Personal Loans

How to Qualify for Peer-to-Peer Lending

If you’re looking for a personal or business loan, peer-to-peer lending is one option to consider. Like a more traditional personal loan, you can use it to consolidate debt or pay for a home renovation.

But peer-to-peer lending lets you bypass the bank and borrow directly from investors. You may also qualify if your credit score has kept you from borrowing from a conventional bank. Here’s what to know before applying.

What is peer-to-peer lending?

Peer-to-peer lending, a type of marketplace lending, connects borrowers with investors who fund their loans. The investors that back the loans can be individuals or institutions. Some peer-to-peer lending platforms assess borrowers’ creditworthiness using more variables than credit score alone, which can make them available to a wider range of consumers.

When applying for peer-to-peer lending, you’ll provide information about the loan’s purpose, include supporting documents verifying your income and employment, and agree to a credit check. If you’re eligible, you’ll receive a list of loan options. After choosing one, investors will decide whether to lend to you. Once the loan is funded, you can access the money in about a week.

As you shop for loans, make sure you understand how much they’ll cost. For those without good credit, peer-to-peer loan interest rates can reach nearly 36%. They may also carry origination fees, which come out of the amount deposited to your bank account. A good or excellent credit score — 670 or higher on an 850-point scale — will get you the lowest rates and fees.

How you can qualify for peer-to-peer lending

You’ll generally need to meet age requirements and be a U.S. citizen to qualify for a peer-to-peer loan. Certain lenders don’t operate in some states or have restrictions on how much you can borrow in your state.

Lenders want to see a history of on-time bill payments and responsible financial behavior, which shows you can be trusted to pay them back. They may look at:

  • Your income
  • Your credit score
  • How long you’ve been using credit
  • How much debt you have relative to your income
  • Whether you’ve filed for bankruptcy
  • How many recent lines of credit you’ve applied for, including credit cards and other loans
  • Your employment status

Some lenders work with borrowers who don’t have much credit history but are likely to earn a solid income in the future. The lender will consider your education and work history, as well as your financial background.

While peer-to-peer lenders have the capability to use nontraditional credit factors in their lending decisions, borrowers with strong credit profiles still get the best offers. If you don’t qualify for a loan, look into a personal loan from your credit union or community bank. Or, you can focus on building your credit by paying bills on time and paying down debt, then reapplying.

Where you can get peer-to-peer lending

Several online marketplaces offer the option to apply for and compare peer-to-peer loans. It’s smart to consider several options so you can choose the lender with the lowest rate.


LendingClub has been operating since 2007, making it one of the most established peer-to-peer lenders. The company has worked with more than 2.5 million personal loan customers, according to its third-quarter 2018 earnings statement.

LendingClub offers personal loans of up to $40,000, business loans between $5,000 and $300,000, auto loan refinancing and medical bill financing. You must be 18 and a U.S. citizen to apply. LendingClub doesn’t operate in Iowa, Guam or Puerto Rico.

  • Minimum credit score: 0
  • Terms available: 36 or 60 months
  • APR: 10.68%–35.89%
  • Origination fee: 2.00% - 6.00%


Upstart provides personal loans for standard purposes like debt consolidation and major purchases. But it also offers education funding, including for short-term boot camps like coding intensives.

When taking out a student loan for a traditional two- or four-year school, max out federal student loans first since they come with lower interest rates and more generous repayment programs. But these generally can’t be used for coding boot camps, which makes Upstart’s product unique. It’s also a good option for those without long credit histories.

  • Minimum credit score: 600 (580 in California)
  • Terms available: 36 or 60 months
  • APR: 8.13%–35.99%
  • Origination fee: Up to 8.00%


Peerform, which was founded in 2010, serves borrowers on the lower end of the credit score range. Loans are available from $4,000 to $25,000, and loan APRs are slightly lower than competitors’ rates. You must be 19 to borrow from Peerform if you’re a resident of Alabama or Nebraska (it’s 18 otherwise).

  • Minimum credit score: 600
  • Terms available: 36 or 60 months
  • APR: up to 29.99%
  • Origination fee: 1.00% - 5.00%


Prosper offers personal loans for debt consolidation, home improvement and even renewable energy installation projects for your home. It doesn’t specify its minimum credit score requirement on its website, so check with the lender for more details.

Loans come in amounts from $2,000 to $40,000. Borrowers are required to show that they have a debt-to-income ratio below 50%, that they earn income, that they did not file for bankruptcy within the past year and that they applied for no more than five new lines of credit in the past six months.

  • Minimum credit score:
  • Terms available: 36 or 60 months
  • APR: 7.95%–35.99%
  • Origination fee: 2.41% - 5.00%

Is peer-to-peer lending the right choice?

Peer-to-peer lending is worth looking into as you compare personal loan options, especially if you’re new to or have shaky credit. Take care to ensure you understand the specific terms of the loan you choose. As is true for any loan, borrow only the amount you know you can pay back to protect the credit score you’ve worked hard to build.


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