How to Check Personal Loan Rates Without Hurting Your Credit

What is a soft credit check?

A soft credit check, also called a soft inquiry or soft pull, is a review of your credit report that does not affect your credit score. Soft inquiries occur when you check your own credit, when lenders pre-screen you for offers, or when you use a pre-qualification tool to see potential loan rates.

Soft inquiries do not require your permission in many cases, such as when a company checks your credit for promotional purposes. However, when you initiate a pre-qualification check, you are giving your consent for that specific soft check. Unlike hard inquiries, soft inquiries are only visible to you on your credit report and are not shown to lenders or other entities that pull your credit.

Because soft checks have no impact on your credit score, they are a safe way to shop for personal loan rates without worrying about lowering your score.

• Soft inquiries do not affect your credit score.
• Soft inquiries are only visible to you on your credit report.
• Examples include checking your own credit score, pre-qualification checks, and promotional pre-screening.
• Soft checks never require your permission for pre-screening offers, but you do consent when you request a rate check.

Sources: Small Business Administration, Experian, Texas Dow Employees Credit Union, Discover

What is a hard credit check?

A hard credit check (or hard inquiry) happens when a lender reviews your credit report as part of a formal application for credit. This occurs when you apply for a personal loan, credit card, auto loan, or mortgage. Hard inquiries can lower your credit score, typically by five points or fewer, and they may remain on your credit report for up to two years.

Hard inquiries are visible to other lenders and can signal that you are actively seeking credit. If you have many hard inquiries in a short period, it may have a compounding negative effect on your credit score and could make lenders see you as a higher risk.

Fortunately, most scoring models only count hard inquiries for about 12 months. After that, they stop affecting your score, even though they stay on your report for two years.

• Hard inquiries occur when you formally apply for credit.
• A single hard inquiry usually lowers your score by five points or fewer.
• Hard inquiries remain on your credit report for two years.
• Hard inquiries may only affect your score for about 12 months.
• Multiple hard inquiries in a short period can compound the negative effect.

Sources: Small Business Administration, Experian, Texas Dow Employees Credit Union

How pre-qualification works

Pre-qualification is a process that lets you see what loan terms you might receive without a hard credit check. Many personal loan lenders offer a soft-check prequalification process, allowing you to compare loan offers without affecting your credit score. You provide some personal information, and the lender uses a soft inquiry to estimate the rates and terms you could qualify for.

This means you can shop around at multiple lenders and compare rates side by side without worrying about damaging your credit. It is important to remember that pre-qualification is not a final approval. It is only an estimate based on the information you provide and a soft credit check. When you formally apply, the lender will perform a hard credit check, and your final terms may be different.

• Pre-qualification tools allow you to check your potential rate with a soft inquiry.
• Most personal loan lenders offer a prequalification process.
• Pre-qualification does not guarantee approval or final terms.
• A hard credit check is still required when you submit a formal application.

Sources: Credible, LendingTree, Discover

Best practices for rate shopping

When you are shopping for a personal loan, the goal is to compare offers from multiple lenders to find the best rate without causing unnecessary harm to your credit. The most effective way to do this is to use soft-check prequalification tools whenever possible. Start by gathering a short list of lenders that offer soft credit checks and use their prequalification tools to get rate estimates.

It is also wise to limit the number of formal applications you submit. Since each formal application triggers a hard inquiry, too many hard inquiries in a short period can signal risk to lenders. While some credit scoring models treat multiple inquiries for mortgages and auto loans as a single inquiry within a 14-45 day window, this rule is not guaranteed for personal loans. Therefore, it is safest to avoid submitting multiple personal loan applications in a short timeframe.

Before you apply formally, review your credit report and score so you know where you stand. Checking your own credit is a soft inquiry and does not affect your score.

• Use soft-check prequalification tools to compare rates from multiple lenders.
• Avoid submitting multiple formal applications in a short period.
• Check your own credit report and score regularly.
• Be aware that the single-inquiry grace period for rate shopping is documented for mortgages and auto loans, not personal loans.

1. Make a list of personal loan lenders that offer soft-check prequalification.
2. Use each lender's prequalification tool to get rate estimates.
3. Compare the offers, focusing on interest rate, fees, and loan term.
4. If you find a good offer, submit a formal application—this will trigger a hard inquiry.
5. Monitor your credit after applying to ensure all inquiries are authorized.

Sources: Small Business Administration, Credible, Experian, LendingTree

How to check your own credit

You can check your own credit report and credit score at any time without hurting your score. This is because checking your own credit is a soft inquiry. It is a smart financial move to review your credit regularly for accuracy and to spot any signs of fraud.

If you find unauthorized hard inquiries on your credit report, it could be a red flag for fraud. You have the right to dispute inaccurate information with the credit bureau. The credit bureau will investigate and remove any errors, including unauthorized inquiries.

• Checking your own credit is a soft inquiry and has no impact on your score.
• Regularly review your credit report for accuracy.
• Unauthorized hard inquiries may indicate fraud and can be disputed with the credit bureau.

Sources: Small Business Administration, Experian, Texas Dow Employees Credit Union

Common myths about credit checks

There are several myths about credit checks that can cause unnecessary worry. One common myth is that checking your own credit will lower your score. In reality, a self-check is a soft inquiry and has no effect. Another myth is that pre-qualification guarantees loan approval. Pre-qualification only gives you an estimate; final approval requires a hard credit check and a full review of your financial situation.

Some people believe that soft inquiries are visible to lenders, but soft inquiries are only visible to you. Only hard inquiries appear on your credit report for lenders to see. It is also a myth that all loan applications will result in a hard inquiry. Many lenders now offer a soft-check prequalification step, so you can get rate estimates without a hard pull.

Finally, you might have heard that hard inquiries stay on your credit report forever. In fact, they remain only for two years and typically stop affecting your credit score after about 12 months.

• Myth: Checking your own credit hurts your score. Fact: Self-checks are soft inquiries.
• Myth: Pre-qualification guarantees approval. Fact: It is only an estimate.
• Myth: Soft inquiries are visible to lenders. Fact: Only you can see them.
• Myth: Hard inquiries last forever. Fact: They stay for two years and usually affect your score for about one year.

Sources: Small Business Administration, Experian, Texas Dow Employees Credit Union

Side-by-side category

The following table compares soft and hard credit inquiries based on how they affect your credit score, visibility, and when they occur. Use this as a quick reference when deciding how to shop for a personal loan.

Sources: Small Business Administration, Experian, Texas Dow Employees Credit Union