How to Prequalify For a Loan without Hurting Your Credit

July 15, 2021by David0
Hard enquiry and soft enquiry – Hard pull and soft pull
Hard enquiry and soft enquiry – Hard pull and soft pull.

Your credit score is a fundamental part of qualifying for a mortgage loan.

It equally determines whether you get loans and the rates you pay. This score gives lenders an idea about your ability to pay off debt and will influence the rate and terms of your loan. In this article we will cover the different types of credit inquiries that can be used to determine your score and how our new ‘Soft Pre-Qualification Tool’ can instantly pre-qualify you for a refinance or purchase loan without affecting your credit score.

What is a Credit Inquiry?

To determine your credit score, lenders will request an inquiry into your credit history. There are different types of inquiries but simply put, these are searches your lender will run on your credit history to determine your reliability as a borrower. This search will take into account your personal financial situation and your bill-paying habits. Your lender uses this report to make decisions to provide quote about the loan approval.

Get to know your true credit score from our financial tool with Equifax® without leaving a ding or Hard Inquiry on your credit and not get penalized for score drops.

The higher your credit score the more reliable your lender will view you as, this will lead to more favorable loan terms and a good opportunity for quick approval.

Types of Inquiries:

Soft Inquiries Hard Inquiries
  • Do not affect your credit score
  • Can be done by lenders to pre-qualify you for a loan
  • Can be done by the individual, employers, or creditors
  • Can lower your credit score
  • Can stay on your credit report for up to 24 months
  • Will be done by a lender after you’ve submitted your loan application

 

Why do hard inquiries negatively affect your credit score? If a hard inquiry is being done, it’s because you are seeking out new credit, which is a new possibility for debt. This can cause your score to lower until you prove your ability to manage the debt.

Why we use a ‘Soft Pre-Qualification’ Built Using Equifax® Technology

As we’ve seen, a soft inquiry is a type of credit inquiry that has no effect on your credit score. It is the first step you’ll take when looking to qualify for a loan which saves you time, and gives a full blown credit report. Furthermore, this type of inquiry gives a true credit score, as opposed to the Vantage score you will likely see with your credit card or through services like Credit Karma.

Our Soft Pre-Qualification’  technology allows you to get pre-qualified for a loan instantly without damaging your credit. Our software will match your SSN to your credit history to do a full credit report. This method does not affect your three-digit credit score because you are not actually applying for credit, but still provides us with the information we need to get you pre-qualified.

Instead of waiting for your lender to do a hard inquiry that lowers your credit score only to then be disqualified for a loan, this pre-qualification process puts you on the fast track for the loan you’re after. After we’ve completed the search, you will receive your quote and be ready to start the full loan application process.

The bottom line

Your credit score is a very important part of qualifying for a loan. Lenders can use different types of inquiries to determine your credit score, but as we’ve seen, not all inquiries are created equal. Our ‘Soft Pre-Qualification’ inquiry tool can pre-qualify you for a loan instantly without causing any damage to your credit report and get you closer to the loan for your refinance or purchase.

David

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