Why some personal loans are approved faster—and how to speed yours up

One of the best things about personal loans is their versatility. Typically, a lender isn't concerned about how you spend the money as long as they approve of your intended purpose. So whether you're adding a deck to your home or consolidating debt, the loan process works the same. And you're smart to learn everything you can about personal loan approval before you fill out an application—including how long the process takes and how to get approved faster.

Times vary by lender and underwriting method

Underwriting is the process of evaluating a loan application. Approval can take anywhere from a few minutes to about a week or so, depending on the lender and its underwriting method. Once you're approved, funding typically takes from about one to five business days, depending on how you receive the money.

When it comes to how long it takes to get a personal loan, there are three terms to remember: digital, automated, and manual, the three types of underwriting.

• Digital underwriting. Digital underwriting is an automated evaluation process that allows underwriters to spend less time on manual or clerical tasks while assessing the risk of granting a personal loan.

• Automated underwriting. Automated underwriting is the technology-driven process that uses algorithms and data to quickly assess the risk of granting a loan. It streamlines the approval process, reduces human error, and can result in faster loan decisions.

• Manual underwriting. Most financial products get the human touch at some point, and that's called manual underwriting. It involves reviewing a borrower's financial history, employment status, monthly income, and other factors to determine whether the borrower is likely to repay the loan. Manual underwriting often results in longer approval times. If you have a unique financial situation, manual underwriting could improve your chances of loan approval.

You can't judge a book by its cover

You can't look at a bank or credit union from the outside and guess whether it relies more heavily on automated or manual underwriting. By the same token, you can't automatically assume a digital or online bank works entirely with automated underwriting.

It depends on what the lender needs to feel good about its decision. Let's say you're a small business owner with a somewhat complicated income stream. No matter which lender you use, there's a good chance your application is going to spend time in the hands of a manual underwriter.

Sometimes, manual underwriting is required. For example, a lender may want to conduct manual underwriting if an applicant has no credit history or a challenging credit history. It may also be necessary to manually underwrite the application of someone with a strong credit history but a higher-than-usual debt-to-income (DTI) ratio.

What to do about a thin credit history

If you're just starting out and you haven't had time to build a robust credit history, there are basic steps you can take to plump it up. For example:

• Open a credit card account (regular, secured, or retail store) and pay it off in full each month.

• Pay all bills on time.

• Keep credit balances low.

• Become an authorized user on the account of a family member or friend with good credit.

• Take out a small loan. A good place to start may be with a credit-builder loan.

• Limit your number of credit applications.

Achieve is not a Credit Repair Organization and does not provide, or offer, services or advice to repair, modify, or improve your credit.

Make your information easy to verify

Most lenders verify the information you provide. Even if a lender chooses not to verify a piece of information (such as your income or whether you're renting or buying your home), it's a good idea to have the supporting evidence ready.

The easiest way to streamline the process is to gather the documents you're likely to be asked for before you apply for a loan. Take the time to gather these documents:

• Proof of identity. Typically, a government-issued photo ID (such as a driver's license or passport) will work well.

• Proof of address. Include a mortgage statement, rental agreement, or utility bills in your gathered documents.

• Proof of income. This may include recent pay stubs, tax returns, or W-2s.

• Employment verification. Some lenders may ask to contact your employer directly, so be prepared to provide your employer's contact information.

• Banking information. You may need to provide a recent bank statement. In addition, if the loan proceeds will be directly deposited, you'll be asked to provide your routing and account numbers.

• Self-employed documentation. If you own a business and are self-employed, you may be asked to provide tax returns and a profit-and-loss statement.

• Existing debt. The lender may request a list of all your current debts.

Aside from streamlining the application process, gathering your documents in one place can make applying for a loan less stressful. If a loan officer asks for something, you have it ready to go.

Avoid small errors

This may sound like common sense, but there's often a lot going on in your life when you apply for a loan. Double-check your application to ensure everything is correct—from your Social Security number to your employer's telephone number.

How to speed up your loan approval

The time it takes to get a loan approved can range from hours to days. Here are four factors that influence how long the process is likely to take:

• Application. Accurate information on your loan application helps move the process along.

• Lender. Some lenders simply take longer than others. If speed is an issue, ask each lender how long the process typically takes as you shop for a loan.

• Verification. How long it takes a lender to verify the information you provide depends largely on the type of underwriting they use.

• Funding. If you elect to receive funds electronically, it's generally faster than receiving a check by mail. A mailed check can take about five business days to arrive.

Achieve Personal Loans can fund as soon as the next business day after approval in some cases.

Why is my personal loan taking so long to get approved?

A wait that runs longer than the lender quoted can feel worrying. The delay usually traces to a few common, fixable causes. For example:

• You could be missing paperwork. If you fail to include even one portion of the loan application, the entire process could come to a halt.

• It could be taking the underwriter longer than expected to verify your credit, employment history, or income.

• The lender could have a backlog of applications, and yours is waiting in line.

• An error or mismatch on your application could need correcting before the lender can move ahead.

In summary, the easiest way to speed up the loan approval process is to have all required documents ready, ensure your application is 100% complete and correct, and work with a lender that uses automated underwriting.

If you're concerned about how long the process is taking, contact your lender and ask if there's anything you can do or provide to speed up the loan.

Tips to apply for a personal loan with confidence

Some factors make it possible to apply for a personal loan with confidence.

Pay all bills on time

Lenders feel better about lending you money when they know you have a history of paying bills on time. Payment history is also the largest factor in your credit scores, which lenders often use to screen applicants and gauge your risk as a borrower.

Order a free copy of your credit reports

Before applying for a loan, order free copies of your credit report from the Big Three credit reporting bureaus: Equifax, Experian, and TransUnion. Once you have your credit reports in hand, go over each one line by line, looking for any errors. For example, you may spot a credit card listed that doesn't belong to you or a loan balance on a loan you've already paid off.

If you find errors, circle them and report them to the credit bureau in question. The credit bureau has to either verify that the information is correct or remove it from your credit report. An accurate credit report that helps boost your credit score could maximize your chances of getting a personal loan.

Prequalify

Most lenders allow potential customers to prequalify to get an estimated rate and potential terms. To prequalify, you fill out an application (less detailed than a complete loan application) that provides the lender with basic information. Based on that information, the lender lets you know whether it believes you'll qualify for the loan, and if so, what your interest rate and terms could be.

Prequalification typically uses a soft credit pull. Unlike the hard pull associated with a credit application, a soft pull or soft inquiry won't impact your credit score. For instance, you can prequalify with Achieve Personal Loans to see estimated rates and terms without hurting your scores.

Prequalification isn't a guarantee of a certain rate, or even of approval. Your rates and terms could change after underwriting.

Apply with a co-signer

If you have a low credit score, a lender may approve your application based on the credit history and income of a co-signer. For example, a parent or friend with a high credit score might agree to be a co-signer.

Ready to start exploring your loan options? Find out if you're eligible with Achieve Personal Loans in minutes with no impact to your credit.

Achieve is not a Credit Repair Organization and does not provide, or offer, services or advice to repair, modify, or improve your credit.