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 and what type of financial journey could you be embarking on? 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. However, if you decide to accept the loan, a hard inquiry may occur, which could 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 term length.

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

First, a loan pre-approval is not a guarantee that you have a loan offer. Second, it will not affect your credit score if a soft credit check is run. However, if you accept a loan offer, a hard credit check could be run, and that may impact your credit score. Third, make sure to review all loan information regarding your pre-approval.