Credible takeaways
- Loan pre-approval and prequalification are effectively the same process for personal loans.
- Pre-approval gives you an estimate of the loan rate and terms you might qualify for.
- Prequalification does not hurt your credit score since the lender performs a soft credit pull.
- Depending on the lender or marketplace, prequalification can take less than 5 minutes and may not require your Social Security number.
Are you thinking about getting a personal loan? Today, most lenders offer prequalification (also known as pre-approval) with a soft credit check. As a result, you don’t have to sacrifice hard-earned credit score points to get a sense of your loan options before you apply.
When you prequalify, your credit score won’t be impacted. However, prequalification is not an offer of credit, and rates and terms of a formal loan offer could be different.
Compare personal loan rates
What is personal loan pre-approval?
Personal loan pre-approval, commonly known as prequalification, is a process where a lender collects information from a potential borrower to (a) determine their eligibility for a loan offer and (b) provide an estimate of rates and terms. The estimate is usually called a quote.
During the process, lenders typically require information such as:
- Desired loan amount
- Loan purpose
- Name
- Home address
- Employment status and annual income
- Birthdate
- Social Security number
- Email address
- Phone number
Once you submit a prequalification request, the lender analyzes your information to determine if you prequalify. If you do, the lender will show you the loan amounts, annual percentage rates (APRs), and repayment terms you may qualify for.
The quote you receive is not a guaranteed loan offer; it’s only an estimate based on the information you provided. An official loan offer will hinge on a formal application and, in most cases, a hard credit check. Unlike the soft credit check performed during prequalification, a hard credit check could temporarily lower your credit score.
Expert editor insight: "The FICO credit scoring model doesn't use a "rate shopping" allowance for personal loans the way it does for home loans, auto loans, and student loans. Multiple hard credit checks from a series of personal loan applications in a short period of time could count as individual inquiries, which makes personal loan prequalification with a soft credit check all the more useful. Instead of immediately applying for personal loans, prequalify to see rates and terms you might qualify for and compare quotes from multiple lenders — and avoid chipping away at your credit score with unnecessary applications."
— Barry Bridges, Personal Loans Editor, Credible
How to prequalify for a personal loan
Before you try prequalifying for a personal loan, check your creditworthiness. Having a general sense of your qualifications can help you determine which lenders are viable options.
- Check your credit score: Many personal loan lenders, but not all, have minimum credit score requirements. You can check your credit score for free using Credible's credit-monitoring tool.
- Check your credit report: Your credit report is a record of your history as a credit user. Visit AnnualCreditReport.com to get a free copy of your credit report and check to make sure all the information is accurate and up to date. If you find a mistake, file a dispute with the credit bureau.
While the personal loan prequalification process can vary from one lender to the next, here are the common steps you can expect:
- Fill out the prequalification form: Most lenders have short prequalification forms on their websites. You’ll need to fill them out and provide your basic personal information. Your Social Security number may or may not be required, depending on the lender. You could also use a personal loan marketplace, like Credible, to prequalify with multiple lenders at once.
- Allow a soft credit check: Next, you’ll need to agree to a soft credit check. After you complete the prequalification application, the lender will review your information to determine if you prequalify. You’ll usually get an answer within a minute or so.
- Review your loan quote: If you prequalify, you’ll receive a quote that includes the loan amounts, APRs, fees, and loan terms for which you may qualify.
While the prequalification process is common with personal loan lenders, not all offer it. In some cases, a lender may require you to complete a full application and permit a hard credit check right away.
Related: How to Get a Personal Loan Using Credible's Marketplace
How prequalification impacts your credit score
Lenders typically process a soft credit inquiry during the loan prequalification process, which doesn’t impact your credit score. If you check your credit reports, you’ll be able to see all of your soft inquiries, but lenders and other third parties can’t.
Soft credit inquiries are not considered official requests for credit, so they don’t increase the risk you present as a borrower in lenders’ eyes. However, if you decide to move ahead with a loan application, most lenders will conduct a hard credit inquiry. Hard inquiries stay on your record for up to two years and can cause your credit score to drop by up to 10 points.
Learn More: Does Applying for a Personal Loan Hurt Your Credit?
What to do after you prequalify
After you prequalify for a personal loan, you’ll be given important information — the estimated rates and terms you could get. To figure out if a loan prequalification quote is competitive, compare it against a few other options.
Tip
You can use a personal loan marketplace, like Credible, to quickly find out if you prequalify with a network of personal loan lenders.
Once you have a few quotes, review the following factors to find the best fit for your situation:
- Loan amounts: Check how much each lender is considering offering you and look for the amount that best covers your needs. Most personal loans range from $1,000 to $100,000 (or more, in some cases).
- APRs: The lower a loan's APR, the less in interest you’ll pay over the life of the loan. The APR is based on the loan's interest rate as well as any upfront fees (like origination fees or administrative fees).
- Terms: The term is the amount of time you’ll have to repay the loan amount. It also impacts your monthly payment amount. Look for a term length that best suits your needs. Most lenders offer terms between 2 and 7 years.
- Fees: Fees can vary between lenders. Take note of any origination fees, application fees, and late fees lenders charge.
- Monthly payment amounts: Compare the monthly payments to see which best fits into your budget.
- Reviews: Check reviews from past borrowers to get an idea of how satisfied they are with a lender’s overall service. Visit Trustpilot or the Better Business Bureau.
- Funding times: Check the funding time each lender offers to find out how quickly you can receive the funds. Many lenders can fund your loan within a few business day after approval, if not sooner.
Compare lenders based on all of these factors to figure out which one is the best overall fit for your situation.
Interest rates and loan amounts by credit score
Understanding what factors affect loan decisions can help you even before pre-approval.
If you’re curious how likely you are to qualify for a personal loan, what rate you might get, or how much money you might be approved to borrow, take a look at the charts below, which are based on Credible user data from July 2024 to June 2025.
In the first chart, we see that borrowers with high credit scores are likely to qualify for the lowest interest rates and highest loan amounts. So if you have poor or fair credit but need a larger loan amount, consider taking action to raise your credit score by lowering your debt-to-income ratio (DTI) and making on-time payments.
Personal loan interest rates by credit score
Based on Credible prequalified and closed loans data from July 2024 through June 2025. Source: Credible
But many people who apply for personal loans don’t have excellent credit. In the second chart, we see that average FICO scores, regardless of income, tend to be in the middle of the good credit score range. And income can serve as a compensating factor to help you get a lower rate or qualify for a larger loan.
Personal loan interest rates by income
Based on Credible closed loans data from July 2024 through June 2025. Source: Credible
What to know about APR
The Truth in Lending Act of 1968 requires all lenders to communicate the costs of loans and credit using APRs so that consumers can more easily compare offers and understand which are the cheapest. So, as you prequalify, compare the APRs between multiple loans and lenders, and look for the lowest.
The APR is a percentage that communicates the yearly cost of borrowing in relation to the total amount being borrowed, which includes the interest rate and any upfront fees (like origination and administrative fees).
You shouldn't find yourself needing to calculate it, which is a good thing, since calculating the APR can be difficult unless you have a financial calculator (and know how to use it) or an APR calculator.
You can also use an APR calculator or a personal loan calculator like the one below to see how much interest you'll pay over the life of the loan.
Some loan calculators will even show you the amortization schedule or payment schedule to see how much interest and principal you’ll pay per month. (As you make monthly payments, the interest portion of your payment decreases, and the principal portion increases.)
How to prequalify with bad credit
If you have bad credit, you may still be able to prequalify for a personal loan through the following methods.
Find lenders that approve bad credit borrowers
Every lender serves a certain segment of the market and sets its underwriting requirements accordingly. LightStream, for example, caters exclusively to borrowers with good to excellent credit profiles, while Upstart allows applicants with credit scores as low as 300 through its website.
To prequalify for a loan despite bad credit, you’ll need to find lenders that approve borrowers with your credit score and financial profile. You can do so by researching their eligibility requirements individually, or by using a personal loan marketplace that runs your prequalification application through a network of lenders.
Related: What Credit Score Is Required for a Personal Loan?
Enlist the help of a cosigner
Another option is to apply with a cosigner. A cosigner is a person who agrees to pay for a loan if the primary borrower can’t or won’t. If you can find someone with good credit who is willing to cosign for you, their guarantee can help you to get approved.
Keep in mind that the loan will impact their credit and financial situation if you default. To preserve the relationship, ensure you can afford the payments and let them know immediately if you foresee missing a payment.
Compare: Co-applicant vs. Cosigner
Explore secured personal loans
Secured personal loans are backed by a piece of collateral, such as a car or bank account. If you’re having trouble getting approved, look into lenders that allow borrowers to pledge collateral.
Doing so can help to strengthen your application and improve your odds of getting approved. However, beware that if you default, the lender will have the rights to seize and sell the asset you pledge.
Compare: Secured vs. Unsecured Personal Loans
Work on building your credit
If you can’t get prequalified for a suitable personal loan now, consider spending some time working on your credit. The main ways to improve it are making on-time payments over time, paying down revolving credit lines, and ensuring you have a mix of open revolving and installment credit accounts.
You can also look into getting a credit-builder loan, which is designed for borrowers with little to no credit history, to help improve your credit score.
Disclosure: Some lending partners that participate in Credible’s comparison marketplace offer loans to borrowers with scores as low as 550. Borrowers with low scores will have fewer lending options than borrowers with higher credit scores.
