Pre-qualification gives you a preview of the potential terms of your personal loan. Learn how to pre-qualify.
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Updated · 4 min read
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Nerdy takeaways
Pre-qualifying for a personal loan shows your likelihood of approval without affecting your credit score.
You can get pre-qualified offers from multiple lenders to compare rates and terms.
Use pre-qualified offers to determine whether the monthly loan payments will fit your budget.
Pre-qualifying for a personal loan is a first step in the loan approval process. It gives lenders an idea of your creditworthiness and it gives you a preview of the loan you might receive.
Getting pre-qualified, however, doesn't guarantee you a loan. Lenders will verify your information before final approval.
Not all lenders offer pre-qualification, but many banks, credit unions and online lenders do. Pre-qualifying doesn’t hurt your credit score, so you can pre-qualify with multiple lenders to compare rates. This feature can be a big help when you’re shopping for a personal loan.
Here are the steps to personal loan pre-qualification, plus tips to increase your approval odds.
Your credit score helps lenders measure your creditworthiness and likelihood of repaying a personal loan. Check your credit prior to pre-qualifying so you know where you stand and can take steps to boost your score if needed.
Some lenders cater their personal loans to applicants of a certain credit band, so you’ll want to research lenders’ credit score requirements. If your score is 690 or higher, for instance, you’ll want to pre-qualify with good-credit lenders. If your score is below 630, consider bad-credit lenders.
Many lenders let you pre-qualify for a personal loan on their website by filling out a form. Personal finance websites like NerdWallet let you pre-qualify with multiple lenders using a single form. In either case, you’ll be asked to provide the following:
Personal details, like your name, date of birth and Social Security number.
Contact details such as your address and phone number.
Your annual income and details about your employment.
Your desired loan amount and loan purpose.
Some lenders might ask for additional financial information, such as whether you have savings, retirement or investment accounts.
Personal loan pre-qualification should not affect your credit score.
Once you submit the pre-qualification form, the lender will run a soft credit inquiry. A soft check doesn’t show up on the credit reports that a lender would see when you formally apply, so it won’t hurt your chances of getting approved.
If you get an offer through pre-qualification, the lender will invite you to submit a full application.
After submitting your pre-qualification form, you should see potential loan terms within minutes.
Pre-qualified offers will usually include the amount you qualify for, the annual percentage rate, the repayment term and your estimated monthly payments. Your offer might also include the total interest costs, or you can use a personal loan calculator to tally up the total cost of the loan.
A pre-qualified offer isn’t binding. Technically, the lender can change the offer after you submit a formal application. Reduce your chances of a changed offer by providing detailed, accurate information during pre-qualification.
5. Compare pre-qualified offers
Once you’ve pre-qualified with a few lenders, compare rates, monthly payments, repayment terms and other loan features to choose the loan that works best for you.
APR: The loan’s annual percentage rate reflects the interest rate plus any fees, like an origination fee. It allows you to make an apples-to-apples cost comparison across personal loans and other financing options.
Monthly payments: Make sure you can comfortably afford the estimated monthly payment. Because most lenders report on-time payments to the three major credit bureaus, on-time payments can help build your credit, while missed payments hurt it.
Repayment terms: A shorter repayment period usually means you’ll pay less in interest over the life of the loan, but your monthly payments will be higher than if you opt for a longer repayment period.
Consumer-friendly features: Additional perks like flexible payment dates, hardship assistance and personalized credit-building recommendations can help you decide between similar loan offers.
Once you’ve decided on a specific offer, it’s time to formally apply for a personal loan.
This step usually involves uploading financial documents like bank statements, pay stubs and recent tax returns, which the lender uses to verify the information you submitted during pre-qualification. After you submit the application, the lender will perform a hard credit check, which will cause your credit score to temporarily dip and stay on your credit reports for up to two years.
Lenders review your credit score, debt-to-income ratio and cash flow when assessing an application. Your debt-to-income ratio and cash flow indicate how much monthly income you have available for loan payments.
If you're approved, some lenders can fund the loan as soon as the next business day, depositing the money into a checking or savings account of your choice. Most lenders can fund within one week.
Some lenders use the terms “pre-qualify” and “preapprove” interchangeably, but they can have different meanings. Personal loan lenders typically use a pre-qualification process to see if a potential borrower meets the criteria for a loan. Other loans, such as mortgages and auto loans, have a preapproval process, which usually requires more information and a hard credit check.
When you pre-qualify for a personal loan, look for statements that indicate your credit score will not be affected because that’s a big benefit of personal loan pre-qualification.
What to do if you’re not approved
If your application is denied, you should receive an adverse action notice or letter. This will include information about the credit agency that provided the report, why you were denied, your current credit score and how you can get a free copy of your credit report.
This information can be valuable in finding ways to quickly build your score and strengthen your odds of getting approved for a personal loan in the future.
To strengthen your odds of getting a personal loan, you may want to consider a co-signed, joint or secured loan.
Joint and co-signed loans allow you to add someone with stronger credit to your application, increasing your chances of approval or getting a lower rate. A co-applicant, however, is on the hook for any missed payments.
A secured personal loan requires you to pledge collateral like your car or savings account to guarantee the loan. It’s usually easier to get approved for a secured loan, but you could lose the collateral if you fail to make payments.
A low credit score may not keep you from qualifying for a personal loan. Bad-credit borrowers (those with a score below 630) can gauge their likelihood of approval by checking their rates at credit unions and online lenders.
Credit unions may offer lower rates and more flexible terms for members with low credit scores. You must become a member in order to apply for a personal loan from a credit union.
Online lenders may also consider other parts of your financial picture, like your education and employment, to qualify you for a personal loan. Borrowers with low credit scores typically get the highest interest rates, though.
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35+
Lenders reviewed
We review over 35 lenders, including major banks, top credit unions, leading digital platforms, and high interest installment lenders operating across multiple states.
25+
Categories assessed
Each lender is evaluated across five weighted categories and 27 subcategories, covering affordability, eligibility, consumer experience, flexibility, and application process.
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Our team tracks and reassesses hundreds of data points annually, including APR ranges, fees, credit requirements, and borrower tools, ensuring up to date, accurate comparisons.
Star rating categories
We evaluate more categories than competitors and carefully weigh how each factor impacts your experience.
Affordability25%
We review lenders’ annual percentage rate offerings at least twice per year and the competitiveness of each lenders’ APR range. We also assess whether a lender charges an origination fee and any opportunity for borrowers to receive a rate discount.
Customer experience20%
We consider the experience of the consumer trying to manage a personal loan, which means accessibility of customer service representatives, whether borrowers can choose and change their payment due date, and the ability to track their loan on a mobile app.
Underwriting and eligibility20%
We consider the rigorousness of each lender’s underwriting practices and how widely available their loans are. This category includes whether a lender does a hard credit check before providing a loan, the range of credit profiles they accept and how many states their loans are offered in.
Loan flexibility20%
We assess how flexible lenders can be with borrowers, including whether they offer multiple loan types, personal loan amounts and repayment term options and whether they offer direct payment to creditors on debt consolidation loans.
Application process15%
We consider the lender’s full application process, including a borrower’s ability to preview their loan offer via pre-qualification, whether basic loan information such as APR range and repayment terms are available and easy to find online and how quickly a loan can be funded after approval.
5.0
Overall score
NerdWallet’s review process evaluates and rates personal loan products from more than 35 financial technology companies and financial institutions. We collect over 70 data points and cross-check company websites, earnings reports and other public documents to confirm product details. We may also go through a lender’s pre-qualification flow and follow up with company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.
Our star ratings award points to lenders that offer consumer-friendly features, including: soft credit checks to pre-qualify, competitive interest rates and no fees, transparency of rates and terms, flexible payment options, fast funding times, accessible customer service, reporting of payments to credit bureaus and financial education. Our ratings award fewer points to lenders with practices that may make a loan difficult to repay on time, such as charging high annual percentage rates (above 36%), underwriting that does not adequately assess consumers’ ability to repay and lack of credit-building help. We also consider regulatory actions filed by agencies like the Consumer Financial Protection Bureau. We weigh these factors based on our assessment of which are the most important to consumers and how meaningfully they impact consumers’ experiences.
