You must be familiar with the term “credit checks” a few times already. These are performed when you look out for borrowing options like loans or credit cards. Credit checks are available in two different formats that are conducted in different scenarios.
Both of them would have different impacts on your credit scores. In addition, you must know that a soft inquiry on your credit profile does not harm your finances. In contrast, a hard inquiry will have a heavy impact on your credit report.
For example,
Hard credit checks are mandatory when you approach a mainstream lender while looking for personal loans. Without understanding the status of your credit scores, the loan provider is not going to issue loan funds. Besides, these loans are obtainable as secured and unsecured money.
No hard check is necessary to get access to a collateral-free funding solution provided by a direct lender. You can look at the impact of soft checks on your finances from the below table.
| The effect of soft inquiry on your credit score | |
| 1. | Lenders or credit card providers conduct a soft inquiry to assess your credibility. |
| 2. | Checking one’s own credit report happens to be a soft credit check. |
| 3. | No imprint of soft checks conducted for employment will be found on credit reports. |
| 4. | Your credit report will record a soft inquiry, but it will not be visible to creditors. |
| 5. | These checks are performed during pre-approval of loans or credit cards. |
Keep exploring this blog to decode the insights about soft credit checks you were unaware of to date.
The ultimate guide to soft credit check loans
Loans that demand a soft check is a preferable option but they are available through pre-approval. Here, you will be able to fetch the needed amount with no credit scores revelation. The loan provider would like to assess your financial potential through these affordability checks.
Thus, this process will revolve around establishing your affordability. For this reason, you do not have to feel anxious about not-so-perfect credit scores. The other meaning of that is that if the other criteria are met, you can get approval with poor scores.
· How does a soft check loan concept unfold?
When you need short-term loan assistance, this option can be the most convenient choice for you. The biggest motivation is no credit verification. If you are currently doing well financially, you can be stress-free.
Many borrowers because of poor credit scores cannot make it to getting loans. Alternative lenders addressed this issue and replaced hard checks with soft analysis. In order to get small loans, credit history is no longer considered as the only criteria.
These lenders emphasise more on affordability. It concerns your current financial state. Thus, if you have worked on enhancing your financial condition, the likelihood of approval just improves.
The lending process has been changed slightly. An additional factor that can give a practical picture of your financial ability has been included. To review this thing, affordability checks i.e. soft analysis becomes a must.
· Is the applying procedure same or relatively different?
You have been seen a remarkable change in the lending approach. This should reflect on the application procedure as well. You must rest assured that the traditional method is not going to be pursued here.
The conventional way of visiting the bank to submit the loan request is not needed. You must submit an online application. From where do you find the loan form?
You can fetch the form from the lender’s website. Fill it out with the accurate details so that the lender can successfully process your application. As the criteria remain simple, you should not face any difficulty in fulfilling them.
These lenders are very lenient about poor credit scores. Since no hard check will be conducted, you can define them as bad credit UK lenders. Your current financial stability grabs all the attention.
Credit records show the details of past transactions. On the other hand, the soft checks unveil how you are dealing with current transactions. Thus, if you are someone who is unblocking the recovery process, these lenders can help you.
· How do you recognise which lender is genuine?
Now, since direct lenders are comparatively a new concept, you will have some confusion. Besides, you will get to know that they operate online which directly questions the reliability factor. This is because you cannot see or discover the loan provider.
Although validating the identity of direct lenders seems difficult, you must understand who they are. Otherwise, you will never be convinced to apply for loans with them. Despite knowing about their virtual operations, you must check their background.
The website that give you access to lender’s information should not be underestimated at any cost. Go through it very carefully as you may come across reviews from other borrowers. These are priceless pieces of information.
By exploring them, you can understand the lender. You can familiarise yourself with the experience of previous borrowers. Some of them are surely genuine.
Besides, you must analyse and re-think if the lender offers an unrealistic proposal. If other loan providers do not agree to offer something like the given one did, you must ditch it right away. Remember that this could be a potential trap for you.
The bottom line
You must remember to cross-check the address of the lender’s office given on the website. If possible, visit it ahead of accepting the loan offer. This will show if the lender really exists or not.
Lisa Ann has developed a well-experienced professional career. From managing the staff of more than 50+ loan experts at Fastmoneyfinance to boosting the delivery of various loan offers, she has acquired many challenging roles to come out with the best results for the company. Lisa Ann is a Senior Content Author and the Chief Financial Advisor at Fastmoneyfinance. To back her massive experience in the UK’s financial industry, she has the postgraduate degree and diploma in Business and Finance.