Signature Loan Requirements

First off, what is a signature loan?  A signature loan is simply a loan secured by a signature.  As opposed to a collateral backed loan all you need for the signature loan is to sign a piece of paper.

Typical loans such as a car loan or a home loan use the car or house as a backup for the lender.  The bank loans you the money but if you don’t make your payments they take the house away from you in order to try and recoup the cost of the loan.

When you do a signature loan they have no recourse aside from hurting your credit history.  Credit cards are similar in nature because they are unsecured loans.  If you don’t pay your credit card bill then it will just ruin your credit history.  It will not however give the credit card company the authority to come and take back the items that you bought with the credit cards.

So what do you need to do in order to qualify for a signature loan?  Well a clean credit history is a great place to start.  If you have a long history of no payments and defaulting on your debt, it will be quite hard to get a good signature loan.  If however you have a great payment history and have no late or outstanding debt it will be a rather simple and painless procedure to get a good signature loan.

If you are in good shape then you can go to the bank and apply for a loan.  Usually you can get a few thousand dollars without much trouble.  If you have bad credit however you will need to meet far more stringent signature loan requirements.  You will likely only qualify for a high interest rate as well as a really small loan amount.

If you fall into the category of someone with bad credit the best thing is to simply fix your credit history.  It can take a while but the process is worth it as you will have better credit and owe less money.  It can be a bit painful as you downsize your life in order to live within your means.  Living within your means is the process of spending less then you earn so that you are a saver and not a spender.

If you are able to pay off most of your debt or at least to make your payments on a regular basis for a long enough period of time you will be able to go and get loans with better and better terms as you prove to the credit agencies that you are a responsible borrower and you wont leave the banks holding the bag.

Another factor that a bank is going to look at before they give you a signature loan is whether you have a job or are unemployed. It's generally not wise for banks to loan to people that don't have a job and for that reason, this is one of the first things they're going to take a look at. Even if your credit score is high enough to qualify for a loan they are going to want you to have a job.

The credit score that's required to get a signature is going to depend on a few factors. If you have a good, steady job you may be able to qualify for a signature loan with a score as low as 600. However, most banks are going to prefer to see a credit score above 650 for most individuals.Those that have a credit score of above 720 will be able to qualify for a much better rate and those above 750 will be able to qualify for a prime rate.

Most signature loans are going to carry interest rates that are quite high - generally 11% or higher - and this is for peope that have good credit. If you need to get a loan and have bad credit it's going to cost quite a bit more in interest, especially if you don't meet all of the requirements in the way that you should. The more requirements that you can meet the better rate you can plan on. If you have bad credit you may want to consider improving it quickly or getting a different type of loan.

Here are some additional articles that can help you to know if you can qualify for different things.

Pell grant requirements can help you to know if you can get Pell grants.

Home mortgage loan requirements - want to buy a home?

FHA loan requirements - need help qualifying for a home loan?

Auto loan requirements - get yourself a new or used vehicle, if you can qualify.

Personal loan requirements - if you can't get any other type of loan, check here.

Student loan requirements - some student loans are absolutely the best loans on the planet (except for free loans from family)