If you need a loan but don’t want to risk hurting your credit score, prequalification is a good solution. Getting prequalified for a personal loan can give you an idea of how likely you are to get approved for a loan, as well as the rates and terms you’ll qualify for.
Prequalification doesn’t hurt your credit because it typically only involves a soft inquiry into your credit report. The process is usually quick, though the exact requirements can vary by lender.
- What does it mean to prequalify?
- Prequalified vs. pre-approved
- Compare loan rates from top lenders
- How to apply for a prequalified loan
- What if you can’t get prequalified?
What does it mean to prequalify for a personal loan?
Many lenders use prequalification to determine if they should lend to you. You can typically begin the process by filling out a prequalification form online.
Prequalifying for a personal loan can give you an idea of what rates and terms you qualify for and how much you’ll be able to borrow. You can use this information to see if the loan meets your needs and fits within your budget.
You can get prequalified with multiple lenders with no harm to your credit score. This lets you shop around until you find the best lender for your situation without dragging down your credit.
The prequalification process is typically fast and simple. But the exact requirements can vary by lender and your unique financial situation. In most cases, you’ll need to share some basic details, such as:
- Personal and contact information: This may include your name, government-issued photo ID, Social Security number, mailing address, and phone number
- Financial information: This includes your annual income, employment status, bank and routing numbers, and your debt-to-income (DTI) ratio
You may also need to indicate the amount you want to borrow, the purpose of your loan, and your preferred payment terms.
Once you’ve prequalified for a loan, you can either submit an application or continue comparing lenders. If you choose to move forward with a loan application, you may need to submit official documentation to initiate the underwriting process. You’ll also undergo a hard credit check, which can temporarily affect your credit score.
Prequalification doesn’t guarantee that you’ll be approved for a loan. Additionally, the rates and terms you receive could change when you apply for the actual loan. Still, it can help you make an informed decision about your financing options.
Is there a difference between getting prequalified and pre-approved?
When it comes to getting a personal loan, some lenders use the terms “prequalification” and “pre-approval” interchangeably. But even though they’re similar, they have a few differences.
Prequalification and pre-approval both require an initial assessment of your credit and financial situation. Both can give you an idea of the loan amount, terms, and interest rates you might be offered without hurting your credit.
Personal loan pre-approval typically requires more information than prequalification. To complete the pre-approval process, you may need to upload supporting documents regarding your identity, income, assets, or debts. This could include things like recent bank statements, federal tax returns, or a current letter of employment.
Since pre-approval requires more information, the process may take longer than prequalification. But because the process takes a deeper look into your financial standing, pre-approval is often a stronger sign of what you can afford to borrow. Pre-approval offers are also typically more accurate than those for prequalification.
You can get pre-approval offers for loans in the mail, by phone, or by email. These are usually prescreened offers based on a lender’s eligibility criteria, rather than an application you’ve submitted.
If you apply for a pre-approved loan offer, the lender must match the rates and terms outlined in their offer. As with prequalification, pre-approval does not guarantee that you’ll qualify for a personal loan.
Compare personal loan rates from top lenders
Here are some of the top personal loan lenders that offer prequalification.
Achieve (formerly FreedomPlus)
Best for: High-interest credit card debt consolidation
Achieve offers personal loans ranging from $10,000 to $50,000 with repayment terms from two to five years. If you put at least 50% of your loan funds toward paying off existing debt, you might be able to qualify for a lower interest rate.
Pros:
- Interest rate discounts if you apply with a cosigner, provide proof of retirement savings, or authorize direct pay
- Can receive funds within one to three business days
- Variety of loan uses
Cons:
- Origination fees from 1.99% to 6.99%
- 620 minimum credit score
- Not available in all states
Avant
Best for: Borrowers with fair credit
Avant’s personal loans range from $2,000 to $35,000 with repayment terms from two to five years To qualify, you’ll need a minimum credit score of 550.
Pros:
- 550 minimum credit score
- Next-day funding
- No prepayment penalty
Cons:
- Potentially high APR (up to 35.959%) for those with fair or poor credit
- Not available in Colorado, Iowa, Hawaii, Vermont, Nevada, New York, or West Virginia
- Origination fee up to 4.75%
Axos Bank
Best for: Borrowers with great credit
Axos Bank offers personal loans up to $50,000 with loan terms ranging from three to six years. If you’re approved for a personal loan, you could receive your funds as soon as the next business day.
Pros:
- Fast loan funding
- Can be used for major purchases and debt consolidation
- No prepayment penalty
Cons:
- Origination fees from 0% to 2%
- $25 insufficient funds fee
- 700 minimum credit score required
Best Egg
Best for: Borrowers with good credit
Best Egg offers personal loans up to $50,000 with loan terms from two to five years. Best Egg considers other aspects of your financial history in addition to your credit score, which could make it easier to qualify with Best Egg if you have poor or fair credit.
Pros:
- No prepayment penalty
- Can borrow as little as $2,000
- 600 minimum credit score
Cons:
- Not available in Iowa, Vermont, West Virginia, Washington, D.C., or U.S. Territories
- Origination fee from 0.99% to 8.99%
- $15 late fee
Discover
Best for: Longer loan terms
Discover’s personal loans range from $2,500 to $35,000 and come with three- to seven-year repayment terms. To qualify, you’ll need a minimum credit score of 660.
Pros:
- Next-day funding
- No origination fee
- Longer terms mean lower monthly payments and more time to repay the loan
Cons:
- $39 late fee
- Cosigners not allowed
- Doesn’t offer discounts
Happy Money
Best for: Consolidating credit card debt
With personal loans from $5,000 to $40,000, Happy Money is good for those with fair credit who want to consolidate credit card debt. Happy Money offers repayment terms from two to five years. If you lose your job, the lender will work with you to make payments and maintain your credit.
Pros:
- High borrowing amounts for debt consolidation
- Free FICO score updates when you borrow
- No prepayment penalty
Cons:
- Can only use funds for credit card consolidation
- Not available in Massachusetts or Nevada
- 0% to 5% origination fee
LendingClub
Best for: Borrowers who want to apply with a co-applicant
LendingClub could be a good choice if you want to apply for a loan with a co-applicant, as they’re one of the few personal loan lenders that allow cosigners on personal loans. LendingClub provides personal loans ranging from $1,000 to $40,000 to borrowers with a 600+ credit score with three- or five-year repayment terms.
Pros:
- Allows co-applicants
- Can borrow as little as $1,000
- No prepayment penalty
Cons:
- Origination fees from 3% to 6%
- Not available within U.S. territories
- $15 or 5% late fee
LendingPoint
Best for: Borrowers who want to repay their loan quickly
LendingPoint’s personal loans come with fast funding times and are a great option for borrowers working to build their credit. Loan amounts range from $2,000 to $36,500 and have two- to six-year repayment terms.
Pros:
- 580 minimum credit score
- Autopay discount
- No prepayment penalty
Cons:
- Origination fees from 0% to 8%
- Minimum annual income of $20,000
- Not available in Nevada or West Virginia
LightStream
Best for: Larger loan amounts
LightStream is a good option if you’re looking to borrow a large amount. You can borrow up to $100,000 with LightStream and receive your funds as soon as the same business day of approval.
Pros:
- High borrowing amounts
- Repayment terms up to seven years
- No prepayment, late payment, or origination fees
Cons:
- 660 minimum credit score
- Doesn’t disclose minimum income requirements
- Funds can’t be used for education or business purposes
Marcus
Best for: Affordable repayment options
Personal loans from Marcus by Goldman Sachs range from $3,500 to $40,000 with repayment terms from three to six years. Marcus offers tailored monthly payment options to help easily fit your payment into your budget.
Pros:
- No fees
- Option to defer payments after making 12 consecutive payments
- Autopay discount
Cons:
- Longer funding time compared to other lenders (three business days)
- 660 minimum credit score
- Doesn’t disclose minimum income requirements
OneMain Financial
Best for: Smaller loan amounts
OneMain Financial’s personal loans range from $1,500 to $20,000 with repayment terms from two to five years. OneMain Financial doesn’t have a minimum credit requirement, meaning you might be able to qualify for a loan with fair or poor credit.
Pros:
- No minimum credit score
- Small loan amounts can be good for those in a financial pinch
- No prepayment penalty
Cons:
- Higher rates compared to other lenders (18% to 35.00% APR)
- May have to visit a branch to discuss loan options
- May require collateral
PenFed
Best for: Borrowers who want to apply with a cosigner
PenFed is another great option if you need a small loan amount — you can borrow as little as $600 up to as much as $50,000 with repayment terms from one to five years.
While you don’t have to be a PenFed Credit Union member to apply, you’ll have to join if you’re approved and want to accept the loan.
Pros:
- Can borrow as little as $600
- No prepayment penalties or origination fees
- Accepts cosigners
Cons:
- Must join the credit union to accept the loan
- Longer funding time compared to other lenders (up to four business days)
- Doesn’t disclose minimum income requirements
Prosper
Best for: Home improvement loans
Prosper is a peer-to-peer lender that offers personal loans from $2,000 to $50,000 with loan terms from two to five years. If you need a personal loan for debt consolidation or to make home improvements, Prosper might be a good option.
Pros:
- Next-day funding available
- No minimum income requirement
- No prepayment penalty
Cons:
- Origination fees from 2.4% to 5%
- Not available in Iowa or West Virginia
- Charges late fees
Reach Financial
Best for: Fast loan funding
Personal loans from Reach Financial range from $3,500 up to $40,000 with loan terms from two to five years. Reach offers customizable monthly payments and a hardship payment pause for up to 90 days.
Pros:
- 90% of loans funded within a day
- 600 minimum credit score
- No prepayment penalty
Cons:
- Origination fees from 0% to 5%
- Funds can only be used for credit card refinancing or debt consolidation
- Charges late fees
SoFi
Best for: Borrower perks
SoFi offers large personal loan amounts ranging from $5,000 to $100,000 with loan terms from two to seven years. When you borrow from SoFi, you also get access to perks such as unemployment protection and free financial coaching.
Pros:
- High borrowing amounts
- No fees
- Autopay discount and membership benefits such as unemployment protection
Cons:
- Funds intended for personal or household use only
- Doesn’t disclose minimum income or credit requirements
- Longer funding time compared to other lenders (three business days)
Universal Credit
Best for: Borrowers building credit
Universal Credit may be a good option for borrowers who are still improving their credit score but need a personal loan for something like debt consolidation or home improvement. Loan amounts are $1,000 to $50,000 and have three- to five-year repayment terms.
Pros:
- 560 minimum credit score
- No prepayment penalty
- Free credit monitoring
Cons:
- Origination fee from 5.25% to 8.99%
- Not available in South Carolina, West Virginia, or Washington, D.C.
- Doesn’t allow cosigners
Upgrade
Best for: Fast loan funding
Upgrade’s personal loans range from $1,000 to $50,000 with three- or five-year terms. If you’re approved for a personal loan from Upgrade, you could receive your funds within a day of clearing verifications. Borrowers can use these loans for nearly anything, from debt consolidation to auto repairs or surprise medical bills.
Pros:
- 560 minimum credit score
- No prepayment penalty
- Free credit monitoring
Cons:
- Origination fees from 1.85% to 8.99%
- Doesn’t disclose minimum income requirements
- Not available to residents of Washington, D.C.
Upstart
Best for: Borrowers with limited credit history
Upstart offers personal loans ranging from $1,000 to $50,000 with repayment terms from three to five years. Because Upstart considers your education and job history in addition to your credit, they can be a good option for those with limited credit history.
Pros:
- Next-day funding
- 580 minimum credit score
- No prepayment penalty
Cons:
- Must have verifiable employment
- Origination fees from 0% to 10%
- Not available in Iowa or West Virginia
How to apply for a prequalified personal loan
Here’s how to get prequalified for a personal loan:
- Complete the prequalification form online. You’ll need to submit personal details like your name and date of birth, as well as basic contact information such as your phone and address. You may also need to indicate your annual income, employment status, and other financial information.
- Undergo a soft credit inquiry. After submitting the prequalification form, you’ll undergo a soft credit check. This won’t affect your credit, but will let you see the loan amount, interest rates, and terms you could get.
- Review the loan rates and terms. Carefully check the prequalification offer and decide whether to go through with the formal application. If you aren’t satisfied with the offer, shop around for different lenders. If you’re not in a rush, work on improving your credit score and reapply later.
- Submit a personal loan application. Proceed to the loan application and upload any required financial or identifying documents. The lender will return to you with an approval decision.
- Receive your funds. If you’re approved and accept the loan agreement, the lender will disburse your loan funds within one to seven business days.
If you’re rate shopping, or applying for a personal loan with more than one lender, aim to submit all of your applications within 14 to 30 days. During this time, multiple inquiries into your credit report will be treated as one single inquiry, which can help keep your credit score intact.
What if you can’t get prequalified for a loan?
Not everyone prequalifies for a personal loan. If you’ve been denied for prequalification, here’s what you can do:
- Find out why. Ask the lender why they denied your prequalification and see if you can make changes for the future.
- Check your credit. Use a site like AnnualCreditReport.com to get a free copy of your credit report and review for any errors. Find out where you could improve, too.
- Dispute any errors. Make sure to check your credit report for any errors, such as closed accounts that are reported as open or incorrect credit limits, and dispute them with the appropriate credit bureau to potentially boost your credit score.
- Consider alternative financing options. Personal loans aren’t the only option. Depending on why you need the money, you might be better off with a different loan, like a home equity loan, a personal line of credit, or a credit card.