Soft vs Hard Credit Checks: How Personal Loan Prequalification Works

A soft credit check lets a lender look at your credit without affecting your score. A hard credit check happens when you formally apply, and it may lower your score slightly for a while. For personal loans, that difference matters because it lets you shop around safely: prequalify with soft checks first, then apply with a hard check only once you have chosen an offer.

Here is how each type of check works and how to use them to your advantage.

Soft vs hard at a glance

What a soft credit check is

A soft inquiry, or soft pull, happens when someone looks at your credit for a reason other than a formal credit application. Checking your own score is a soft inquiry. So are pre-screened card offers and most personal loan rate checks.

Soft inquiries show up only on the version of your credit report that you see. Other lenders cannot see them, and they have no effect on your credit score. You can check your rate with as many lenders as you like this way.

What a hard credit check is

A hard inquiry happens when you apply for credit and authorize a lender to review your full report to make a decision. Mortgages, auto loans, credit cards and personal loan applications usually involve one.

Hard inquiries are visible to other lenders. A single inquiry typically has a small effect on your score that fades over time. Several in a short period can matter more, because they may suggest you are taking on a lot of new credit at once.

How personal loan prequalification works

Prequalification, sometimes called "check your rate," is the soft-pull step most online lenders offer before a full application. The process usually looks like this:

1. You enter basic details. Typically your name, address, income, employment, housing cost, loan amount and loan purpose.
2. The lender runs a soft inquiry. It looks at your credit report without affecting your score.
3. You see estimated offers. These show the rate, term, monthly payment and any fee the lender expects to offer you.
4. You choose an offer and apply. This is usually when the hard inquiry happens. The lender verifies your income and identity.
5. The lender makes a final decision. The final rate or approval can differ from the prequalified offer if your details do not check out.

A good lender tells you clearly which step triggers the hard inquiry. If you are not sure, look for the disclosure on the rate-check page or ask before you submit.

Which lenders offer a soft-pull rate check

Most of the lenders we review let you check your rate with a soft inquiry. This table summarizes what we found in general. Processes change, so confirm on each lender's site.

All of the options in our current group describe a soft-pull rate check or a no-impact estimate. LightStream, which we previously listed as the exception because it did not offer soft-pull prequalification, now says on its site that it is no longer accepting applications. If you are comparing lenders with strong-credit offers, see our SoFi vs PenFed page.

Prequalified is not the same as approved

A prequalified offer is an estimate. The lender has not yet verified your income, employment or identity, and it may have looked at a limited version of your credit. Approval is never guaranteed at this stage.

During the full application, the lender may ask for pay stubs, bank statements or tax documents. If what you submit differs from what you entered, or if your credit has changed, the final offer can be different or the application may be declined.

To avoid surprises, enter accurate figures when you prequalify. Rounding your income up will only produce an offer you cannot get.

How to shop for a personal loan without hurting your credit

Use soft checks to do all your comparing, then apply once:

• Prequalify with two or three lenders. Or use a marketplace to see several offers with one soft inquiry.
• Compare APR and total cost. Our guide to comparing personal loan offers shows how.
• Pick one offer and apply. Submitting several full applications means several hard inquiries.
• Keep your shopping short. If you do need more than one hard inquiry, keeping them close together is generally better than spreading them out.

Some credit scoring models group several inquiries for certain loan types, such as mortgages and auto loans, into one if they happen within a short window. Do not assume this applies to personal loans. The safest approach is to do your comparing with soft checks.

A hypothetical example

Say a hypothetical borrower checks rates with three lenders on the same day. Each uses a soft inquiry, so the borrower's score does not change. The borrower compares the offers, picks the one with the lowest total cost and submits one full application. That application triggers a single hard inquiry. If the borrower had applied fully to all three, there would have been three hard inquiries instead of one.

Watch out for misleading claims

Be cautious of any offer that says "no credit check" or "guaranteed approval." Legitimate personal loan lenders review your credit and income before deciding. Offers that skip this step are often very expensive or not what they seem. Also never pay a fee just to see or "unlock" a loan offer.

Where to go next

See every lender's rate-check approach on our personal loans ranking, read what credit score you need for a personal loan and learn how we score lenders on our How We Rank page. For direct comparisons, try SoFi vs Upgrade or Happen Bank (formerly LendingClub) vs Prosper.

Rates, terms and approval are always set by the lender. Check your rate on the lender's site and read its disclosures before you apply.