When looking for a personal loan, one of your concerns may be how the loan application process will affect your credit score. Many lenders run a hard credit inquiry when you apply, which can temporarily lower your score. There are lenders who will run a soft credit inquiry to check your eligibility instead, which won’t impact your score. Here are a few things you should know before deciding to borrow with a soft pull personal loan.
What is a soft credit pull personal loan?
A soft pull personal loan is a type of loan where the lender performs a soft credit check to assess your creditworthiness before extending your loan offer. In addition to being called a soft credit pull loan, it may also be referred to as a soft credit check loan or soft credit inquiry personal loan. Whatever you call it, these terms all reference the same thing and can be used interchangeably.
While you can find no credit check loans, be sure to do your research about the lender’s process. They may run a soft credit check to assess your eligibility, but still run a hard credit check after to determine final approval.
How do soft credit pull loans work?
When you apply for a soft credit pull loan, the lender will be able to check your credit profile without impacting your credit score. Unlike a hard credit check which shows a detailed description of your credit report, a soft credit pull allows them to see some basic information and summary of your credit. This allows them to assess your creditworthiness at a high level and provide loan options if you meet their eligibility requirements.
What’s the difference between a soft credit pull and a hard credit pull?
Before applying for a soft pull personal loan, you should understand the difference between a soft credit check and a hard credit check.
| Soft credit pulls | Hard credit pulls | |
| Credit impact | No impact on your credit score. | Can temporarily lower your score by a few points. |
| How can they be used | Assessing eligibility, preapproval offers, checking your own credit. | Applying for loan applications, credit card applications, rental applications. |
| What’s included | High level summary of your credit. | Detailed credit history. |
| Consent | Companies do not need your consent to run a soft credit check. | You must give a company permission before they run a hard credit check. |
How does a soft credit pull loan affect my credit score?
Soft credit pulls will not affect your credit score. However, after qualifying and accepting a loan offer, the lender may run a hard credit pull to finalize loan approval. Additionally, if you take out a soft pull personal loan and your lender reports payment history to the credit bureau, your score could be impacted further. On-time payments can help you build your score, but missed or late payments can damage your score.
What to know about soft credit pull loans.
Borrowers should always do their research and assess their financial situation before applying for any type of loan. Many financial institutions may use soft credit checks to prequalify borrowers and run a hard credit check to determine approval. Getting a prequalified offer can give you an idea of the loan terms you could be approved for, such as the loan amount, interest rate and repayment terms. This can make shopping around for a loan easier, so you can find the best loan offer for you.
When comparing loan offers, pay attention to the details to ensure you’re making the right decision for you. Here are a few factors to look out for:
Fees. Personal loans often have some fees attached. Look to see what the origination fees are, how much late fees will cost and if there’s any kind of prepayment penalty.
Interest rates. Depending on the lender and your financial situation, interest rates on personal loans can vary a lot. Shop around to find the lowest rates available to you. You should also check to see if they are offering fixed interest rates or variable interest rates.
Loan terms. Be sure to review your loan agreement before signing. This can help ensure that the loan you’re getting aligns with your needs.
Customer support. Loan lenders with good customer support can make a big difference if you run into issues or need help during the life of your loan.
Who offers soft pull personal loans?
You can find soft pull personal loans at a variety of financial institutions. Here are two of the common lenders that provide soft pull personal loans.
Online lenders. Online lenders often offer fast, flexible funds (sometimes as soon as the next business day) with only a soft credit pull. Be sure to do your research and ensure the company is reputable when borrowing online.
Credit unions. Credit unions may also use a soft credit pull to determine eligibility. If you’re a member of a credit union, you may be able to leverage your existing relationship to find competitive rates.
If you’re unsure if the lender you want to borrow from offers soft credit pull loans, you can contact their customer service before applying.
How to get a soft credit pull loan.
Identify your financial needs. Before you start looking for a loan, you should first consider why you need it. Is there a financial emergency and you need the money the same day? Do you have a home improvement project coming up? Do you want to get a loan for debt consolidation? Your financial needs can help identify what type of loan is right for you.
- Research lenders. Look for a reputable lender with good reviews. You’ll want to make sure they have the type of loan you’re looking for and that you meet their eligibility requirements.
- Fill out the application. You may need to provide the lender with some personal information such as your Social Security number, bank account information and other details.
- Compare offers. If you’re approved, you’ll want to compare your loan offers. Be sure to review things like loan amount, annual percentages rates, fees and repayment schedule.
- Sign the agreement. Once you’ve decided on a loan, you’ll just have to sign the agreement. After, the money will likely be sent to your bank account and you can begin repayment.
You can soften the impact with a soft pull.
Soft pull personal loans can help protect your credit score while looking for a loan. Unlike hard credit inquiries, which can temporarily lower your score, soft pulls allow you to check your rates and eligibility without any impact on your credit. However, it’s important to carefully research your chosen lender to fully understand their loan process, including terms, fees and how the loan might affect your credit over time. Taking the time to explore your options can help you make an informed decision and find the best loan to meet your needs.
DISCLAIMER: This content is for informational purposes only and should not be considered financial, investment, tax or legal advice.
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