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How to Get Loan or Mortgage Pre-Approval Without a Hard Credit Check
Getting a loan is sometimes necessary when you want to make a big investment. Let’s say you want to start shopping for a new car or a house. It would be heartbreaking to find out later that you won’t be approved for a loan. And if you don’t find a way to pay soon, then you might just lose the opportunity.
Thankfully, there is such a thing as loan pre-approval—which means you can get the information about if you’re approved and how much of a loan or mortgage you’re approved for before going through the full application process.
This guide goes over everything you need to know about how to get pre-approved for a mortgage or loan without a hard credit check.
What is Loan Pre-Approval?
From the name of it, you might think it’s an actual approval for a loan. However, while it might be very close to that, it’s not actually an approval.
Simply put, when you wish to get pre-approval for a loan, you send an application to the lender with the necessary documents. They will then let you know if you are likely to be eligible for a loan or not, and if so, how much.
Getting pre-approved for a mortgage or other type of loan allows you to shop in confidence knowing how much you can afford.
How Loan Pre-Approval Works
Once the application has been submitted, the lender will review your data: income, credit, and other relevant factors.
Based on that review, they will tell you what your options are when it comes to getting a loan or mortgage. You will find out exactly how much you can borrow from a particular lender, what the terms and rates would be, and so on.
Benefits of Getting Pre-Approved for a Loan or Mortgage
Through pre-approval, you can quickly find out if you are eligible for a loan—without going through the full application process or actually taking out the loan.
This can also prove advantageous if you decide not to purchase the home, car, or whatever else you need the loan for. When it comes to a new home, for example, if someone buys it before you, you won’t find yourself with a loan that you have no idea what to do with.
When you get pre-approved, it is not necessary to also borrow the money. You just get your facts straight. If you get another attractive offer from a different lender, you are free to make your choice between them, as there are no obligations.
Just be sure to disclose the true value of what you are intending to buy. This way, the chances of the loan falling through will be much smaller.
What Is the Difference Between Pre-Approval and Pre-Qualification?
Technically speaking, there are hardly any differences between pre-approval and pre-qualification—particularly when it comes to personal loans. Depending on the lender, the term may even be used interchangeably.
Pre-approval is generally associated with large loans, such as a mortgage. You may even opt for a credit card that has been pre-approved by your bank or the one who has issued the loan.
How Long Does the Pre-Approval Process Take?
The pre-qualification process can last a few hours—or it may be done within just a few minutes. It mostly depends on the availability of the staff—particularly if you choose to do it online.
If you get pre-approved, you will be guided through the final process—the actual loan application. This is where you submit the documents necessary to confirm the pre-qualification information you have previously given.
How Does Mortgage or Personal Loan Pre-Approval Work?
Getting your loan pre-approved is one of the preliminary steps necessary to get the funding you need for your purposes—regardless of what they may be. It provides the lender with a review of how creditworthy you are—and ends with the average offer you’re eligible to receive.
Bear in mind that getting pre-approved does not necessarily mean you will get the loan in the last stage. Sometimes, that may depend on the lender, but other times, it may depend on you. Here are the steps that generally involve pre-approval.
The first step of the pre-approval process is sharing the information that your lender may deem relevant.
Your income and occupation are necessary to get a loan offer, but you will also have to make them aware of any existing debt you may have.
While online lenders may not be as strict as banks, too much debt might actually cause your application to be denied.
2) Soft Credit Check
Regardless of the type of lender, they will have to perform a soft credit check. Your credit history and credit score will be checked to determine whether you are a risky borrower or not.
This may be a pre-approval without a hard inquiry, but if your credit score is extremely poor, then the chances of you getting pre-approved can be very slim.
And even if you do receive the loan, the interest rate might be very high.
3) Approval or Denial
The lender can deny or they can grant you a pre-approval. If things go smoothly and you get pre-approved, then at that point you will receive some information on the loan you are eligible to receive. You will be given an offer for the loan amount, as well as the rate of the loan.
If you’ve been pre-approved and given an offer, this does not also mean that you have to take it. You may accept, or you may decline the offer—depending on your requirements.
However, if you accept, then you will have to continue with the process and follow up with more necessary documents.
Hard Inquiries: What Are They?
If you wish to go for loan or mortgage pre-approval without a hard inquiry, you need to know precisely the types of inquiries out there.
Hard inquiries (also called “hard checks”) are exactly what make the borrowing process more difficult—as this “hard pull” literally pulls out a full credit report.
Since hard credit checks are so extensive, your credit score will be negatively affected. In addition, too many hard checks in the past few years can be a red flag to lenders.
If your credit history or score has a dark spot on it, a hard inquiry will uncover it which may lead to your request being denied.
What Are the Differences Between a Hard Inquiry & Soft Inquiry?
There is a very significant difference between soft inquiries and hard inquiries.
A hard inquiry is used when someone applies for a loan or a credit card—pulling out a full report so that the lender gets all the data they need. Hard inquiries also show up on your credit report. So, if you apply for multiple loans or get rejected, the next lender will be able to see that you have not been approved.
A soft inquiry, on the other hand, is a less extensive report that doesn’t affect your credit score or show up on your credit report. Ideally, you would find a lender that offers mortgage or other loan pre-approval without a hard check so your credit score does not get affected it.
5 Best Personal Loans With No Hard Inquiry
Hard inquiries are one of the least attractive parts of applying for loans. Your credit score takes a hit and you still might not be approved. Luckily, some lenders offer soft credit inquiries on applications, keeping your credit score regardless of whether you get approved or not. Below, we’ll discuss our picks for the five best soft credit inquiry personal loans, but here there are at a glance:
Read on to learn about each of these lenders and why we picked them.
- AmOne (Best for Good to Okay Credit)
- Spring Loans (Best for Bad Credit)
- First Premier Lending (Best for Bad Credit)
- Upgrade (Best for Good Credit)
- Avant (Best for Okay Credit)
1. AmOne (Best for Good to Okay Credit)
AmOne’s platform specializes in efficiently matching borrowers with suitable lenders. For individuals cautious about hard inquiries, AmOne can connect them with options that offer pre-approvals without affecting their credit score, allowing them to gauge potential offers risk-free.
2. Spring Loans (Best for Bad Credit)
Spring Loans emphasizes flexibility and borrower convenience. They offer a range of lending solutions, and their pre-approval process is designed to give potential borrowers insights into possible loan offers without initiating a hard credit pull, ensuring their credit remains untouched during the preliminary stages.
3. First Premier Lending (Best for Bad Credit)
First Premier Lending understands the importance of credit health for its borrowers. Their approach to pre-approvals is tailored to provide initial loan insights without a hard inquiry, allowing potential borrowers to explore their offerings without immediate repercussions on their credit score.
4. Upgrade (Best for Good Credit)
Upgrade is dedicated to transparent and accessible lending. Their pre-approval process is structured to provide potential borrowers a clear picture of their eligibility and possible loan terms without the need for a hard credit inquiry, emphasizing a customer-centric approach.
5. Avant (Best for Okay Credit)
Avant offers a seamless and straightforward pre-approval process. Recognizing the importance of maintaining credit health, Avant allows potential borrowers to check their loan eligibility and terms without a hard credit pull, fostering trust and ensuring a non-invasive preliminary experience.
- Guide to Getting Second Personal Loans
- How to Borrow Money for a Downpayment
- Principal Vs. Interest: What’s the Difference?
- What is Conditional Loan Approval?
- What is a Credit Reference?
Final Thoughts on Getting Pre-Approved Without a Hard Credit Check
Loan pre-approval without a hard check is a great option if you are still shopping around for lenders and you do not wish for every loan request to show up on your credit score.
This way, you will be able to see your options without any risks—therefore increasing your chances of getting your best loan approved.
You can try Stilt for pre-approval without a hard inquiry. The process is simple, and regardless of your status or credit score, the chances of you being accepted are high.