Soft Inquiry Personal Loans: What They Are + Your Options

Soft Inquiry Personal Loans: What They Are + Your Options

Attempting to navigate the world of credit can be extremely confusing and unnerving, especially if you are unfamiliar with all of the different ways your credit score can be affected. Having bad credit (or no credit) is extremely common. Because of this, lenders and credit bureaus intend to make it increasingly difficult for individuals with low/no credit to obtain loans or increase their scores.

Applying for and obtaining loans in the US can be just as confusing for immigrants or nonresidents. Don’t be discouraged — there are still great options for your needs!

What is a Soft Credit Check?

A soft inquiry is a type of credit check that doesn’t count negatively towards your credit score. The person or company providing the soft inquiry checks your credit report as a background check, such as when you would apply for a lease or a personal loan.

Soft inquiries do not affect your credit score and can be useful for those with no credit or bad credit. If you have bad credit and don’t want your score to be negatively affected (and want more than just loans for bad credit), then a soft inquiry loan might be the right option for you. It’ll keep your credit safe in the long run.

Be Careful: Soft Inquiry Loans can be Predatory

Watch out for unfair loan terms when agreeing to a soft inquiry loan. Many predatory lenders focus solely on credit, and not at all at the borrower’s ability to repay the loan. Be sure to do your homework and figure out all that the soft inquiry loan entails before agreeing to it.

Keep an eye out for:

  • Payday Lenders
  • High-interest rates
  • Loans bigger than you can realistically afford to pay back

What is a Hard Pull Credit Inquiry?

A hard pull is another type of credit score check that will affect your credit report. This type of credit check occurs when you authorize a lender (whom you’ve applied for credit with) to review your credit report. They do this so that they can make a decision on the type of loan they can provide you. Hard pull issuers often include financial institutions such as credit card companies and other lenders.

Hard pulls are usually used when credit checks are acquired for various credit card issuers and loans, and for mortgages. Be wary of how often you allow your credit report to be drawn up, as hard pulls always affect your credit and decrease your credit score.

If you have no credit history, it’s generally better to avoid hard pull credit inquiries, as they are likely to be denied right away.

Does a Hard Pull Hurt My Credit Score?

Yes. A hard pull inquiry will appear on your official credit report and can be listed as an error or negative item on your credit score, bringing it down. Dropping credit scores from negative credit history mean higher interest rates when you borrow.

Other factors decrease credit scores, such as missed/late payments or charge-offs and collections. However, it is extremely common for individuals to have negative marks on their credit history from hard pull inquiries.

Some Examples of Soft and Hard Inquiries

The key difference between soft and hard credit checks is permission. A lender can perform a soft inquiry without your permission. A lender must have your permission to do a hard inquiry, though.

Below, we’ll look at some examples of both.

Common Soft Inquiries

These, again, are credit checks that a lender does not need a borrower’s permission to perform. They include:

  • Property Rental Applications
  • Credit Card Applications
  • Student Loan Applications
  • Auto Loan Applications
  • Personal Loan Application

Common Hard Inquiries

And these are just the opposite situation of a soft inquiry–they do require a borrower’s permission to perform.

  • Checking your credit scores on Credit Karma
  • “Pre-qualified” credit card offers
  • “Pre-qualified” insurance quotes
  • Employment verification (i.e. background check)

How to Dispute a Hard Credit Check

It’s a good practice to check your credit reports regularly to make sure that there are no errors in the reporting. If you do find an error in your credit report, however, it can be disputed by getting in touch with the credit bureau in question or by contacting the Consumer Financial Protection Bureau.

An important note to make here is that you cannot, under any circumstances, dispute a hard inquiry that you gave permission for.

Soft Inquiry Personal Loans

Now that you know what a soft credit check loan is, and if it’s the best option considering your own personal financial situation, here is a list of some of your best options!

1. Stilt

Stilt offers soft pull inquiry loans with no cosigner requirements, no prepayment fees, and 24-hour decisions. Loan disbursements range anywhere from as low as $1,000 to as high as $25,000 depending on your needs. Stilt aims to help immigrants and the underserved who are particularly in need of personal loans. By taking into account the factors beyond the borrower’s credit score, Stilt can lend to those with no credit.

Pros

  • Soft Credit Check
  • No Cosigner Required
  • Simple Application Process
  • Decision in 1 Business Day

Cons

  • 24 Month Term Limit
  • $25,000 Limit
Personal Loans
 with Soft Credit Checks!

Check Loan Options

Loans for up to $25,000. No cosigner required. No prepayment penalty.

2. Avant

This lender provides the opportunity for a wide range of loan volumes — from $2,000 to $35,000. They have really quick turnarounds for loan disbursements, which can be extremely helpful. Avant does require a minimum credit score of 580, so if you have some credit but don’t want to bring it down any further with hard pull loans, then this is a great option.

Pros

  • Soft Credit Check
  • Fixed Interest Rates
  • No Prepayment Penalty

Cons

  • Interest Rates up to 35.99%
  • Charges Origination Fee

3. OneMain

OneMain Financial is notable for working with borrowers who have a less than great credit score (~600) They’re loans are available up to $30,000 for 60 months with interest rates starting at 16.05%. OneMain is also unique among the lenders listed here because they require an in-person meeting at a branch to complete a loan, so depending on your customer services preference, this can be an annoyance or a selling point.

Pros

  • Soft Credit Check
  • Fixed Rates
  • No Prepayment Penalties

Cons

  • APR from 16.05% to 35.99%
  • Loans Cannot be Used for Tuition
  • Loan Must be Completed at a OneMain Branch

4. Freedomplus

This lender offers loans up to $40,000 with same-day approval (funds take 48 hours to disburse). Loans can be approved for a wide variety of uses, including tuition, refinancing, and even personal reasons. Freedomplus’s APR’s range from 5.99% to 29.99%.

Pros

  • Soft Credit Check
  • No Prepayment Penalty
  • Same Day Approval

Cons

  • 700 Minumum Credit Score
  • Origination Fee up to 5.00%

5. BestEgg

BestEgg, like the other lenders in this list, offers loan applications with soft credit checks. Their loans go up to $35,000 with interest rates from 5.99% to 29.99% and the company is known for having an excellent application process that helps borrowers get their funds quickly.

Pros

  • Soft Credit Check
  • Considers Applicants with Lower Credit Scores
  • Competitive Interest Rates

Cons

  • APR’s up to 29.99%
  • Origination Fees
Personal Loans
 for Immigrants!

Check Loan Options

Loans for up to $25,000. No cosigner required. No prepayment penalty.
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