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If you currently have a personal loan and need to borrow more money, you may be able to take out another loan. You can theoretically have as many personal loans as you want, as long as lenders approve you. Before you take on another loan, however, you should understand how lenders evaluate borrowers and the risks of borrowing more.
Can You Have More Than One Personal Loan?
There's generally no set limit on the number of personal loans you can have. Instead, lenders decide whether to approve you based on your finances and the information in your loan application.
If you're applying for a second loan from the same lender, they may review your existing loan history, including:
- Your current loan status and remaining balance
- Your loan payment history on the existing loan
- How much you've repaid on your existing loan
Other lenders will consider similar factors when they're deciding whether to approve your application. For example, they may consider:
- Your outstanding loan balances: Some lenders don't limit the number of loans you can have, but they may cap the total amount you can borrow across all loans.
- Your debt-to-income ratio (DTI): This shows how much of your income is currently going toward paying debt. A lower ratio means you have more income available for new loan payments, while a higher ratio will limit your ability to access new loans.
- Your credit scores: Good credit improves your chances of getting approved for new loans and may help you qualify for rates.
Tip: Ultimately, approval for a new loan is up to the individual lender. Applying with different lenders may improve your chances of getting approved for multiple loans, especially since some lenders limit the total amount you can borrow.
How Do Multiple Personal Loans Affect Your Credit?
Having multiple personal loans can affect your credit in several ways, depending on how you manage the loans.
Payment History
Your payment history is the most important factor in your FICO® Score☉ Θ, the score used by 90% of top lenders. If you consistently pay on time, having multiple loans can help your credit.
However, if juggling multiple due dates leads to missed payments, your credit score could be damaged, particularly if payments are 30 days late or more.
Credit Mix
Having a mix of credit types, including installment loans and revolving credit, can help your credit since it shows you can manage different types of credit accounts.
New Inquiries
Applying for multiple personal loans in a short period of time can cause your scores to dip slightly since the lender does a hard credit inquiry to review your credit. Fortunately, hard inquiries have less impact as they get older and the impact to your credit is usually temporary.
You can limit your applications by getting prequalified with a soft pull first. This gives you an idea whether you're likely to qualify for a loan without affecting your credit.
Tip: Put payments on autopay to avoid missed payments, but only if you're confident that you'll always have enough money in your account to cover the payment.
Pros and Cons of Having Multiple Personal Loans
There are advantages and disadvantages to having multiple personal loans. If you're considering taking out another loan, consider both sides to decide whether it fits your financial situation.
Pros
Meet multiple financial needs: You can use multiple personal loans to cover financial needs. For example, you might use one loan to consolidate credit card debt and another to cover a major expense like a wedding or home repairs.
Potentially save on interest: Personal loans often have lower interest rates than what credit cards offer. Using a personal loan instead of high-interest credit cards could help you lower overall interest costs.
Fixed repayment schedule: Personal loans have a set repayment schedule and payoff timeline, which can make budgeting easier.
Cons
Higher monthly payments: Multiple loans mean multiple monthly payments. If your income changes or you have unexpected expenses, managing multiple loan payments can become challenging.
Increased risk of missing payments: More loans can strain your budget and make it harder to make payments. Missing a payment can result in late fees and hurt your credit score.
Higher DTI: Taking additional personal loans increases the amount of debt you're carrying and raises your DTI. A higher DTI can make it harder to qualify for new credit cards or loans.
How to Qualify for Another Personal Loan
If you're applying for another personal loan, lenders will look closely at whether you can handle additional debt. Here are some ways to improve your chances of qualifying.
- Improve your payment history. Make your existing payments on time and avoid late payments. Paying down your credit card balances can improve your credit utilization ratio and help you qualify for another loan.
- Increase your income. Additional income that comes from freelance work, side gigs or part-time work can lower your DTI, making it easier to qualify for and afford another loan payment.
- Avoid new credit applications. New inquiries can hurt your credit score. Also, lenders may view recent credit inquiries as a sign that you're taking on too much debt.
- Offer collateral. Some lenders offer secured personal loans, which may be easier to qualify for since you're providing an asset (such as cash savings or your car) that the lender can claim if you default on loan payments.
- Apply with a cosigner. Applying with someone who has stronger credit, lower debt or a higher income may help you qualify for another personal loan. Keep in mind that your cosigner is responsible for making loan payments if you can't afford to.
Alternatives to Getting Another Personal Loan
Before taking out another personal loan, consider other options that may cost less, carry less risk or fit your financial needs better.
- Open a 0% intro APR credit card. If you qualify, you can finance purchases interest-free, sometimes for up to 21 months.
- Borrow against your home equity. Homeowners may be able to borrow against home with a home equity loan or home equity line of credit (HELOC). This does mean using your home as collateral, which means you risk losing your home in foreclosure if you fall behind on payments.
- Negotiate bills or payment plans. Ask service providers whether you can spread your payments over time. This can make it easier to pay off balances, sometimes with little or no interest.
- Borrow from friends or family. If you can turn to friends or family for a short-term loan, putting your repayment terms in writing can prevent misunderstandings.
Learn more: Alternatives if You Can't Qualify for a Personal Loan
The Bottom Line
You can typically have more than one personal loan at a time, but qualifying depends on your credit, income and existing debt. Multiple loans can help you meet different financial needs, but they also increase your required monthly payments and interest paid.
Before applying for another loan, consider whether you can comfortably afford the payments. Alternative options may carry lower costs or less risk.