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When you get preapproved for a credit card, you’ve met initial criteria to receive an offer to get a credit card. In other words, you’ve popped up on a list of consumers who satisfy a credit card company’s requirements and are being invited to apply for a card.

Here, you’ll learn the details of how preapproved credit card offers work, the difference between preapproved vs. prequalified offers, and the pros and cons of preapproved offers.

What Is a Preapproved Credit Card Offer?

A preapproved credit card offer, as noted above, is an invitation from a credit card company to apply for a credit card because you seem to meet some of the conditions for approval.

Credit card issuers usually use criteria pulled from credit reporting agencies to extend these offers. If you fall within the parameters of the credit card requirements set by the card issuer, then you may receive an offer — either via email, snail mail, or over the phone — to formally apply for approval for the card.

How Do Preapproved Credit Card Offers Work?

While it sounds promising, getting a preapproved credit card offer doesn’t necessarily mean you’re guaranteed to get approved for a credit card. Even if you’re preapproved, you’ll need to properly apply.

When you do, the credit card issuer will look over your application and usually request additional financial and personal information. The credit card company will also check your updated credit report to figure out if your credit still meets its criteria (after all, credit scores do change over time).

Preapproved vs Prequalified Credit Card Offers

The terms “preapproved” and “prequalified” often are used interchangeably when it comes to prescreened credit card offers. And within the realm of credit cards, they often are one and the same. But in other types of lending, they mean different things.

•  Preapproval means you’ve been prescreened for offers by the credit card company. These credit companies work with the three major credit reporting agencies — Equifax®, Experian®, and TransUnion® — to come up with a list of consumers that meet their lending criteria.

•  Prequalified offers are usually requested by you, the consumer. To get prequalified, you typically need to provide basic personal and financial information. During the screening process, the credit card issuer will check your credit. However, it will only conduct a soft pull, which won’t impact your credit score. After reviewing the info you submitted, the credit card company will let you know if you’re likely to get approved.

With both preapproval and prequalification, you’ll still have to submit to a hard credit inquiry and potentially provide additional financial information to actually get approved for the loan product. Keep in mind that with a hard vs. soft credit inquiry, a hard pull will usually temporarily lower your score.

Benefits of a Preapproved Credit Card

Now that you know what preapproved means for a credit card, you may be wondering what the benefits are. In general, these are the upsides of preapproval, whether for a rewards card or a virtual credit card.

Indicates Your Odds of Approval

Perhaps the most obvious benefit of getting preapproved for a credit card is that you’ll have a better sense of how likely you are to ultimately get approved for the card. Although preapproval is not a guarantee of eventual approval, if a credit card issuer has already selected you to apply and neither your financial situation nor credit hasn’t drastically changed, you’re likely within the required parameters to get the card.

Won’t Impact Your Credit Score

One of the major benefits of getting preapproved for a credit card is that it won’t impact your credit score. To get preapproved, the card issuer does a soft pull of your credit. Only if you decide to formally apply for the card will the credit card company do a hard pull of your credit.

Could Allow You To Secure More Competitive Terms

Getting preapproved for a credit card may allow you to secure a lower interest rate than you’d otherwise be able to get. This is because the lender is effectively advertising the card to you in order to get you to apply. Keep in mind, however, that your rates aren’t set until after you formally apply.

Recommended: How to Avoid Interest on a Credit Card

May Provide Access to Better Intro Offers

Another advantage of a preapproved credit card is that it might come with more lucrative perks than what’s more widely advertised to the public. You might be privy to cards with more attractive sign-up bonuses or introductory earnings opportunities. For instance, a cash-back credit card might offer a higher initial earnings rate through preapproval offers.

Could Get a Longer Intro APR for Balance Transfers Cards

For balance transfer credit cards that allow you to transfer your existing debt over to the new card, you might be able to get a lower introductory credit card annual percentage rate (APR) for longer through preapproved offers. This could make it easier to pay off your balance in full before the regular interest rate kicks in.

Easier for You

Because credit card companies have vetted you and know that you’ve passed at least some of its criteria, you don’t have to spend time researching cards. Instead, these offers are coming to you. Still, when choosing a credit card, it doesn’t hurt to take a look around to make sure this is truly the right fit for you.

Drawbacks of a Preapproved Credit Card

While there are benefits of preapproved credit card offers, there are drawbacks to them as well.

Might Not Be the Best Card for You

While you don’t have to jump through the same hoops as you would looking for a credit card on your own, the credit card you’re preapproved for may not be the right one for you. It might be a good idea to spend some time doing your own research and understanding differences in how credit cards work even if you do get preapproved.

Could Get Flooded With Unwanted Offers

Preapproval offers mean you receive a lot of unsolicited emails, mail, or phone calls. Especially if you’re not in the market for a new credit card, you could feel inundated with offers you don’t necessarily want or need.

Potential for Theft of Personal Information

There’s a chance that a would-be criminal hoping to commit identity theft could intercept your prescreened offer and get hold of your name and mailing address. The good news is that a fraudster would likely need information beyond what’s included in a preapproval offer.

Temptation to Open More Cards

Receiving preapproved offers for credit cards may tempt you to open a new credit card you don’t necessarily need, especially if the preapproval offer includes a lucrative sign-up bonus or an extended introductory APR offer. Especially if you’re already set with your lineup of credit cards, this might entice you to take on more cards and debt than you can comfortably manage.

When You May Need Credit Card Preapproval

You might want to receive a preapproved credit card offer if you’re in the market for a new credit card and would rather not go through the full process of researching credit cards. As you know you already meet certain lending criteria, the odds of getting approved for a card can be improved.

Keep in mind, however, that you don’t need to get credit card preapproval in order to apply for a credit card. If you’re getting a credit card for the first time and have a limited credit history, for instance, you’re likely not going to get so many preapproval offers — but that doesn’t mean you can’t still try applying.

Recommended: What Is the Average Credit Card Limit?

Tips for Getting a Preapproved Credit Card Offer

If you’d like to get preapproved offers, you’ll want to opt in by visiting OptOutPrescreen.com . From there, you can choose to get these offers through the mail, email, or via phone.

Instead of waiting for offers to come to you, you can also get preapproved by visiting a credit card issuer’s website and applying for prequalification. This typically requires providing basic personal and financial information.

Recommended: How Long It Takes to Get a Credit Card

Tips for Improving Your Chances of Preapproval

While you can still get preapproved for offers with not-so-great credit, you’ll get offers with the most favorable terms and rates with a strong credit score. To maintain or build your credit score and thus improve your chances of approval, make sure to do the following:

•   Avoid late payments

•   Keep your credit utilization rate low

•   Aim to keep cards open

•   Don’t apply for too many new accounts

•   Maintain a diverse mix of different forms of credit

Recommended: When Are Credit Card Payments Due?

How Does a Preapproved Credit Card Impact Your Credit Score?

A preapproved offer for a credit card doesn’t impact your credit score. As we talked about, lenders will do a soft pull of your score, which doesn’t affect your score.

But if you decide to apply for a card, the credit card issuer will do a hard pull of your credit. This will most likely ding your score, though generally only temporarily.

Opting Out of Preapproved Credit Cards

If you don’t want to get flooded by preapproval offers, you can decide to opt out. Visit the website OptOutPrescreen.com and follow the simple steps outlined on the website to do so. You then won’t be included on lists to get considered for preapproval for five years.

Recommended: Does Applying for a Credit Card Hurt Your Credit Score?

The Takeaway

A preapproved offer for a credit card means you’ve met certain lending criteria to most likely get approved for a specific card. You’ll still need to officially apply to secure approval though. But if your credit score and financial history are the same as when you initially received the offer, there’s a high likelihood you’ll get approved.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

How long does it take to get a credit card if you are preapproved?

It depends on the credit card and credit card company. If you’re preapproved for a card, you’ll still need to officially apply. If you do get approved for a card, it could take anywhere from five business days to two weeks for your card to arrive in the mail.

Can you get denied after preapproval?

In some cases, yes. For instance, if your credit or financial situation changed between the time you received a preapproved offer and when you applied, you might get denied.

Can I get a credit card if I am not preapproved or I don’t qualify for a credit card?

You don’t need to get preapproved for a credit card; it simply skips a few steps and can boosts your odds of getting a card. However, you will need to qualify for a credit card to get it. This happens if you meet the credit card company’s lending criteria. If you do, you’ll have a chance of getting a particular credit card. If you don’t qualify, you might consider applying for a secured card, which uses your cash deposit as your spending limit.

Should I still apply if I am not preapproved for a credit card?

Just because you aren’t preapproved doesn’t mean you won’t be able to get a particular credit card. Spend some time doing your homework to figure out which cards are a good fit for your needs and financial situation. When choosing a credit card, it’s important to check the rates, credit limits, and fees.

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Photo credit: iStock/akinbostanci

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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Gas credit cards can be one option to earn a rebate on gas purchases, either in the form of cash back or other types of credit card rewards. This can make gas purchases help with your budgeting efforts.

There are many different types of gas credit cards, each with their own pros and cons. Some gas credit cards work only at one particular chain of gas stations, while others offer rewards no matter where you buy gas and may even give rewards on some non-fuel purchases. Understanding the different types of gas credit cards can help you choose the best gas credit card for your specific situation.

What Is a Gas Credit Card?

A gas credit card is a term that can refer to a number of different types of credit cards. One might be a standard credit card that earns bonus credit card points on all gas purchases. Another type of gas credit card is one that is co-branded with an actual gas station and gives rewards at that gas station. There are also gas credit cards that are designed more for companies with large fleets of vehicles.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score?

How Do Gas Credit Cards Work?

Gas credit cards work in much the same way that any other credit cards work. You are extended a line of credit which you can use to make purchases. If you don’t pay what you owe at the end of your billing cycle, you are assessed interest for the privilege of carrying a balance.

Most gas credit cards run on a major credit card processing network like Visa, Mastercard, or American Express. That means that even if you might think of it as a gas credit card, it can be used anywhere those types of cards are accepted.

Types of Gas Credit Cards

There are a few different types of gas credit cards put out by various credit card issuers. Here are a few of the most common types of cards to consider if you want to save money on gas.

Recommended: Can You Buy Crypto With a Credit Card?

General-Purpose Gas Credit Cards

General-purpose gas credit cards are credit cards that earn rewards on a variety of different purchases. They may have gas as one possible bonus category, or they may earn the same high rewards rate on all purchases.

Gas Station Co-Branded Credit Cards

A gas station co-branded credit card is generally marketed and primarily branded for one particular gas station (BP, Shell, Marathon, etc.). These types of cards are often referred to as “co-branded” because they are branded with both a gas station brand and the brand of the bank that issues it. While these are also usually part of a major credit card processing network like Visa or Mastercard, the rewards they earn are typically targeted to the main “branded” gas station chain.

Fleet Gas Cards

A fleet gas card or fleet fuel card is a different type of gas credit card entirely, and is targeted more toward businesses that have to manage a large fleet of vehicles. A transportation manager can give fleet cards to individual employees, allowing them to pay for things like fuel, repairs, and maintenance without having to pay out of pocket and get reimbursed. The transportation manager can then track and account for all of the disparate charges centrally.

Recommended: What is a Charge Card?

How Different Types of Gas Cards Compare

If you’re choosing a rewards credit card, there are a few questions that you’ll want to ask yourself:

•   Ease of use: Is this a gas card that can only be used at one particular gas station, or can it be used anywhere?

•   Rewards: Does the reward structure of the card match up with your spending patterns?

•   Fees: What kind of fees does the card have? Avoiding credit card fees is an important part of choosing the right card.

Recommended: Tips for Using a Credit Card Responsibly

Which Type of Gas Credit Card Is Right for You?

Trying to determine what’s the best credit card for gas for you? Here’s a look at two of the most popular options among the different types of credit cards for gas.

Who Gas Rewards Cards Are Best For

The following types of people might be best served by a general purpose credit card that happens to offer rewards on gas purchases:

•   Consumers who frequently shop at multiple different gas stations.

•   Infrequent travelers who spend much more in other categories than they do at gas stations.

•   People looking to maximize their credit card miles or cash back.

Who Gas Station Credit Cards Are Best For

These consumers might find that the best gas credit card for them is a gas station credit card:

•   Consumers who spend an above average amount at gas stations.

•   Travelers who frequently fill up at the same gas station chain every time.

•   Employees who are given a gas station credit card by their employer and are mandated to use it.

Are Gas Credit Cards Generally Worth It?

For many consumers, gas and fuel purchases are one of the biggest spending categories each month. Just like improving gas mileage, earning cash back or other credit card rewards can help offset some of your fuel cost each month. Just make sure to compare the different gas card options to find the best gas credit card for your situation.

The Takeaway

There are a variety of different cards that can be considered gas credit cards. Some gas credit cards are more general rewards credit cards that happen to give a bonus on gas purchases. Other gas station cards have rewards targeted to one particular gas station brand. Still other gas cards are used by companies with large fleets to help manage their transportation expenses. Compare options, and see if one can suit your needs.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Is there a credit card only for gas?

There are some gas credit cards that work only at specific gas stations and do not work for other purchases. Other gas cards are branded with a particular gas station’s color and branding (such as BP, Shell, or Marathon) but are still part of a major credit processing network (like Visa, Mastercard, or American Express). That means that you can use the card anywhere those networks are accepted.

What is the best fuel card to get?

The best fuel card to get is the one that maximizes the rewards based on your unique and specific spending patterns. If you always shop at the same gas station, you might be better off with a card that’s specific to that brand. If you shop at different gas stations or want to earn rewards on non-fuel purchases, you may want to consider a more generic rewards credit card that happens to also earn rewards on gas purchases.

Do gas cards help build credit?

Whether gas cards help build credit depends on specifically what kind of gas credit card it is. If it is a store-specific card that is not part of a major credit card processing network, it likely does not report purchases and credit history to the major credit bureaus. In that case, it likely will not help you build your credit history.

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Photo credit: iStock/kckate16

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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If you enjoy the benefits of earning rewards with your credit card, you may be interested in paying property taxes that way. After all, it can be one of the largest expenses for many homeowners and can yield a large amount of points or other perks. Also, some people may not have the cash available for taxes on the due date and want to use a credit card to pay their bill over time.

The good news is that many states, counties, and other local jurisdictions do allow you to pay your property taxes with a credit card. However, in many cases, there is a processing fee associated with a credit card payment. Depending on the fee that’s charged and the card that you use, paying your property taxes with a credit card may or may not be a good idea. Take a closer look.

Can You Pay Property Taxes With a Credit Card?

Many states and counties allow you to pay property taxes with a credit card. In some cases, they process any payments directly. Other jurisdictions may partner with a third-party processing company to handle payments.

In many cases, a processing fee will apply. This fee is generally around 2% of the payment or higher. For example, Hamilton County in Ohio charges a 2.35% fee for credit card payments, while Cook County in Illinois charges a fee of 2.10%.

Recommended: Does Applying for a Credit Card Hurt Your Credit Score?

Pros and Cons of Paying Property Taxes With a Credit Card

For many homeowners, property taxes and mortgage payments are some of the largest expenses in their budget. So it makes sense that you might try to offset some of the cost by earning credit card rewards on the purchase.

For instance, if you get cash back, this could allow you to recoup some money when you pay your taxes.

However, there are potential downsides to paying property taxes with a credit card to take into consideration as well. For one, you may pay a processing fee. You also could owe interest charges and experience effects to your credit score, depending on how you manage your credit card bill.

Here’s a closer look at the pros and cons of paying property taxes with a credit card:

Recommended: How to Avoid Interest on a Credit Card

Paying Your Property Taxes With a Credit Card: 4 Steps

Just like paying your mortgage with a credit card, paying your property taxes with a credit card usually takes a few simple steps. While the exact steps will vary depending on your local tax authority, here is the basic flow.

1. Enter Your Property Tax Information

First, you will enter your property information. Many counties have assigned all property into specific parcel IDs. If you’re not sure about your parcel ID, you can usually look that up with your address or other identifying information.

2. Enter or Confirm Any Required Personal Information

Once you have entered in the required information pertaining to the parcel you’re paying property taxes on, you may be asked to enter or confirm some of your personal information. This helps to ensure that you are paying for the correct piece of real property.

3. Choose Your Payment Method and Amount

Next, you will choose the credit card you want to use. Because most jurisdictions charge a processing fee to pay your property taxes with a credit card, you’ll want to be careful about which card you use.

There are, of course, many different types of credit cards. If you have a rewards credit card with a rewards rate that’s higher than the fee you’re being charged, that may be a good card to use. You might also consider a new card on which you’re attempting to meet the spending requirement to earn a signup bonus.

If your card has a high spending requirement, paying your taxes with a credit card can help you fulfill that requirement. If you need more time to pay your bill, you might also consider a card with an introductory 0% annual percentage rate (APR) offer.

Once you’ve decided on your card, you’ll enter it into the tax processing website. Similarly to if you were paying bills with a credit card, you’ll likely need to enter your name as it appears on the card, your full credit card number, the expiration date, and the CVV code.

Recommended: Can You Buy Crypto With a Credit Card?

4. Submit Your Payment

The final step in paying taxes with a credit card is to submit your payment. If a confirmation page is shown, you may want to print it for your records. That can help you in case there’s a dispute about whether your property taxes have been paid. You also may be able to select an email confirmation.

Types of Cards You Can Use to Pay Property Taxes

There are many credit cards that you can potentially use to pay property taxes. Visa and Mastercard are the two most prevalent, but many tax authorities accept American Express, Discover, or other types of credit cards. Check with your local tax authority to see what types of cards you can use in your area.

You may be able to use a debit card as well. While the benefits of credit cards include rewards and other perks, fees are often lower for debit cards than credit cards.

Recommended: What Is a Charge Card?

The Takeaway

It’s usually possible to pay property taxes with a credit card, though it depends on the policies and laws in your specific jurisdiction. However, many states and counties charge a processing fee to accept credit card payments for property taxes, and the fees may be higher than the value of any rewards that you may earn. Check with your local tax authority to see what options you have in your specific area.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Which states allow you to pay property tax with a credit card?

Where you can pay property tax with a credit card varies widely depending on a property’s exact location. States, counties, cities, and school districts all may have different laws and policies. If you’re not sure if you are able to pay property tax with a credit card, check with your local taxing authority.

Can you get cash back by paying property tax with your credit card?

Yes, one benefit of credit cards is that you can often earn cash back or other rewards with each purchase. It’s likely possible to earn cash back (or other credit card rewards) by paying property taxes with your credit card. However, in many cases, you will be charged a processing fee by your local taxing authority. Make sure that the value of any rewards you earn exceeds the cost of the fees you may be charged.

Will paying property taxes with a credit card positively impact your credit score?

Paying property taxes will likely not have a huge impact on your credit score if you pay your statement on time and in full. However, if you pay your taxes with a credit card and then don’t pay the bill when it comes due, that could lead to negative impacts on your credit score.

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Photo credit: iStock/xijian

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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Having a cosigner on a loan can help you build credit in some situations. For example, a cosigner with good credit can help you get approved for a loan if you have no credit history or a poor one. If you then handle that credit responsibly, you’d likely see a positive impact on your score.

A cosigner is someone you know who already has established a positive credit history and a good credit score. This person is usually a trusted friend or family member. The prospective lender will consider the credit of both the primary applicant and any cosigners when deciding whether or not to approve the loan. Learn more about this process and how cosigning could help you build credit.

How Does Cosigning Work?

Cosigning is one way to build credit if you don’t already have an existing credit history. When you have a cosigner, the lender will use both your credit profile and that of the cosigner to determine whether or not to approve your loan request.

Without any sort of credit profile, some lenders may not be willing to issue you credit or the interest rates they offer may be quite high. In those cases, you may consider applying with a cosigner who already has good credit in order to increase your odds of getting approved or securing better terms.

Recommended: How to Avoid Interest on a Credit Card

Cosigning vs Authorized User

Besides cosigning, becoming an authorized user is another way to help build credit. Here is a quick look at how the two approaches differ:

Cosigning	Being an Authorize User
The amount of debt factors into the cosigner’s debt-to-income ratio.	Debt information on an account where you are the authorized user does not affect your debt-to-income ratio.
Both the cosigner and the primary account holder are responsible for making the payments.	An authorized user is not responsible for making payments.
Both the primary account holder and the cosigner must be adults.	Children can be approved as authorized users on a parent’s account.

Recommended: When Are Credit Card Payments Due?

Does Cosigning Help Build Your Credit?

When used appropriately, cosigning can help build your credit. Just make sure to avoid these mistakes when choosing a student loan cosigner or a cosigner for any other type of loan. If the responsibility is not taken seriously, it could have negative implications for both parties’ credit.

Recommended: Tips for Using a Credit Card Responsibly

When Cosigning Can Build Your Credit

If you’re just starting out and establishing credit, using a cosigner can be an attractive option. If you have a trusted friend or family member who is willing to cosign on your loan, you may be able to qualify for a loan that you wouldn’t otherwise be eligible for. Then, as you make on-time payments on your loan, you would likely build your credit score due to a positive payment history.

When Cosigning Can Hurt Your Credit

If you find yourself needing a student loan cosigner or any other type of cosigner, it’s important to also understand the potential downsides of cosigning. While being a cosigner does not affect your credit in and of itself, it is possible to damage your credit by cosigning.

When you cosign a loan or credit card, both the primary applicant and the cosigner are liable for the debt. You may find yourself in a situation where your credit is harmed because the other party fails to make regular payments when required. So, depending on your situation, you may be better off with a student loan application without a cosigner.

Recommended: Does Applying for a Credit Card Hurt Your Credit Score?

Things to Know Before Cosigning

The most important thing to know before cosigning is that cosigning on someone else’s loan does come with some risk. While cosigning can make sense to help a friend or family member who is starting out in life, it’s riskier to cosign for someone who already has bad credit.

If someone has bad credit, then they likely already have a history of not reliably meeting their debt obligations. Make sure you fully understand the situation before cosigning a loan.

Other Ways to Establish Credit

Besides getting a cosigner, there are a few other ways to establish credit.

Open a Secured or Credit-Building Credit Card

There are also some types of credit cards that are marketed to those with a limited credit history. Often, these are marketed as either credit-building credit cards or secured credit cards, which involve putting down cash as a collateral (and that sets your credit limit). As you open credit cards and regularly make on-time payments, you are likely to build your credit score.

Become an Authorized User

If you don’t want to apply for a credit card or can’t get approved without a credit card cosigner, you can consider becoming an authorized user on someone else’s account. In this arrangement, only the primary account holder is liable for any purchases that are made on the account. Even if the authorized user is the one that actually makes the purchase, they aren’t financially responsible. Positive payment habits on the account can help build credit.

Get a Guarantor

A guarantor is similar to a cosigner, but there are some important differences between guarantors and cosigners. A cosigner is legally obligated and financially responsible right away to repay any debts. A guarantor, on the other hand, is more of a backup plan. The guarantor is only responsible for repaying the debt if the primary borrower fails to make payments and the loan goes into default.

The Takeaway

When you’re first starting out and building up your credit, you may not be able to qualify for loans. One way to help build your credit is by applying with a cosigner. A cosigner is usually a trusted friend or family member who already has good credit. Applying with a cosigner allows the potential lender to consider both people’s credit. It may help you get a loan that you otherwise wouldn’t qualify for.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Does cosigning show up on your credit report?

Yes, cosigning will show up on both the credit report of the primary applicant as well as the cosigner. Any outstanding debt will be used in calculating your debt-to-income ratio, and late payments might negatively affect your credit. This is one reason that it is always important to check your credit score on a regular basis.

Does a cosigner have to have good credit?

A credit card cosigner doesn’t necessarily have to have good credit, but it’s usually more helpful if they do. The whole point of having a cosigner is to use their good credit to help an applicant with poor or no credit qualify for a loan. If the cosigner has poor credit, it may not make a difference in whether or not the applicant is approved.

Whose credit score is used when cosigning?

When you apply for a loan or credit card with a cosigner, the potential lender will use both people’s credit score and history to determine whether to grant approval. Typically, the primary applicant will have poor or no credit, while the cosigner will have excellent or good credit.

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From unemployment benefits to hardship programs, there are a number of options out there when it comes to managing money during difficult times. One option that people may consider during unemployment is a personal loan. But one important question is: Can you get a loan while unemployed?

While there are personal loans for the unemployed available, it’s important to carefully assess the downsides and the benefits before moving forward. You’ll need to ensure you’ll be able to pay back the loan even if money gets tighter, and you should also be prepared for a more challenging approval process.

Personal Loan Basics

At its most simple, a personal loan is when a lending institution pays out a lump sum of money to a borrower, who then pays back the amount owed plus interest over a predetermined period of time.

Unlike a mortgage or student loan, personal loans aren’t tied to a specific expense. In other words, someone might take out a personal loan to cover the cost of paying for a dream wedding, to remodel a kitchen, or to cover living expenses during a time with low cash flow.

Personal loan amounts can range from $1,000 to $100,000, depending on the lender’s guidelines, the amount a borrower requests, and the borrower’s creditworthiness. While the lender pays out the amount of the loan in one lump sum to the borrower (minus any origination fee), the borrower pays back the loan over time in installments, often over a period of 12 to 60 months.

Personal loans are generally unsecured loans, which means they do not use collateral to secure the loan. Instead, lenders may look at borrowers’ creditworthiness to determine the risk in lending to them and their personal loan interest rate.

Interest rates vary for different borrowers depending on a borrower’s creditworthiness. Average personal loan interest rates can range anywhere from around 5% to over 35%. Interest is paid back alongside the principal amount in monthly payments that are made over the life of the loan.

Recommended: Personal Loan Guide for Beginners

When Should You Consider Taking Out a Personal Loan While Unemployed?

Ideally, you’d avoid taking on debt while you’re unemployed and don’t have regular income coming in from a job. You might first explore any other options available to you to free up funds, whether that’s taking on a side hustle, getting a roommate, or reassessing your budget. However, there are some circumstances when taking out a personal loan while unemployed may be doable, and it can be a better option than resorting to a high-interest payday loan or expensive credit card debt.

If you’re considering a personal loan while unemployed, you should first assess whether you’ll realistically be able to make on-time payments on your loan each month. Not doing so can lead to late fees and impacts to your credit score. You may even consider crunching the numbers using a personal loan calculator to determine if a personal loan would net you any savings over another borrowing option.

It’s also important to understand what lenders will look for when determining whether to approve you for a loan while unemployed. You’ll generally need a strong credit history and credit score to qualify. Additionally, lenders will want to see some income in order to prove you’ll be able to make monthly payments. Without a regular paycheck coming in during unemployment, this could be Social Security benefit payments, disability income, money from investments, or even your spouse’s income, among other alternatives.

Pros and Cons of Unemployment Loans

Taking out a personal loan may seem appealing to someone who is temporarily out of work because it might be relatively quick to secure and can come with lower interest rates than credit cards. But as with all financial decisions, it’s important to understand the pros and cons of taking out a personal loan while unemployed before applying.

Pros of Personal Loans for Unemployed Individuals

•   Personal loans can be more flexible than other types of loans. The money from a personal loan can be used for almost anything.

•   It may be less costly than other borrowing options. A personal loan may come with lower rates than a credit card, which can be a major benefit when it comes to saving money. Additionally, the fixed rate of a personal loan can help borrowers budget for monthly payments.

•   You could consolidate existing debt. Sometimes called debt consolidation loans, this type of personal loan can help borrowers save money if they can secure a lower interest rate than they’re currently paying on their credit cards. Additionally, debt consolidation loans can streamline multiple payments into one monthly payment. Keep in mind, however, that continuing to use credit cards after obtaining a credit card consolidation loan can lead to debt continuing to pile up.

•   They can help you deal with unexpected expenses. Personal loans may be an option for borrowers facing unexpected expenses, like medical bills or moving costs.

Cons of Personal Loans for Unemployed Individuals

•   It will likely be harder to qualify for a loan while unemployed. Lenders look at a variety of factors when determining whether to offer a borrower a loan, like income, debt-to-income ratio, credit history, and credit score. If a borrower is unemployed, they won’t necessarily have income to show, and their debt-to-income ratio might be much lower than it would be with a stable income.

•   Lenders may charge higher interest rates. Some lenders may offer higher interest rates to unemployed personal loan borrowers. This is because of the additional perceived risks of lending to someone who is unemployed.

•   Borrowers are taking a risk. Consider your ability to pay a higher interest rate or make monthly payments while you’re unemployed. Borrowers could face late fees for missed payments and more fees if the loan is sent to collections, not to mention a hit to their credit score if they’re unable to make payments.

Does SoFi Offer Personal Loans for Unemployed People?

SoFi does offer personal loans for unemployed individuals, including those who may need a personal loans for bad credit, assuming applicants meet other conditions. If you are not currently employed, it’s necessary to meet one of the two following eligibility criteria:

•   Have sufficient income from other sources

•   Have an offer of employment to start within the next 90 days

Beyond these conditions regarding employment and income, SoFi also has a number of other requirements that borrowers must meet. Additionally, SoFi will consider an applicant’s financial history, credit score, and monthly income vs. expenses.

Improve Your Chances of Getting Approved for a Personal Loan While Unemployed

If you’re hoping to get a personal loan as an unemployed person, there are steps you can take to increase your odds of getting your loan approved.

For one, it helps to familiarize yourself with your own financial situation. Check your credit score to see if it falls within a lender’s requirements, assess your current sources of income now that you’re unemployed, and take a look at how your current monthly debt payments compare to your monthly income. These are all factors that lenders will take into account when determining whether to approve the loan application, so the better they look, the better your chances that the lender’s answer will be a yes.

If you’re not confident you can get approved for a personal loan with your financial situation as is, you might consider taking some of the following actions:

•   Minimize your debts: If your debt-to-income ratio is way out of whack, that could lower your odds of approval. Consider ways you could cut costs, whether that’s downsizing your home, moving in with a friend or family member in the meantime, or selling off a car that’s saddling you with monthly payments.

•   Consider adding a cosigner: Another option could be to ask a friend or family member with good credit and a steady income to serve as a cosigner. Adding them to your application may make it likelier that a lender will view you favorably. (Cosigning can also help build your credit.) Just remember that if you fail to make timely payments on your loan, you could damage your cosigner’s credit and stick them with the payments — not to mention the harm it could do to your relationship.

•   Consider adding a co-borrower: There are some similarities between a cosigner and a co-borrower. For instance, when you use a co-borrower, you leverage that person’s income, credit score, and financial history to help you qualify for a loan. But unlike a cosigner, a co-borrower is equally responsible for paying back the loan and will share ownership of any property the loan is used to purchase.

•   Increase your income: While this might seem like an impossibility if you’ve recently lost your job, there are other ways to approach adding sources of income while you’re on the job search. You could pick up a side hustle or get a roommate. Also take the time to review what counts as income for credit card applications — you might find you’ve forgotten to include something. (Remember, unemployment benefits count as income.)

Recommended: Guarantor vs. Cosigner: What Are the Differences?

The Takeaway

If you’re interested in personal loans for unemployment, you might want to consider all the pros and cons before taking one on. If a personal loan sounds like it might be the right solution, do a little bit of preparation beforehand. It’s never a bad idea to figure out exactly how much you want to borrow in advance. But remember — you should only borrow the amount you need.

Taking a look at the affordability of monthly payments may also help you determine how much to borrow. Additionally, you may wish to pull up your financial documents and take a peek at your current credit score and overall financial health before applying for a personal loan.

If you’re ready to apply for a personal loan, it’s important to look for one that meets your specific needs and to find a lender willing to work with unemployed borrowers, if that’s your current situation.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

SoFi’s Personal Loan was named a NerdWallet 2026 winner for Best Personal Loan for Large Loan Amounts.

FAQ

Can you use a personal loan as an unemployment loan?

Yes, it is possible to use a personal loan as an unemployment loan. However, in order to qualify for a personal loan while you’re unemployed, you’ll still need to meet a lender’s eligibility requirements. This generally includes demonstrating some type of regular income.

What are the benefits of using an unemployment loan?

While risky, a loan for an unemployed person does offer a number of benefits, including flexibility in how the funds are used, potentially lower costs than other borrowing options, and the choice to consolidate existing debt. A personal loan could also come in handy if unexpected expenses arrive, such as a surprise medical bill or an unanticipated move.

Are there any fees associated with unemployment loans?

Personal loans for unemployed people can absolutely carry fees. Which fees apply will depend on the lender. Common fees you could face include origination fees, late fees, and prepayment penalties.

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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