Save your credit score by getting prequalified for a personal loan first. Learn how. (Shutterstock)
If you’re looking for a personal loan, prequalification is a good place to start. Since applying for personal loans can affect your credit score when inquiries appear on your credit report, it can be helpful to get quotes from multiple lenders at once.
In addition, if you’re concerned you won’t qualify, prequalification can give you insight into how likely you are to get a loan, so you don’t ding your credit score by submitting many applications.
Credible makes it easy to see your prequalified personal loan rates from various lenders, all in one place.
Personal loan prequalification allows you to find out if you’re likely to qualify for a personal loan, and what interest rates and repayment terms a particular lender might offer you.
Some lenders use the term prequalification and pre-approval interchangeably, but the terms can mean something slightly different depending on the lender.
When you apply for prequalification, the lender typically does a soft pull on your credit, which won’t affect your credit. The lender gets a basic picture of your financial situation and estimates how much they might lend to you.
A loan pre-approval is a more in-depth look at your finances and provides a more complete loan offer. For example, when you’re pre-approved for a mortgage loan you’ll need to provide the lender with more detailed personal and financial information.
Getting prequalified for a personal loan has several advantages:
If you plan to apply for a personal loan, prequalification should be the first step. Visit Credible to compare personal loan rates from various lenders without affecting your credit score.
When seeking prequalification, follow these steps:
- Use the information to fill out prequalification forms. You can apply on individual lender websites, or you can use Credible, where you can fill out your information once and get rates from multiple lenders in one place.
- Once you’ve submitted your information, review the offers from each lender and figure out which, if any, fit your financial needs. Make sure to compare loan amounts, fees and interest rates to figure out the best option.
- After you’ve chosen a lender, you’ll need to complete a full application and provide additional information to the lender. Once you submit your application, the lender will run a full credit check before finalizing your offer.
If you discover during the prequalification process that you don’t qualify for a personal loan or are eligible for less than you need, you may need to ask a friend or family member to cosign or take a little time to work on your credit score before looking again.
You can get prequalified for a personal loan from banks, credit unions and online lenders.
You may also consider visiting individual online lenders’ websites if you have a particular lender in mind. You may also want to consider seeking prequalification through your local bank or credit union. Many banks or credit unions offer discounted rates to current customers.
If you’re ready to get prequalified for a loan, Credible lets you quickly and easily compare personal loan rates to find one that works for your unique situation.
When you have bad credit, it might feel impossible to get a personal loan. Fortunately, a number of lenders work with borrowers who have subprime credit. As a borrower with a lower credit score, you may pay higher interest rates on your loan.
In some cases, you may only qualify for a secured personal loan, where you’ll have to provide collateral to get the loan (typically a car title, expensive jewelry, or other valuables). If you fail to make your payments, the lender can take your collateral to repay the debt.
Alternatively, you could ask a trusted friend or family member to cosign your personal loan. Your cosigner should be someone with an excellent credit history. If you fail to repay your loan, the cosigner is responsible for the debt.
If you’re trying to find a personal loan and you have bad credit, focus your search on lenders that specialize in loans for subprime borrowers. While your interest rates are likely to be higher, it’s still possible to find a lender who will loan you money.
If you’re still unable to qualify for a personal loan, here are some things you can do to improve your credit:
Before applying, check your credit report for any errors and potential red flags that could make it difficult for you to qualify for a loan.