Our evaluations and opinions are not influenced by our advertising relationships, but we may earn a commission from our partnersโ links. This content is created by TIME Stamped, under TIMEโs direction and produced in accordance with TIMEโs editorial guidelines and overseen by TIMEโs editorial staff. Learn more about it.
Ready to apply for a personal loan? A good first step before submitting an official application is to get prequalified.
Prequalification allows you to shop around for loans without affecting your credit score. By filling out a form, you can get a sense of the loans for which youโre eligible and a better idea of whether or not youโll be approved. But prequalification doesnโt guarantee approval. Youโll still have to officially apply for the loan even if youโve prequalified, and thereโs a chance your application will be rejected.
Interested in prequalifying for a loan? This article will explain how the process works, when to expect an answer from the lender, and what to consider before getting preapproved.
The prequalification process for a personal loan isnโt difficult, but itโs a good idea to familiarize yourself with the steps before you get started.
The first step in prequalifying for a loan is to fill out a form. Most lenders offer a prequalification form on their websites, which makes it very easy. Youโll typically need to provide the following information:
Once youโve submitted the prequalification form, the lender will run a soft credit check. This allows the lender to determine your creditworthiness without seeing any specifics and affecting your credit score. Only more in-depth hard credit checks impact your credit score.
Since the lender will only run a soft credit check, you can prequalify with multiple lenders at once without it hurting your credit score. This allows you to shop around for the loan with the best terms and rates.
After the lender has completed the soft credit check, youโll be able to see if youโve been prequalified for the loan. Usually, the lender will notify you once theyโve reached a decision.
If your prequalification request was approved, the lender will invite you to fill out an official application. If youโve been prequalified for multiple loans, this is the time to compare the details between them to determine which will work best for you.
When you fill out an official application, the lender will run a hard credit check. Since a hard check will have a slightly negative effect on your credit score, itโs inadvisable to apply for more than one loan at a time.
Before you start prequalifying for loans, there are a few things youโll want to keep in mind. Here are the main considerations to take into account before you get the ball rolling.
You might assume that prequalification and preapproval describe the same process. They donโt. Prequalification is a process where the lender performs a soft credit check to determine whether a borrower could potentially qualify for a loan. Preapproval takes things a step further and can give you a better idea of whether youโll be approved for a loan. This process is more likely to involve a hard credit check, which can affect your credit score slightly.
Some lenders may use these two terms interchangeably. If youโre not sure, itโs best to ask the lender whether theyโll be performing a soft or a hard credit check to determine your eligibility for a loan.
Prequalifying for a loan doesnโt mean youโll definitely be approved for it when you fill out an official application. The prequalification process gives lenders a glimpse at your finances However, theyโre unable to see the full picture without running a hard credit check. Youโll still need to go through the application process and wait to see if you are officially approved for the loan.
Before prequalifying for a loan, itโs smart to know your credit score. If you have a score that falls within the โgoodโ or โexcellentโ range, youโll likely get prequalified for a loan fairly easily. But if your credit score falls in the โfairโ or โpoorโ category, your prequalification request may be denied.
Using a credit-monitoring service such as Experianโs CreditWorks or FICOโs myFICO can help you keep tabs on your credit score and know when it reaches a level thatโll make it easier to prequalify for a loan.
Not all lenders offer prequalificationโand, even if they do, the available rates and terms may not be what youโre looking for. Thatโs why itโs important to do your research before you get started. Here are some examples of lenders that offer prequalification for their loans.
Lender | Loan Type |
---|---|
American Express | Personal |
Student | |
AUTOPAY | Auto (new and refinance) |
Calque | Home equity |
Capital One | Auto |
Auto (refinance) | |
Chase | Personal |
Auto (refinance) | |
Student (refinance) | |
Tresl | Auto (lease-purchase and refinance) |
Auto (refinance) | |
U.S. Bank | Personal |
Wells Fargo | Personal |
Dave | Cash advance |
If youโre shopping for a loan, getting prequalified is a great tool to determine which ones you could potentially be eligible for. But youโll still need to go through the application process. Thereโs no guarantee the application will be approved, even if you are prequalified.
No. Even if you prequalify for a loan, you still need to fill out an official application and undergo a hard credit check. While prequalification makes it likely youโll be approved for the loan, it doesnโt guarantee it, as the lender might find something in your full credit report that disqualifies you.
Most major banks offer prequalification for personal loans. Check the bankโs website to see if thereโs an online loan prequalification form available.
Not long. Usually, youโll receive a decision from the bank within minutes letting you know whether or not you prequalify for a loan.
The information presented here is created by TIME Stamped and overseen by TIME editorial staff. To learn more, see our About Us page.