Can a Stay-at-Home Parent Qualify for a Personal Loan?

From home improvement projects to debt consolidation, personal loans can be a helpful way to get the money you need. Most people with a steady source of income can go to a lender, apply for a loan based on their credit score and income, and get approved.

However, what happens when you're a stay-at-home parent without an income? For couples deciding to have separate finances, the spouse who chooses to stay at home and care for the children may be in a difficult position to qualify for the money they need.

In this post, we'll explain why this is and some potential ways to still get funding.

Lenders usually use several criteria to evaluate applicants for a loan. Two of the most commonly used ones are credit score and income.

Even if a person has an otherwise good credit score, the lender still needs to have assurances the loan can be repaid without the risk of default. To determine this, they'll usually look at criteria such as:

However, if the applicant doesn't have any income, then they won't have a viable way to prove to the lender that they'll be able to pay them back.

Though options are somewhat limited, there are two common ways that someone without income can get approved for a personal loan.

If you know someone with income and they will agree to co-sign on the loan with you, then this may give your application an automatic boost. Co-signers share an equal responsibility with you to repay the loan. Therefore, any attributes they can bring to underwriting, such as income, employment history and/or a better credit score, will all be considered and most likely help you get approved for a loan.

Keep in mind the co-signer does not have to be your spouse. Your co-signer could also be a parent, another family member, or a trusted friend. Whoever you choose to be a co-signer, be sure they understand their responsibilities. If you miss payments or default on the loan, the co-signer is equally responsible for repaying the debt.

The other way to possibly get financed is to apply for a secured loan. What is a secured loan? A secured loan is a personal loan that requires the use of collateral - something of value like a vehicle that the lender can seize and sell if the borrower defaults on their payments.

This type of loan can have a reasonable interest rate and repayment terms that last for many years. That's because with the presence of collateral, the lender may be more willing to relax their requirements for income and credit score. This could help you to get through the approval process and get the funding you seek.

When you're a stay-at-home parent with no individual source of income, it can be challenging to qualify for a personal loan. One way around this is to have someone with an income co-sign the loan with you. Another option is to apply for a secured loan using collateral to help alleviate the risk to the lender and move you closer to getting approved.