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There’s a piece of advice that you’re sure to read on almost any financial blog: if you’re applying for credit cards, loans or other forms of credit, don’t apply to lots in a short space of time. This is a red flag for lenders as it shows that you’re either in financial hot water, or you’re predicting hot water on the horizon. Handled incorrectly, it can result in a damaging credit rating. And damaging credit ratings can stop you from borrowing money or getting credit.
So how do you find the best personal loan without damaging your credit rating?
There’s a two-word phrase that is going to become your best friend while you look for a personal loan. It’s going to act like a beacon to reputable lending sources and protect you from any nasty damage to your credit rating.
(Sometimes it’ll be three-words: soft credit search)
What is a soft search?
In the simplest terms, a soft credit search is a super quick credit check that doesn’t affect your credit score at all.
Of course, a soft search does leave a mark on your credit file – just like every check or enquiry about your finances does – but lenders can’t see these soft search marks. And, because they’re invisible, it means that they’re not damaging your credit rating in the slightest.
You could check your credit score or eligibility for a loan every hour of the day, and there’d still be no damaging effects on your credit rating
Why soft search is so important
Let’s go back to the beginning of this article, when we mentioned that piece of advice about not applying for too many loans in a short space of time because it looks like you’re either in trouble or are expecting trouble.
But what if you are in trouble or are expecting some financial difficulties?
What can you do then?
That’s where soft search comes in handy.
This Is Money, The Daily Mail finance blog, reports that applications to loans, credit cards or other forms of credit make up around 10% of your credit score.
Now, 10% doesn’t sound like a lot, but it can make a huge difference to your overall score. And lots of applications you have to different forms of credit result in a damaging credit rating and trouble being approved for credit.
However, most lenders now let you perform an eligibility check that lets you know whether you’re likely to be accepted for a loan without damaging your credit rating in the slightest.
Our top tips for finding the best deal without damaging credit rating:
Tip One: Get clued up on your credit score
Here’s another advantage of soft search: it lets you check your credit score without leaving a trace.
Before you start looking for a personal loan, get a free overview of your credit score from Experian, ClearScore or Noddle, so that you’re aware of where you stand. This will help you filter out the products you’re never going to qualify for and save you some precious time.
(It’s also just a good idea to keep up to date on your credit score – you’ll notice what helps to repair it, what fixes a damaging score and whether you’re heading in the right direction.)
Tip Two: Make sure you look for products targeted at people with your credit score
Once you know your credit score, it’s a good idea to look for personal loans designed for people in your exact situation.
If you’ve got good credit, it’s not worth applying for a loan for people with bad credit as you’re probably not eligible. Likewise, if you’ve got bad credit, you’re not going to be eligible for the loans targeted at people with great credit scores. (Well, not yet anyway, but never say never.)
This is good news, because if you’ve got a damaging credit rating, there are loans just for that!
And, once you start looking for loans targeted at people with similar credit scores to you, you’re far less likely to be rejected. (And, on top of that, far less likely to end up with a damaging credit rating.)
Tip Three: Make sure you take the eligibility tests
Once you’ve got a loan in your crosshairs, make sure you take a breath and take the eligibility checker.
We’ve all been there: you’ve spent ages looking for a loan and now you’ve found the perfect loan. It’s got great repayment terms, can lend you the amount you need and is targeted at people like you. And, because you need the money pretty quickly, you fire off an application immediately.
But be careful.
If you’re rejected, you might end up taking your credit score from a good credit rating to a damaging credit rating.
The eligibility checker will tell you whether you qualify, what products you’re eligible for and what repayment terms you might expect.
All without damaging your credit rating at all.
See if you can get a Bamboo Loan (without damaging your credit score)
Here at Bamboo we offer a personalised quote tool that checks whether you’re eligible for one of our products before you apply. That way, if we’re not the right lender for you, you’ll know before you apply for the loan and avoiding damaging your credit score.
Even better, if we are the right lender for you – you won’t have to have that horrible dread when you hit the apply button: you already know you’re likely to be accepted (well, after a few final checks).
If you’d like to use a soft search to find out how much you’re eligible to borrow from Bamboo, why not get a personalised quote? And, as you now know, it won’t affect your credit score in any way. (Representative 49.7% APR.) A guarantor may be required.
- Author The Bamboo Team
- Posted 13 December 2017