Can you get a personal loan while on Social Security?

Qualifying for a personal loan while you’re on Social Security is similar to qualifying for a loan in general. (iStock)

Social Security benefits can provide financial help through retirement, disability or hardship. While the income can help you pay your bills, there may be a time when you need to take out a personal loan. Lenders look at your credit score and income, and if you’re on government benefits it could be harder to qualify. Before you apply, you’ll want to understand how Social Security impacts your credit and eligibility.

How to get a personal loan while on Social Security

Qualifying for a personal loan while you’re on Social Security is similar to qualifying for a loan in general. Since personal loans are often an unsecured form of debt, lenders take a close look at your credit score to measure your creditworthiness. You’ll need to have demonstrated a history of paying your bills on time and have a low debt-to-income ratio, which is the percentage of your monthly gross income that goes toward paying any of your debts, such as a mortgage or credit card.

Lenders will also look at your income. Some types of social security benefits are a guaranteed form of income, such as the retirement benefits you are eligible to take at age 62 or later. If you collect disability benefits, however, your income may be subjected to audits and re-certifications. It’s possible that the amount you receive each month could go down or go away entirely, depending on your situation.

To qualify for a personal loan, you may need to have another form of stable income, such as a pension, alimony or child support. Or the lender may require that you get a cosigner.


It’s important to know that not all lenders will offer personal loans to borrowers on social security. Government benefits can’t be garnished if you don’t pay your loan, which increases their risk.

When should you take out a personal loan?

Personal loans can help you pay for an emergency or consolidate debt into a lower monthly payment. These might be good reasons to consider this form of financial help. But it’s important to only take out a personal loan if you know you can pay it back.

And beware of predatory lenders that offer financing with high-interest rates to people on Social Security, such as payday loans or other expensive forms of credit. Always shop around for the best rates and terms and understand what you’re signing before you commit to a loan and lender.

How does this impact your Social Security?

Some Social Security benefits are based on your income and circumstances, and you may have wondered if a personal loan could reduce your monthly assistance. According to the Social Security Administration, a personal loan is not considered income, and it does not reduce the benefits you are entitled to receive. To be considered as a loan, however, the debt must be something you receive from someone that you agree to pay back.


But there’s a catch: If you take out a loan and don’t spend in the first month, it will count towards your Social Security Income (SSI) resource limit of $2,000 for individuals and $3,000 for couples. To maintain your Social Security benefits, only borrow what you need.

Use Credible’s personal loan calculator to estimate your monthly payments so you can determine how the payment will impact your budget, especially if you’re on a limited income. And if your Social Security income went up in 2020, consider using the extra funds to pay down your debt faster. You don’t want a loan payment to hurt your financial future.