The fear that quietly costs people money
A lot of people never check what loan rate they could get because they are scared that looking will damage their credit score. It is one of the most common and most expensive myths in personal finance. The fear made sense a couple of decades ago, when almost any inquiry meant a hard pull. It does not make sense now. Access to your own credit has been democratized, and checking where you stand is something you can do freely, without a scratch on your score.
Soft pull versus hard pull: the actual difference
There are two kinds of credit checks, and only one of them touches your score.
- A soft pull (soft inquiry) happens when you check your own credit, when a lender prequalifies you with a soft check, or when a card issuer sends a preapproved offer. It does not affect your score at all, and only you can see it on your report.
- A hard pull (hard inquiry) happens when you formally apply for credit and a lender pulls your report to make a decision. This one can lower your score, but only a little, usually a few points, and only for a while.
That is the whole distinction. Looking is a soft pull. Applying is a hard pull. And the thing people fear, checking their options, is almost always the harmless one.
What prequalification actually is
Prequalification is a lender giving you an estimated rate and loan amount based on a soft pull and some basic information about you. Most lenders use a soft pull for this, and soft inquiries do not affect your credit scores, so you can prequalify with several lenders to compare estimates before you commit to anything. Ask each lender which kind of check it uses.
One honest caveat: prequalification is an estimate, not a guarantee. When you choose a lender and formally apply, they do a hard pull and verify your details, and the final offer can differ from the estimate. But prequalifying first means you walk into that application already knowing roughly where you stand, instead of applying blind.
What actually happens when you apply
So what does a hard pull really cost? Less than the fear suggests. A single hard inquiry typically knocks a few points off your score, the effect fades within a few months, and the inquiry drops off your report entirely after two years. For most people, one hard pull to get a loan that saves them thousands is a trade worth making without a second thought.
Worried that comparing several lenders means several hard pulls stacking up? The scoring models account for this. Multiple inquiries for the same kind of loan, made within a window of about two to six weeks depending on the model, are counted as a single inquiry. You are meant to shop around, so the system does not punish you for it.
I learned what hesitation costs the hard way
Let me tell you where this lesson comes from for me, and I will be honest that it is a slightly different situation. A few years back I was buying a home, and the rate I wanted was sitting right around 5%. I wanted to lock it in, but I hesitated, I was nervous, I waited. By the time I moved, rates had climbed to 5.5%, and I am still paying that difference today.
That was a rate-timing mistake, not a credit-check one. But the lesson transfers cleanly: hesitation has a price. The difference is that with a soft-pull prequalification, hesitating makes even less sense, because looking costs you literally nothing. There is no rate to miss and no score to lose. You are just choosing whether or not to find out where you stand.
So go find out where you stand
If the only thing stopping you from comparing loan options is the fear that checking will hurt your credit, let that go. Start by knowing your number: you can check your credit for free (we may earn a commission if you sign up through our link, at no extra cost to you). Then prequalify to see estimated rates with a soft pull, and only apply once you have found an offer worth a hard pull. That order costs you nothing and puts you in control.
See your options without the guesswork
Know your credit, then compare what you could qualify for.
Compare loans now →For a broader look at how comparing a personal loan works on Lendifi, see the Lendifi personal loans page.
Frequently asked questions
Lendifi is operated by Apex Lead Group LLC. Lendifi is not a lender and does not make loans or credit decisions. We are an advertising-supported comparison service, and some links on this page are affiliate links through which we may earn a commission at no cost to you. Any rates or savings figures shown are estimates based on average market data and are not guarantees of approval or financing. Actual rates and terms are determined by the lender based on your full credit profile. See our Ad Disclosure for details.