Editor’s Note: This article has been updated for 2019.
You don’t have to have a long credit history to qualify for a personal loan with Earnest. This innovative lender uses thousands of data points and a personalized underwriting process to look at each applicant’s history and potential. Although these loans are geared toward applicants with minimal credit, this lender looks for borrowers with a record of saving, no delinquencies and an income that’s high enough to support the loan payment in addition to other monthly expenses.
Earnest also looks for borrowers who don’t have a lot of debt other than a mortgage and student loans, so if you’re looking for loans to consolidate credit card debt, this one isn’t a contender. An Earnest loan is still a viable option for anyone with a steady income and a light credit history, but it’s important to compare loan providers with similar offerings to ensure you make the right choice for your needs.
To be eligible for an Earnest personal loan, you must be 18 years of age or older. Additionally, you must be a United States citizen, long-term resident alien, or conditional resident alien with an acceptance or approval of Form I-751 “Petition to Remove Condition of Residence”. You must reside in a state in which Earnest operates, which excludes anyone living in:
- Rhode Island
Although the company doesn’t specify a minimum credit score for acceptance, Earnest prefers applicants with good to excellent credit, placing the lender’s offerings among the top personal loans for good credit. Part of what makes Earnest so different is the way that this company assesses its applicants’ financial history.
Earnest uses multiple data points to get a thorough view of a potential borrower’s financial habits and potential. It’s okay to be weaker in one area and stronger in another. The more of the guideline traits you have, the more likely it is that Earnest can approve your application. These guidelines include having:
- A savings account with enough money to cover at least two months of expenses
- A steadily increasing bank balance, which proves that you spend less than you earn
- Minimal debt other than a mortgage and student loan
- A positive payment record
- No recent collections activity or bankruptcies
How Are They Different?
Many traditional lenders shy away from borrowers with limited credit history. Earnest’s unique application process goes beyond the length of your credit history to look at your earning potential and uses a merit-based lending model to assess elements other than your credit score. Earnest’s thorough application process takes much of the risk out of the loan process, which reduces fraud and defaults. This, in turn, reduces the lender’s overall costs to save borrowers money.
In order to analyze your financial picture, Earnest offers a detailed six-step application that requires information about education history, the purpose of the loan, employment history and bank account information. The lender then uses an algorithm to evaluate your financial transactions and financial habits before performing a thorough credit check. Additionally, you have the option to provide Earnest with input about your preferred payment amount, change your due date and increase your payment amount at any time during the life of the loan without penalty.
Earnest Lending Terms
Earnest offers personal loans with a 3, 4, or 5 year term and a fixed annual percentage rate (APR) that ranges from 6.99%–18.24%. Applicants can borrow anywhere from $5,000 to $75,000 and expect to receive the funds within one week after approval.
Earnest Fees and Penalties
The online application process lets this lender reduce costs, and the savings are passed onto borrowers in the form of lower rates. In addition to relatively reasonable APRs, Earnest charges minimal fees and penalties, including:
- No origination fees
- No prepayment or early payment fees
- $8 returned payment fee
- 0.35% stamp tax on Florida loans
Earnest Loan Comparison
Before applying for a personal loan, it’s essential to shop around and compare some of the other available options to find the one that’s right for you. Pay close attention to each lender’s fees, APR, terms and application process. Comparable personal loans are available from Best Egg and Prosper, although each lender has its own strengths and weaknesses.
Best Egg offers personal loans ranging from $2,000 to $35,000. Like Earnest, this lender offers an online application. Unlike Earnest, most borrowers get a decision within minutes, and approved borrowers often get their money within one business day. The APR on these loans ranges from 5.99%–29.99%, depending on your creditworthiness. Best Egg relies on your credit history, credit scores and debt-to-income ratio to determine your acceptance and rates.
A Best Egg personal loan comes with an origination fee that ranges from 0.99%–5.99%, and late-payment and returned-payment charges are each $15. Available loan terms include 3-year and 5-year loans.
To qualify for a Prosper personal loan, you need a credit score of at least 640. This loan relies on a completely different lending model: peer-to-peer lending, which uses investors instead of a bank to fund the loan. Once you complete the online personal loan application and undergo a soft credit check, your receive different loan options, including terms, fees and fixed APRs. You choose the loan option that works for your requirements and fill out a second, more detailed application.
At this point, Prosper puts the loan on its website marketplace to connect it with investors interested in funding loans. While your loan waits for investors, Prosper completes income and identity verification. For approval of your loan, investors must fund at least 70 percent of the requested amount, and you receive the money within five business days. Prosper charges an origination fee, called a closing fee on the company’s site, of up to 5%.
Before applying for an Earnest personal loan, or any personal loan, consider all your available options. In some cases, a 0% APR credit card offer or a home equity line of credit could provide the additional funds you need at a lower cost. Check your credit score and credit report to evaluate your own financial strengths and weaknesses before you compare loans for good, fair and bad credit, depending on where you stand, and be prepared to provide personal information and supporting documentation, such as paycheck stubs and/or bank statements, to verify your identity and income.