead.

Bank Account

Lenders usually send the funds as a direct deposit to a bank account. Certain types of loans, such as ones where you provide collateral, may not require you to have a bank account. But most loans will.

Steady Income

Lenders need to be confident that you will repay the loan. So you will need to demonstrate that you have a source of income and/or significant assets. Lenders don’t generally disclose minimum income requirements, but you must be able to manage your monthly payments in addition to any other debts/expenses you have.

Credit Score of 585-700+

Lenders require applicants to meet a certain credit score threshold for approval. The most popular lenders usually require a credit score of at least 585 to 700. However, these requirements aren’t set in stone. Having a high income might help make up for a low credit score, and vice versa.

Reasonable Financial Obligations

If the lender determines that you already owe too much money relative to your income and assets (i.e. the amount you can afford to pay back), you probably won’t qualify. Lenders will also consider monthly expenses like housing payments that will decrease the amount of money you can put toward repaying a loan.

Stable Employment

It’s not impossible to get a loan if you don’t have a job. But if you’re unemployed you’ll need a strong alternative source of income, such as a pension, government benefits or investments.

Bottom Line

Overall, good credit and disposable income are the two most important personal loan requirements. You can check your latest credit score for free as well as compare personal loans based on their minimum credit score requirements on WalletHub. Lenders will be able to provide more detailed information about other requirements.

Although each lender is a bit different, the basics of the application and approval processes are pretty much the same. You can take the same general approach to maximize your odds of success, too.

Personal loan applications require several key pieces of personal information, including your name, SSN/ITIN, address and date of birth, along with financial information such as your yearly income and monthly mortgage/rent payments. It usually takes less than 7 business days to get a decision and to receive your money if you’re approved.