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A soft pull personal loan means that the lender only requires a soft credit check for preapprove or approval, which won’t impact your credit score. With a soft pull, a lender is able to look at information in your credit report without leaving a negative mark. It differs from a hard credit pull, which does have an impact on your score.
Read on for a closer look at what soft pull personal loans are and what skipping a hard pull means for borrowers.
Getting a personal loan can be a great way to pay for large expenses or consolidate high-interest debt. But applying for a loan also means your credit score will take a temporary hit from a hard inquiry. That’s why soft pull personal loans are gaining popularity – they let you check rates and prequalify without impacting your credit.
In this comprehensive guide we’ll explain everything you need to know about personal loans and soft credit checks. Here’s what we’ll cover
- What is a soft credit pull and how does it work?
- The difference between soft pull vs hard pull
- Why check rates with a soft pull first
- Finding reputable lenders that offer soft pull preapproval
- Other loans and services that use soft inquiries
- Avoiding predatory soft pull loans
What Is a Soft Credit Inquiry?
When a lender or creditor checks your credit, they can do either a “soft pull” or a “hard pull.”
A soft pull is when a lender takes a look at your credit report without affecting your credit score. It’s basically just peeking at your credit history.
Soft pulls don’t require your permission. In fact you probably won’t even know it happened. Common examples are
- Getting prequalified for a credit card or loan
- Applying for an apartment
- Checking your own credit score
- Background check for a new job
A hard inquiry, on the other hand, does show up on your report and can temporarily lower your credit score. Hard pulls occur when you formally apply for new credit, like a credit card, auto loan, or mortgage.
How Do Soft Credit Checks Work?
When a lender does a soft pull they can see much of the same information as with a hard inquiry including
- Your payment history
- Debts and balances
- Length of credit history
- Credit utilization
However, with a soft pull the lender can’t see sensitive details like your social security number or account numbers.
Soft inquiries only provide a snapshot of your creditworthiness to help the lender make pre-offer decisions. The credit bureaus treat soft pulls differently so they don’t impact your scores.
The Difference Between Soft Pull vs Hard Pull
It’s helpful to understand the key differences between soft vs hard credit inquiries when shopping for loans:
| Soft Pull | Hard Pull |
|---|---|
| No permission required | You must authorize it |
| No impact on credit score | May lower credit score |
| Used for pre-offers | Required for approval |
| Not visible to other lenders | Visible on full credit report |
| No record on your report | Stays on report up to 2 years |
The main takeaway is that soft credit checks won’t hurt your credit score. Hard inquiries may knock your score down a few points temporarily. But the effect is usually small and your score typically rebounds within a few months.
Why Check Rates With a Soft Pull First
Here are some of the advantages of checking your rate first with a soft pull:
- See personalized preapproval offers
- Verify you qualify before applying
- Compare loan terms from multiple lenders
- Accept the loan offer later if you want
- Shop around without hurting your credit
Prequalifying gives you important information to evaluate loan offers, while preserving your credit score.
If you see an offer you like, you can go ahead and formally apply and complete the hard pull then. But at least you’ll have more confidence about qualifying and the rate.
Where to Find Reputable Soft Pull Lenders
Many online lenders now offer soft pull preapprovals for personal loans. Here are a few things to look for to find a trustworthy lender:
- Reviews from objective third-parties like Trustpilot
- Years in business with a proven track record
- Transparent about rates, fees, and eligibility
- Quick and easy prequalification process
- Competitive rates compared to alternatives
- Flexible loan amounts and terms
- Strong customer service
As an example, SoFi offers personal loans with rates starting as low as 4.99% and you can check your rate without a hard credit check.
Other Common Soft Credit Inquiries
Beyond personal loans, here are some other common uses for soft pull credit checks:
- Prequalified credit card offers
- Employer background checks
- Renting an apartment
- Checking your own credit report
- Credit monitoring services
- Insurance quotes
Soft pulls allow lenders and service providers to review your financial profile without affecting your credit score. As long as you avoid shady lenders, soft pulls are nothing to worry about.
Be Wary of Predatory Soft Pull Loans
While soft pull loans can be beneficial in many cases, you do need to be cautious of predatory loans that take advantage of borrowers with poor credit.
Some lenders promote “guaranteed approval” no credit check loans. But then they charge excessively high interest rates, sometimes over 400%. Payday loans and car title loans are examples.
If an offer seems too good to be true, make sure to read reviews and research the lender extensively before providing any personal information. Legitimate lenders won’t guarantee instant approval without checking your credit.
The Bottom Line
Checking your personal loan rate and prequalifying with a soft pull lets you shop around to find the best offer, without taking a hit to your credit score. Just be sure to watch out for predatory lenders and only complete a hard pull when you’re ready to formally apply with a reputable company.
Soft pull preapprovals provide the information you need to make a wise borrowing decision, while protecting your credit score during the process.
Compare Personal Loan Offers With SoFi
A personal loan is a flexible kind of financing that you can use the funds to cover virtually any type of expense, including home renovations, credit card consolidation, medical costs, a wedding, and more.
If you’re interested in exploring your loan options without triggering a hard credit pull, SoFi can help. SoFi personal loans offer competitive, fixed rates and a variety of terms, and checking your rate won’t affect your credit score. Plus, it only takes just one minute. See if a personal loan from SoFi is right for you.
Do lenders see less of your credit history with a soft pull?
With a soft inquiry, a lender or creditor will typically see a modified version of your credit report. They likely won’t be able to see information like your account numbers but will see things like your payment history and if you have any accounts in collections.
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What is a soft pull personal loan?
A soft pull personal loan means that the lender only requires a soft credit check for preapprove or approval, which won’t impact your credit score. With a soft pull, a lender is able to look at information in your credit report without leaving a negative mark. It differs from a hard credit pull, which does have an impact on your score.
What are the best soft pull personal loans?
One of the benefits of applying for one of the best soft pull personal loans with Avant is that the range of the loan amount you can get is relatively wide. These soft credit check loans from a direct lender have another benefit: they can be fast. They can get you your money relatively quickly if they approve the loan.
Should I prequalify for a personal loan with a soft pull?
While prequalification for a personal loan with a soft pull isn’t a guarantee you’ll get approved for a loan, it can give you a good idea of the loan amount, rate, and terms you may be able to qualify for. If you choose to then apply for the loan, the lender will then do a hard credit pull.
What is a soft pull credit check?
Unlike a hard credit check, which requires your explicit consent and can impact your credit score, a soft pull is typically used for informational purposes or prequalification. For example, let’s say you’re shopping around for personal loan offers and want to check your rate.
Do soft pull personal loans affect your credit score?
Well, your payment history and ability to make timely monthly payments on your credit accounts are some of the most significant factors that affect your credit score.v So, as long as you don’t miss any payments on your soft pull personal loans, your credit report and credit score will remain healthy.
How does a personal loan work?
The lender gets insight into your credit worthiness while empowering you with more information to make sound borrowing decisions. Discover Personal Loans, for example, offers a soft credit pull to let you know your estimated rate and monthly payment based on your requested loan amount and repayment term.