September 28, 2016 By College Ave Student Loans
Student Loan Credit Pre-Qualification
“Will I be approved? What rates can I expect?” These thoughts have probably run through your mind a few times if you’re thinking about financing your education with a private student loan.
Unfortunately, you often don’t find the answers you’re looking for until after you submit a lender’s application. When researching and comparing student loans, it can be difficult to make the best financial decision without having access to such a critical piece of information.
That’s why we created a simple-to-use credit pre-qualification tool. Now, you can find out if your credit qualifies for a College Ave student loan and what rates to expect before applying for a student loan.
What is Pre-Qualification?
If you’ve never borrowed money from a lender, the idea of pre-qualification may be new to you. Simply put, credit pre-qualification is a way for lenders to assess a borrower’s ability to pay the amount due on time without conducting a full review. Once a lender makes this assessment, they can provide feedback to potential borrowers including whether they are likely to be approved and a range of qualifying interest rates.
While credit pre-qualification is common in other types of lending, such as mortgages, College Ave’s credit pre-qualification tool is unique to the private student loan industry.
It’s important to note that credit pre-qualification is an indicator based on a high-level review and not a guarantee of approval or interest rates. The actual approval decision and interest rates offered could vary during the official application/approval process.
Benefits of Pre-Qualification
In general, the student loan process can be unnecessarily complex and confusing, which is why our goal at College Ave has always been to provide a simple and clear student loan experience. Pre-qualification provides transparency in the process, enabling students and families to properly plan their finances.
There are three main benefits of pre-qualification:
1) Credit approval status
Rather than fill out an entire private student loan application (which involves the lender pulling a credit report) to find out if your credit qualifies, you can provide basic information and get an initial assessment in seconds.
Advanced notification of credit approval is also beneficial when you know you’ll need to utilize private student loans to pay for college and you’re looking to figure out your finances but aren’t yet ready to fill out an application.
2) Personalized interest rates
If your credit pre-qualifies, you’ll receive an expected interest rate range. With most lenders, you will not see your exact interest rate ranges until after you apply. By seeing the rates in advance, you can properly assess the total cost of the loan and compare your options to ensure you borrow responsibly.
3) Find an eligible cosigner
Most private student loans require a cosigner due to the borrower having limited credit history. As a result, finding a qualified friend or family member to cosign the loan is an important step in receiving approval.
Instead of blindly submitting an application with a cosigner, you can share the credit pre-qualification tool with them to see whether their credit qualifies. In addition, you can compare expected interest rates if you have multiple people, such as your parents, willing to cosign.
Will Pre-Qualification Affect My Credit Score?
An important distinction between pre-qualification and other forms of credit inquiries is how it affects your credit score, or, more accurately, how it does NOT affect your credit score. Pre-qualification is an example of a “soft” inquiry, which does not affect your credit score.
In contrast, submitting a loan application results in a “hard” inquiry, which can affect your credit score. Too many “hard” inquiries in a short period could negatively impact your credit score.
Tip: For more information on soft and hard inquiries, see Understanding My Credit Score.
How Can I See if I’m Pre-Qualified?
It’s really simple. In fact, you already know everything you need to use the credit pre-qualification tool. Simply enter your name, street address, date of birth, and zip code, and we’ll do the rest. About 3 seconds after you submit the form, you’ll receive your pre-qualification status and interest rate range.
We’ll also provide a personal pre-qual code that you can input into the College Ave Student Loans calculator to get a better idea of how much your private student loan will cost.
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