What is personal loan eligibility?

When you apply for a personal loan, you’ll need to meet a lender’s eligibility criteria. This helps a lender decide whether to accept your application.

Eligibility criteria is often in place to benefit both lenders and their customers. It ensures only those with suitable financial and personal circumstances can access credit, which reduces the likelihood of a customer defaulting on their agreement and getting into unmanageable levels of debt.

Ultimately, responsible lending is all about acting in a customer’s best interests. Lenders must therefore take proactive steps to make sure they’re only lending money to customers who can realistically afford to make their repayments reliably every month.

This means that lenders must have evidence the customer is financially stable, with a steady income. They must also be able to verify a customer’s identity and will use your personal information such as your address to do so.

In this guide, we’re looking at the factors that affect personal loan eligibility and how you can take steps to improve your chances of getting a personal loan.

What is eligibility criteria?

Eligibility criteria is essentially a checklist of requirements applicants must meet to be considered for a financial product, such as a personal loan. Those who do not meet the essential criteria will likely be declined, so it’s important to only apply for a loan if you know you meet the criteria stated by the lender.

While lenders don’t often disclose their full assessment criteria, most reputable organisations will share their eligibility criteria. This allows customers to compare lender requirements and make an informed choice when deciding which financial product best suits their circumstances and which provider to apply with.

Factors that affect personal loan eligibility


Lenders have a duty to lend responsibly, so finance providers will only lend to adults over the age of 18. In fact, many lenders choose to extend this age limit to those aged 21 or over.


As part of a lender’s affordability checks, they need to know how much money you’ve got coming in and what demands you have on your money each month. This information is provided by banks to the credit reference agencies, though lenders may also ask to see bank statements.

By assessing your debt-to-income ratio, lenders can determine whether an additional loan might be affordable. This will form part of their decision on whether to accept your application or what loan amount, term or rate they can offer you.


Lenders like to see stability and may look for consistency in employment over a fixed period, such as over six months or a year. This reassures lenders that you have a regular stream of money coming into your account and will therefore be more likely to be able to pay off your debts.

Address history

Understanding your address history helps lenders to verify your identity. The address you’ve provided on your application form will be compared with records such as the electoral roll – basically demonstrating that you are who you say you are.

Your address history may also be taken into consideration when a lender assesses your creditworthiness. Lenders like to see stability. So, living in the same address for a longer period could be more desirable to lenders than living at multiple addresses over a short space of time.

UK residency

Many lenders may require you to be a permanent UK resident or require you to have lived in the UK for a certain amount of time. This is because credit reports are not usually transferable from one country to another. So, if you move to the UK, you’ll need to start building your UK credit history from scratch. Often lenders stipulate that you must be a UK resident to ensure you have enough credit history to help them make an informed lending decision.

Bank or building society information

You’ll need to have a bank account when applying for a loan. Otherwise, how will lenders pay you the money you need and how will you make your monthly instalments?

Bank account information is also an essential part of any lender’s credit checks.

Credit history

Lenders assess your credit report to see what kind of customer you’re likely to be. For example, if you have a good history of repaying the money you owe, this may make you a lower risk customer and therefore you might be able to borrow money at a lower rate.

Minimum requirements for personal loan eligibility

Every lender will have their own loan eligibility requirements. Criteria should be clearly stated on a lender’s website or application form. Always research a lender’s requirements in advance of applying for a loan.

Most lenders will only lend to applicants who are over 18, have some form of income, have a three-year UK address history and have a bank or building society account.

Novuna Personal Finance eligibility criteria

To apply for a loan with Novuna Personal Finance, you must:

  • Be aged 21 or over
  • Be a permanent UK resident — we’ll need to know your address history from the last three years
  • Be in permanent paid employment, self-employed, retired with a pension or a houseperson with a partner in permanent paid employment or self-employed
  • Have an income greater than £10,000
  • Have a bank or building society account
  • Have a good credit history

While some lenders specialise in offering loans to those with bad credit, we only lend money to customers with a good credit score and a strong track record of paying back debt responsibly.

It’s also important to us that our customers can comfortably afford to make their loan repayments, without putting unnecessary strain on their finances. Our affordability checks are there to make sure the customers we accept are in a financial position to take on additional credit.

How lenders determine eligibility for personal loans

Lenders will set eligibility criteria based on what kind of customer they feel is most suitable for a particular product. For example, a high APR credit builder card or student credit card is likely to be most suitable for those with a thin credit file. Therefore, an applicant might not need to have a good credit history or earn a minimum annual income to apply for that product.

A low-rate personal loan product may be more suitable for those with previous experience managing debt. Therefore, it’s likely that the eligibility criteria will be more stringent given that lower rates are on offer for that product and lenders will want to minimise the risk of customers defaulting on their repayments.

Do remember – you might be eligible to apply for a loan, but that does not automatically mean your application will be accepted.

Lenders assess your credit risk and affordability when deciding whether to accept an application. This helps them to predict how likely you are to make your repayments and assess whether making those repayments would cause you to struggle financially.

Lenders will look at the information on your application form, combined with the information provided by credit reference agencies, to aid their decision-making process.

If you’re looking for more information about how lenders make a decision on your loan application, our guide covers everything you need to know.

How to check your eligibility

Most reputable lenders will clearly state their eligibility criteria, both on their website and as part of the application process. Consider this a checklist to run through before you click ‘apply now’.

If you’re not sure what your credit score is or what information is on your credit report, it’s a good idea to find out before applying. This could give you an idea of whether you’re likely to be accepted. It’s free to check your credit report so it’s worth requesting a copy from each of the three credit reference agencies: Experian, Equifax and TransUnion.

Some lenders also offer eligibility checkers, which tells applicants their likelihood of being accepted with no effect on their credit score. If you have a high chance of being approved for a loan, it might help you to feel more confident applying and accepting that hard credit check.

How can I improve my eligibility for a personal loan?

It’s perhaps stating the obvious, but only apply for a loan if you know you meet the eligibility criteria. Do your research and make sure you know what a lender’s looking for before you hit that ‘apply now’ button. After all, why add an unnecessary hard search on your credit file if it’s likely you’ll be automatically declined?

There may be some elements of the eligibility criteria you simply can’t change, while it may be possible to make some changes to meet the criteria:


Unfortunately, we can’t pick and choose our age. If you’re too young to meet a lender’s age criteria, you’ll have to wait until you’re old enough to apply or research other lenders who may accept younger applicants.

Address history

While it’s advised not to move address too frequently, it isn’t always possible to stay in one place. It’s more important to make sure that your address records are up to date. Ensure everything is registered to your current address, from your mobile phone contract and bank accounts to electoral roll information.


You may not be in a position to change your employment status. Fortunately, most lenders do accept applications from a wide variety of employment types including both part-time and full-time workers, self-employed individuals and retirees who are receiving a pension. At Novuna Personal Finance, we also accept applications from those who aren’t currently employed, but whose partner is in permanent paid employment or self-employed.

If you have had a recent change in employment – such as a short gap in employment or a substantial pay increase – this may not be instantly reflected on your credit file and therefore may not factor into a lender’s affordability checks for several months. In this case, it may be beneficial to delay applying for credit until your most recent employment status is reflected accurately in your credit report.


A minimum income requirement is usually in place to ensure lenders only accept applicants who are in a financial position to afford their loan repayments.

It’s important to ensure you have a steady stream of income coming into your current account. And, furthermore, make sure that account appears on your credit record. This is particularly important for self-employed applicants who may not always pay a regular income into their current account. Try, where possible, to pay a reasonable minimum amount into your current account on a monthly basis to showcase that stability. Our guide on personal loans for self-employed people goes into more detail.

You should also keep an eye on your debt-to-income ratio. It’s recommended to try and make sure monthly debt equals less than around 40% of your monthly income. If your debt burden is too high, this could indicate you won’t be able to afford to take on another credit commitment. Therefore, to improve your chances of getting a loan, try to reduce the amount of debt you currently have. This will help to demonstrate you have enough surplus money to comfortably pay off any money you borrow.

Current account

Lenders need to deposit into and collect funds from a bank or building society account, so it really is essential that you have one.

It’s relatively simple to open an account and shouldn’t cost you a penny. That said, if you haven’t already got a current account then it’s very likely you’ll have a thin credit file. This could make it more difficult to obtain credit, as you won’t have a track record of repaying debt in the past. If this is the case, it may be worth taking steps to build your credit history before applying.

Credit history

Your credit file is an ever-changing record that provides an overview of your credit history. This means there are several different ways you can try to improve your credit report in order to become a more attractive applicant to lenders. Our guide on how to improve your credit score might be helpful here but, in summary:

  • Keep up with any repayments to show you’re a reliable borrower
  • Check your credit file periodically to make sure there are no mistakes and all the information is up to date
  • Register on the electoral roll to ensure lenders are able to verify your identity
  • Reduce debt where possible and keep an eye on your credit utilisation
  • Showcase stability by keeping any long-standing accounts open
  • Avoid multiple hard searches on your credit report
  • Don’t show evidence of poor money management, such as withdrawing cash using your credit card or taking out a payday loan
  • If relevant, submit a notice of dissociation to make sure another person’s poor credit score doesn’t have an adverse effect on your own

Selecting the right personal loan for you

In addition to meeting the eligibility criteria, there are a few other things that will impact your chance of getting accepted for a loan. These include:

Loan amount

If you’re not sure what loan amount you can afford or how much you can borrow, why not use a loan calculator to work out what your monthly repayments could be for a smaller amount instead? Borrowing a smaller amount could have less of an impact on your debt-to-income ratio and may make your application more viable for lenders if you’ve previously been declined for a larger amount. You could find that borrowing less will cost you less each month, too, depending on the loan term you choose.

Loan term

How long you borrow money for will impact your monthly repayments and the amount of interest you pay in total. You could choose to take out a loan over a short period of time to reduce total interest costs or extend the loan term to bring your monthly repayments down (though you will pay more interest in total this way).

It may also be worth looking out for lenders like Novuna Personal Finance who won’t charge you application fees and won’t apply penalty charges for overpaying or settling your loan early. This may make the cost of your loan a bit more manageable.

Finally, do consider whether an unsecured or secured loan is the right option for you. An unsecured loan doesn’t require you to put up any valuable assets as collateral, which means it could be trickier to qualify if you have a less-than-perfect credit history. That said, you may find an unsecured loan more suitable if you don’t own a house or car, need to borrow a smaller amount or simply prefer a quicker and more straightforward application process.

Are you ready to apply for a Novuna Personal Finance loan?

If you meet our eligibility criteria, simply fill out our online application form. You’ll need to have your employment details (including annual income), bank account details and address history from the last three years to hand, so please get the information ready to help speed up the process.

Once you’ve applied, you’ll receive an instant decision on your application. Ready to get started?


Written by

Sophie Venner

Sophie Venner is a Yorkshire-based content writer specialising in crafting content for the financial services industry. She’s written over 300 articles on finance, but she’s covered everything from insurance to digital marketing trends. Her content has been featured in the likes of Semrush, Digital Marketing Magazine and Insurance Business. In her spare time, you won’t find Sophie far from a notepad and pen as she squirrels away trying to write a novel.

Tuesday 8th August 2023