You’ve probably seen the ads: “pre-qualify for a credit card and get a lower interest rate!” or “pre-qualify for a mortgage and save money!” But what does it mean to pre-qualify, and can it hurt your credit?

Pre-qualification is when a lender gives you an estimate of what you may be able to borrow, based on the information you provide about your finances. This is different from pre-approval, which is when the lender actually approves you for a loan.

So, can pre-qualification hurt your credit? The answer is maybe.

If you provide your information to too many lenders in a short period of time, it can negatively impact your credit score. This is because each time a lender checks your credit report, it counts as an inquiry. Too many inquiries in a short period of time can signal to lenders that you’re desperate for money or that you’re taking on too much debt.

However, if you space out your pre-qualifications over a longer period of time, it shouldn’t have a significant impact on your credit score. And if you’re worried about the impact of inquiries on your credit score, you can always ask the lender to do a soft pull instead of a hard pull. A soft pull won’t show up on your credit report and won’t impact your credit score.

In short, pre-qualifying for a loan probably won’t hurt your credit score as long as you space out the inquiries and don’t do too many in a short period of time. However, if you’re concerned about the impact of inquiries on your credit score, you can always ask the lender to do a soft pull instead of a hard pull.

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When you apply for prequalification, the lender will pull your credit report and look at your credit score. This is known as a “hard inquiry” and it can temporarily lower your credit score by a few points.

However, the impact of a hard inquiry is typically small and will disappear from your credit report after two years.

In addition, if you’re shopping around for a loan (for example, a mortgage), multiple hard inquiries from different lenders within a short period of time (usually 30 days) will only count as one inquiry. This is because lenders understand that you’re rate shopping and they don’t want to penalize you for it. So, if you’re considering applying for prequalification, it’s best to do so within a short period of time so that multiple inquiries don’t end up hurting your credit score.


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Note: The information on this website is for general purposes only and does not constitute financial or legal advice.