How does a pre-approved loan influence your CIBIL score? MintGenie explains
loan pre-approval does not influence your CIBIL score in any significant way. Let us understand what is a soft inquiry. When you apply for loan pre-approval, the bank may conduct a soft inquiry on your credit report to evaluate your creditworthiness.
These inquiries do not impact your credit score since they are not initiated by you for the purpose of obtaining credit. Instead, they are used for background checks, pre-qualification, or promotional purposes. Loan pre-approval does not lead to any sort of commitment from either bank or the borrower.
It’s an initial assessment of your eligibility for a loan based on basic information such as your income, credit score, and debt-to-income ratio. Since there’s no formal application or credit extension involved at this stage, it doesn’t have a significant impact on your credit score. ALSO READ: Can I get a personal loan to pay off student loans? MintGenie explains A soft inquiry may appear on your credit report; it’s typically not visible to other lenders and does not affect your credit score, at least in any substantial way.
Even if it is visible, it has barely any impact when compared to hard inquiries, which occurs when you formally apply for loan. It’s important to note that if you proceed with the formal loan application after receiving pre-approval, the bank will conduct a hard inquiry, which can impact your credit score. Monitoring your credit score regularly helps you stay informed about your financial standing and any changes that may impact your ability to borrow money or access financial products.
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