What You Need to Know about Loan Pre-Approvals

Loan Pre-Approval: Information You Need to Know

Getting a loan pre-approval may be exciting or even a relief when you need funds. But what does it mean to get pre-approved for a loan? Keep reading to find out these answers and more!

What Is a Loan Pre-Approval?

A loan pre-approval is an assessment of your financial information by a lender who decides you are likely to qualify for a loan up to a particular amount.

What Types of Financial Information Are Assessed?

Typically, the lender reviews your credit score, income, debts, and credit history.

Will a Pre-Approved Loan Affect My Credit Score?

The short answer is maybe. Getting pre-approved for a loan usually does not affect your credit score. In general, applying to review the value you’re pre-approved for will only result in a soft credit check, which will not affect your credit score. But make sure to review all information regarding the lender’s pre-approval process. Once you decide to accept the loan, a hard inquiry may occur, which will impact your credit score.

Which Loan Could I Be Pre-Approved For?

That depends on the lender performing the evaluation and what types of loans they offer. Generally, when a loan pre-approval is given, you’re notified of the loan type, rate, credit limit, and loan term.

Is a Loan Pre-Approval a Guarantee?

A loan pre-approval is not a guarantee for a loan. You will be invited to apply for the pre-approved loan to officially start the process. Then, if you are offered a loan, you may accept or decline the offer.

Pre-Approval Key Takeaways

• A loan pre-approval is not a guarantee that you have a loan offer.
• A soft credit check will not affect your score, but a hard credit check will.
• Always review the lender’s details carefully before proceeding.

This information is presented for educational purposes only. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.