Looking for a loan? Applying for a pre-approved loan can save you time and stress as you have a better chance of getting approved. Read our guide to learn how pre-approval works and what you can do to improve your chances of acceptance.
Looking for a loan? Applying for a pre-approved loan can save you time and stress as you have a better chance of getting approved. Read our guide to learn how pre-approval works and what you can do to improve your chances of acceptance.
A pre-approved loan means you have the best chances of getting approved if you apply. It’s possible to get pre-approved for various types of loans including personal loans and secured loans.
A loan is one way to spread a large expense like home improvements or to consolidate debt. You’ll borrow a lump sum and make monthly payments to repay it plus interest. Interest is the cost of borrowing — it’s calculated as a percentage of the amount you owe, called the interest rate.
Pre-approval is based on a soft credit search which looks at some but not all of the information on your credit report. It may also take into account information you’ve provided such as your monthly income. Make sure this information is accurate to get a more accurate idea of your chances of approval.
No, a pre-approved loan isn’t legally binding until you make a formal loan application and get full approval. You’re free to go with a different offer or decide not to borrow. You don’t need to tell the lender if you decide not to take a pre-approved offer.
No, pre-approval doesn’t mean guaranteed loan approval. It’s possible to be rejected when you apply for a loan with pre-approval, although unlikely. This is because the lender looks at more information when you apply, including your application details and a more detailed search of your credit report called a hard credit check. They may learn something new that affects their decision.
Unfortunately there’s no way to get guaranteed approval before applying for a loan. And all regulated lenders in the UK must do a hard credit check when you apply. This means there’s always a risk of being turned down, although the risk is smaller with a pre-approved loan.
No, pre-approvals won’t affect your score. They’re based on a soft credit check and although this is recorded on your credit report it can’t be seen by lenders. This is different from hard credit checks which happen when you apply for a loan — hard checks can be seen by lenders and your score will dip to reflect this.
Pre-approval helps you apply with confidence as it means you have the best chances of acceptance. You can search pre-approved loans without affecting your credit score. You’ll often see a pre-approved annual percentage rate (APR) which should give you a better understanding of the cost of the loan. Loans without pre-approval show a representative APR which the lender only has to give to 51% of people who apply.
Choosing a pre-approved loan may also save you time and protect your credit score because it helps you avoid guesswork. Guesswork may mean making applications until you find a lender who accepts you. This takes time and isn’t good for your credit score. Too many applications on your report can make lenders think you’re a higher risk, especially if you’re refused credit. Your score dips with each application to reflect this. Applying for a pre-approved loan will lower your score, but it may mean you only have to apply once.
Look for the pre-approval label when you search personal loans with Experian. When we show you a loan with pre-approval it means we’re confident you’ll get accepted at the rate shown if you apply. Remember, pre-approval doesn’t guarantee acceptance and conditions may apply.
You may see eligibility ratings next to some of your loan results. This is a percentage that reflects your chances of getting a specific loan. A higher number means you’re more likely to get approved. But pre-approval is the best eligibility you can have.
Searching loans and seeing your eligibility is free, takes less than 2 minutes and won’t affect your score.
When you search pre-approved loans with Experian, we’ll ask things like:
This information helps us find the right loans that you’re more likely to get. We also use some information on your credit report — but don’t worry, this won’t affect your score.
If you aren’t seeing pre-approved loans, it may mean you don’t fit lenders’ criteria or they don’t have enough information about you. Luckily there are several ways to improve your eligibility and help get pre-approval including:
Improving your credit score. Big improvements may take time, but you may be able to get a quick lift by sharing information about your everyday payments with Experian Boost. But be aware that not all credit scores will increase with Boost and not all lenders use Boost.
Checking your report is up-to-date. Make sure the information on your Experian Credit Report is accurate and complete. It should be consistent with the information you give to lenders and the electoral roll.
Spread out credit applications. Lenders may be less likely to pre-approve you if you recently applied for credit. Wait a while before searching for loans with pre-approval to see if your eligibility has improved.
Consider a different amount, term or type. For example, lenders may be more likely to pre-approve you for a secured or small loan. Vary your search criteria to see what’s available, but make sure the loan is right for you before applying.
Boost your income. A pay raise or extra income may help you meet lenders’ affordability criteria.
It’s possible, but harder and you’ll have fewer options. Bad credit loans may be easier to get pre-approval for as they’re designed for people with low credit scores. They usually come with higher rates and smaller borrowing amounts.
Taking out a loan should never be done lightly. Here are some things to think about before you commit:
Yes, you can compare loans with Experian. You can see what loans are available from different lenders and what your chances of approval are.
When you apply for a loan, your information will be checked by lenders, and once approved then you’re all good to go.
Searching is free, takes less than two minutes and won’t affect your score. Look out for the pre-approved label — this means you should get accepted at the rate you see if you apply.
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