Prequalify for a Loan Online Without Hurting Your Credit

While most people understand that missing payments on a loan can significantly lower their credit score, it's important to note that simply applying for a loan can also have an impact on your credit. 

This is because the application process can trigger a hard inquiry, which differs from a soft credit check that is typically used for background checks and does not affect your credit score. A hard inquiry, on the other hand, can hurt your credit score.

So, how can you qualify for a loan without hurting your credit score? Well, the answer is to do your research on loan providers along with eligibility criteria and to limit your applications.

How Can a Loan Application Affect Credit?

It’s important to limit your applications because most lenders or providers will perform a hard credit inquiry before any real terms are agreed upon.

There are a few ways in which a hard inquiry can affect your credit score:

• A hard inquiry can immediately lower your FICO score by a few points.
• When evaluating your credit risk, the lenders will look not only at how recently you have applied for credit but also at how many times you have done that. If quite a few hard inquiries have occurred in a short timeframe, the majority of lenders might view you as a risk
• A hard inquiry can stay on your credit report for up to 2 years. The good news is that the inquiries that are over a year old might not affect your score if you manage to keep the credit utilization rate low and make the payments on time

If you’re worried that there might be something on your credit report that the lender will not like, then you should try to manage your hard credit inquiries.

You can do that by monitoring your credit (this will help you stay on top of the things that can affect a lender’s decision) and applying only for the loans that you urgently need. By the way, getting prequalified for a loan also won’t trigger a hard inquiry.

What Do “Prequalified” and “Preapproved” Mean?

Loan prequalification is a great way to estimate your chances of getting the loan that you need. If you get prequalified by the lender, this will mean that you have extremely high odds of getting approved once you finally apply for the loan.

Sometimes, the terms ‘prequalification’ and ‘preapproval’ are used interchangeably, but in some cases, they are quite different.

•       Prequalification is, in general, a less detailed and faster process. Once you get prequalified, it means that the lender has reviewed the financial information that you managed to provide and believes that you will qualify for a loan if you decide to apply.
•       Preapproval is a more in-depth process. Though it also will not affect your credit score unless you respond with an application, people usually tend to lean toward the prequalification process as it is often instant. At the same time, preapproval might take a few days to complete.

Do bear in mind that not all lenders offer a pre-qualification option. If you notice such phrases on the company’s website as ‘view your rates’ or ‘check your rates’, the chances are high that the lender does offer such a service.

If you’re unsure, you can always call the lender directly and get your questions answered.

Here is an example of how prequalifying for a loan might work:

1. The pre-qualification process involves filling out a special form online. You would have to share some personal and financial information.

• •       Make sure that you provide the exact information that you’re planning on providing to the lender if you decide to apply for the loan.
  •       The common information required usually includes your name, address, and date of birth, as well as your employment status, yearly income, and housing status. Don’t forget to specify the loan amount that you want to request.

2. After filling out the necessary information, in the majority of cases, you will be instantly provided with a prequalified offer. You’ll get to find out whether you can get approved for the loan and the sum that you might qualify for.
3. One important thing to remember is that even if you do get prequalified for a loan that does not guarantee that you won’t get denied during the final decision. And though taking advantage of the prequalification process won’t hurt, it does not secure a loan for you.

How To Prequalify for a Loan Online Without Hurting Your Credit

As stated above, the prequalification process allows for a more expedient loan experience. The lender has streamlined the process for you by examining your financial information ahead of time.

Simple Fast Loans is an online lender with a lot of experience in online installment loans for borrowers with less-than-perfect credit. How does this work? Simple Fast Loans uses more than just your debt-to-income ratio and your credit score to decide on your loan. Instead, each loan decision takes into account unique factors like rent payments and utility bills.

Applying for a Loan Online with Simple Fast Loans

To instantly get the loan decision, you would have to:

1. Fill out the online application form. This will take you only a few minutes if you have all the necessary documents prepared. Those include your government-issued ID, and the routing and account number for an active checking account (where most of your income is deposited). If you’re applying for a personal loan, you’ll also need your social security number and proof of income. You might be able to qualify for anywhere between $200 and $3,000. Additionally, your loan might be funded the next business day or even on the same day.  
2. Review your loan. After you apply online, your loan agreement will be set up in the shortest timeframe, and you will be presented with an online loan package that needs to be signed.
3. Sign your loan. To e-sign your loan, you only have to click on the spots where your signature is required.

Your income, identity, and bank account information will all be verified electronically. Simple Fast Loans representatives understand that nobody wants to waste their precious time, especially if someone is in a situation where they urgently need money.

So, you wouldn’t have to drive to the lender’s office and wait for the decision for days.

Get the Money You Need Without Hurting Your Credit

If a lender offers prequalification services, this is something that you should take advantage of as you’ll be able to assess your chances of getting approved for a loan without hurting your credit.

With Simple Fast Loans, however, you will be able to get a loan decision in a matter of minutes. And the best part is that you might be able to receive the much-needed cash the very same day.

Note: The content provided in this article is for informational purposes only. Contact your financial advisor regarding your specific financial situation.