The basics

Earnest is a loan originator that tends to work with people who have good credit scores but have relatively recent credit history. The average borrower hasn’t borrowed much before, has a credit score above 720, and has a fairly high income. These borrowers don’t have much, if any, debt to speak of; these are people who have money in retirement accounts and have far more income than debt. Borrowers from Earnest have never defaulted on a loan and have few if any late payments.

Borrowing with Earnest

Do you have a good income? Do you pay your bills on time, get ready for the future, and generally stay smart with your money? That’s great, but most lenders still won’t want anything to do with you. What you lack is a good credit history, the proof that you are good at paying money back after you have borrowed it. Your credit score may be fantastic, but you definitely won’t go far with most lenders. That’s where Earnest steps in – looking at what you do, not how you’ve borrowed. This is a company that wants to understand its customers and figure out how to meet their needs in a method that works for everyone.

Earnest, a San Francisco company, eschews the typical lending process in favor of more robust data analysis. The company looks at thousands of different data points to determine the amount of risk each borrower carries. This allows Earnest to offer lower interest rates and recoup more money.

Of course, Earnest isn’t the only company that caters to responsible financial planners who are new to borrowing. There are plenty of businesses that do that, and most of them are just as interested in building relationships with their customers. Some offer career counseling, offer loans to people without credit scores, or even offer lower rates for those who make certain milestones. Earnest differs from the pack by offering more flexibility – there’s no fees, and borrowers can change their payments dates and the loan amount at any point during the life of the loan.

How to apply to Earnest

Earnest wants you data to figure out whether or not you are a good investment. You’ll need to go through a lengthy application process online to satisfy their needs, and you’ll want to bring a good bit of data with you. You’ll start by giving the company basic education and employment data, along with some of your reasons for wanting the loan. If you don’t feel like filling everything out on your own, you can connect your LinkedIn account to auto-fill some of the information.

Next, you’ll give Earnest access to your bank account. The company will sacn through everything you do, creating an image of how you interact with your money. While this might seem a tad invasive, the company doesn’t store the information – it is only used a single time. From there, the company will perform a hard credit check and determine whether or not to finalize the loan. Once you’re approved, you can change your loan payments around to see how the loan is impacted.

Requirements for Borrowing

Generally speaking, an Earnest borrower needs income, not credit. You don’t have to possess a high credit score, but a score over 720 definitely helps. You will need a high gross income, but you don’t need any sort of credit history and there is no minimum debt to asset ratio.

In return, you’ll get a loan with an APR between 5.25 and 12 percent, right in line with a small business loan from a bank. Loans range from two thousand to fifty thousand dollars, with repayment terms between one and three years. You’ll only wait a week to get your money, and there are no fees involved except for an eight dollar fee that might be incurred if you miss a payment.

What to Know Before you Take a Personal Loan

If your credit score is high enough to take out a personal loan, you should probably look at other options. There might, for example, be zero-percent APR credit card offers that will help you with your monetary situation without costing you quite as much. You may also be able to get a home equity loan if you own a home, and you should have your pick of lenders with a good credit score and little debt.

If you are dead set on getting this kind of loan, learn more about your credit. If you’ve got a good credit score, you are more likely to get a loan and more likely to get a good rate. If you have a lot of debt or low income, your chances of getting a good loan drop. Even a great credit score can be hobbled by debt, while a low credit score can be saved by a good income. Once you’re comfortable, you’ll give lenders your money, figure out the payments you’ll need to make, and move on.

If you need a loan, you should also start working on getting out of debt. A personal loan is a short-term solution to a long-term problem. Start budgeting and making sure you can survive even when you can’t get a loan.