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What is a Pre-Approved Loan?

Pre-approved loans are loans that have been undergone a provisional soft credit check. While pre-approval isn’t always a guarantee, it does make give you a good indication of whether you’ll be accepted.

When it comes to loans applications, it can be handy to know what pre-approved means and how soft checks affect your credit score.

Pre-approved loans are an indication that a lender will agree to a loan. It’s important to remember they’re not a guarantee but simply a soft credit check to assess your details, and tell you if your loan is likely to be denied.

Typically, if a lender carries out a full, or hard, credit check it will show on your credit score. Multiple credit checks can be interpreted as a dependence on borrowing or a sign of financial problems. So, if your credit score isn’t great to begin with, being denied a loan and then applying for more can make things worse. With a pre-approved score, you can get a heads up on your approval chances without putting your credit score at risk.

Want to know more about pre-approved loans? Let’s delve into the nitty-gritty, starting with key things to consider before you apply.

How do I get pre-approval for a loan?

A pre-approved loan can change from lender to lender. However, loan providers will tend to take the following factors into consideration when considering a pre-approval:

If the personal information you’ve provided doesn’t align with the records in the soft credit check, it may affect your application. Be sure to take time to familiarize yourself with each point before you apply.

Pre-approved loans process

You’ve made your application, but now what? Let’s run through how it all works. This should give you an overview of what to expect. However, bear in mind, this is a general overview, lenders may have their own individual ways. If you apply through Norton Finance one of our qualified loans advisors should be able to guide you through the process and help with any questions.

There are two ways to apply for a pre-approved loan:

  1. Apply yourself
  2. Apply through a broker who will let you know if you’re eligible for a loan.

If you’re applying for a pre-approval either by yourself or with a broker, there can be a lot to consider.

  1. Amount - Not only do you need to decide how much you need to borrow, but the type of loan is also important. Secured, or homeowner, loans will allow you to borrow more than unsecured. You should also factor in the Annual Percentage Rate (APR) and take into account the affordability of repayment.
  2. Lender options - Look for different lenders to get an idea of the repayment rates to help you come to an informed decision. You can do this with lenders themselves, through comparison websites, or use a broker such as Norton Finance to do the hard work for you.
  3. Loan eligibility search tools - After you’ve found a loan that best suits your needs, an eligibility checker can show you the likelihood of being accepted without showing up on your credit score.
  4. Soft credit check - The eligibility search tool will use a soft credit check to look at your credit report. The information you entered will be assessed and will inform the lender whether you’re approved or not.
  5. Pre-approval or rejection - Decision time. At this stage, you’ll find out if your application is successful or not.

Can your loan be rejected after pre-approval?

Yes, your loan can be rejected after pre-approval. If the lender finds out that the information you’ve provided is inaccurate, you may be rejected. Other concerns that may only show up after a hard, or full, credit check can result in a rejection too.

We recommend you take your time to fully research your alternatives, and don’t rush your application. Remember, quality is key. The last thing you need is multiple applications potentially harming your credit score because of one small error.

Find out more about hard vs soft credit checks

How to be pre-approved for a loan

There are several things you can do to increase your chance of approval, such as:

How do pre-approved loans differ from traditional loans?

Pre-approved loans are a provisional agreement between the borrower and the lender, whereas if you opt for a traditional loan the agreement won’t be conditional. While you can opt for pre-approval to see if your application is likely to be accepted, to continue you will need to apply for a traditional loan.


How likely am I to get a pre-approved loan?

If your credentials are in line with eligibility, and the information you’ve provided is correct, you’re likely to get a pre-approved loan. However, this isn’t 100% guaranteed, so you could still be declined. Your approval will also depend on the circumstances.

Do pre-approvals hurt your credit score?

No, pre-approvals don’t hurt your credit score because they carry out a soft credit check. This way both you and the lender can have an idea early on if your full application is likely to be successful.

Does pre-approved mean approved?

Being pre-approved is a provisional acceptance of your application based on the initial assessment of your information. However, it doesn’t guarantee you’ll get the loan. It’s important to see it as an early indicator, rather than the end result.

What happens if you get pre-approved for a loan but don’t use it?

A pre-approval isn’t legally binding, therefore you are free to reject it any time you like. If you find another more favorable offering, you’re also free to switch. However, be cautious if you’re applying for multiple loans that require a credit score check at the same time.

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