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Earnest Personal Loans Review

Earnest Personal Loans Review
Daniel Cohen
UpdatedMay 5, 2019
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    4 min read
Key Takeaways:
  • Earnest approves personal loan borrowers with strong potential income based on educational achievement and career path.
  • Earnest approves borrowers who show good financial health habits.
  • Requirements of a 680 minimum FICO score and two months of living expenses in savings eliminate Earnest for many borrowers.

Is an Earnest Personal Loan a Good Choice for You?

The demand for personal loans keeps growing. In 2018, American consumers took out more than $138 billion in unsecured personal loans. That is an all-time record.

Capitalizing on the growing market, new lenders have emerged, a large number of them online lenders. These "FinTech" lenders, have used innovative technology and data analysis to define their target audience and design products that appeal to consumers who did not find a suitable loan from a bank or credit union.

Earnest, A Niche Lender

Earnest Personal Loans take a unique approach to making loans. Many lenders look for borrowers with a long, stable, positive credit history. Lenders that accept borrowers with less than strong credit scores, or limited credit history, charge higher interest rates to offset the risks they take by lending to less creditworthy borrowers.

Earnest personal loans takes into account a number of factors beyond credit score, credit history and ability to afford the monthly personal loan payment by calculating current debt-to-income ratios.

Is Your Income Heading Up?

Earnest places a strong emphasis on your expected income based on your future prospects. Earnest’s personal loan approval process weighs your educational achievements and your professional earning potential.

Earnest also targets borrowers who have established some good financial health habits, such as:

  1. Built up savings- Earnest requires you to show two months of living expenses in savings.
  2. Spending under control - You spend less than you earn and your bank balances are growing.
  3. Debt under control- Earnest won’t accept you if you have heavy credit card debt or personal loan debt (student loans and mortgage debt are not viewed the same).
  4. Good money management - You pay your bills on time; there is no pattern of late payments or collection accounts.

Some Traditional Lending Standards

While Earnest uses unique methods to find borrowers who don’t meet all the traditional lending requirements, some standards they employ would fit with many banks, credit unions, and traditional lenders. Earnest won’t approve you for a personal loan if you have:

  • A FICO score less than 680
  • Filed bankruptcy in the past 3 years
  • Any collection accounts open

Earnest offers personal loans for the following purposes, some standard to all lenders, such as:

  • Credit card consolidation- While you can’t get an Earnest personal loan with heavy credit card debt, it is possible to qualify with some.
  • Home improvements.
  • Wedding expenses.

In true Earnest fashion, they specify some unusual, acceptable loan purposes:

  • Unaccredited education expenses
  • For a security deposit on a rented home or apartment

Earnest loans are not allowed to be used to purchase real estate, for business expenses, or to pay for tuition at an accredited school or institution that processes U.S. federal student aid.

Earnest Loan Rates, Terms, and Fees

Earnest charges no fee: no origination fee or processing fee, no late fees, and no pre-payment fees. As their website says, "no anything-else fees."

Earnest offers low rates to borrowers who may not find them elsewhere. As of May 2019, interest rates range from 6.99% APR to 18.24% APR. Earnest offers loans that can be repaid in 3,4, or 5 year terms. The number of payments you choose affects your interest rate; the longer the repayment term the higher the rate.

Interest rates can vary from lender to lender, so it is important to comparison shop. Don't leave money on the table by taking the first loan you are offered. You can use the Personal Loan Rate Table immediately below to see offers from different lenders, without affecting your credit.

Earnest Eligibility Requirements

Aside from financial and credit requirements, here are some other eligibilithy requirements you must meet to get an Earnest personal loan.

  • You need verifiable, steady income that is paid in US dollars.
  • You are either a US Citizen, long-term permanent resident alien, or conditional permanent resident alien.
  • Are at least 18
  • A resident of the District of Columbia or any US state other than Alabama, Delaware, Kentucky, Nevada, and Rhode Island

Earnest Isn't for Everyone

Earnest doesn't aim to offer a loan for all borrowers. The 680 credit score and two months of living expenses in savings requirements eliminate many people seeking personal loans. 

If you have limited credit history and an income that should rise based on your educational background and current job's earning power, Earnest may be the best fit for you. It takes Earnest longer to make a decision than most personal loan lenders, but that is due to it taking into account factors that would lead other lenders to turn the application down right away.

Earnest has an easy to use website, and a well-rated Client Happiness team, charges no fees, and offers competitive rates. When shopping for a personal loan, if you meet Earnest's basic requirements, there is good reason to include the in the firms you check out.