Sep 01, 2022

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Woman uses a laptop to check her rate for a personal loan with a soft credit pull

Every year, millions of people use personal loans for many reasons, from consolidating debt to paying for weddings or emergencies. Nonetheless, some consumers are hesitant to apply for a personal loan for fear it may hurt their credit score. This is an understandable concern. While new credit only accounts for 10 percent of your FICO® credit score, for example, sometimes a few points can make the difference between hundreds or thousands of dollars in additional interest payments over time.

However, if you’re still hesitant, we have good news: It’s easy to check what your personal loan interest rate could be without doing any harm to your credit score and without any commitment to apply. The way you do this is through what’s called a “soft” credit pull as opposed to a “hard” credit pull.

What is a soft credit pull? What is a hard credit pull?

Soft credit pulls

A soft credit pull is like a snapshot of your credit report. When a lender does a soft credit pull, they are looking for the most current report on your credit based on information from major credit bureaus. Since it’s not attached to an actual application for credit, a soft credit pull won’t impact your credit score at all.

A soft credit pull might occur when:

  • You check your credit score online
  • An employer does a background check
  • You submit a home or apartment rental application

Hard credit pulls

A hard credit pull is linked to an application for financing from a lending institution. It will be visible to other creditors and it could affect your credit because you are applying to borrow money from a lender.

A hard credit pull on your credit report generally occurs when you apply for:

Do your research prior to any major financial decision so that you know in advance which type of credit pull may occur. The lists above don’t cover every type of soft or hard credit pull.

The best way to check your rate

Some personal loan lenders look at your credit report using a soft credit pull, allowing them to prequalify you while letting you know your approved interest rate. It’s a win for both sides. The lender gets insight into your credit worthiness while empowering you with more information to make sound borrowing decisions.

Discover Personal Loans, for example, offers a soft credit pull to let you know your estimated rate and monthly payment based on your requested loan amount and repayment term. This allows you to check your estimated interest rate without impacting your credit score. The estimated rate and monthly payment are open for up to 15 days. You can easily return to where you left off online or call Discover to apply for the personal loan within the 15-day period.

If you miss the 15-day offer period, not to worry. You can always check your rate again.

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