What is a Credit Eligibility Checker?
7th Oct 2024
A credit eligibility checker is a website tool which helps you work out which loans you are likely to qualify for. Also known as “soft search”, this sort of check into whether or not you are likely to be accepted doesn’t leave a trace on your credit file or affect your credit score. Soft searches or eligibility checkers work by using information taken from your credit report. They then compare that against the lending criteria of various loan providers. In essence, eligibility checkers can narrow down your application options and direct you towards the loans or credit cards which you stand the best chance of getting.
Why Bother Using a Credit Eligibility Checker?
Applying for loans without knowing your chances of approval can negatively impact your credit score. Each application leaves a mark on your credit file. Lenders will look at your your credit file to evaluate your credit management history, including recent applications, missed payments, and late payments. All of these matters come together to make up your credit score, and this is the only tool the lenders have to decide whether you are a good risk or not. Applying for lots of credit cards or loans and then being turned down can drop your credit score even further, as lenders will worry that you have had a change in financial circumstances and are desperate for an injection of funds.
Using a loan eligibility checker can offer several benefits:
- Protect Your Credit Score: By reducing the number of applications you make, and only applying for credit which you know you stand a very good chance of being approved for, you minimise the impact on your credit score.
- Avoid Rejections: It helps prevent rejected applications, which can harm your credit rating and make it harder to secure loans in the future. This vicious circle of applying for credit, being denied and then finding it even harder to apply for more credit can be a difficult pattern to break out of.
- Understand Loan Options: Eligibility checkers let you see which loans you are eligible for and understand the different options, such as managing them online or through an app. They can put you in a better position to shop around for the best deal in terms of interest rate, terms and overall costs.
- Understanding Rates: lenders will often advertise a lower rate to encourage applications, but if your credit score is not ideal, they may only offer to lend to you at a higher rate. Eligibility checkers let you make an informed decision with all of the information.
- Loan Terms: Although it might at first appear better to take a lower rate over a longer period of time to decrease your monthly payments, an eligibility checker will show the total costs of taking the loan to allow you to make a more informed decision based on overall cost.
- Time Savings: Many eligibility checkers will pull together products from lots of different lenders and show which you are likely to be accepted for. This saves a lot of time when compared with searching individually with each lender.