No, College Ave does not perform a hard credit check for initial inquiries or when you check your eligibility and estimated rates.
College Ave only conducts a soft credit pull when you check your potential rates or pre-qualify for a loan. This is a significant advantage for prospective borrowers, as it allows you to explore your options without any impact on your credit score.
Understanding Credit Checks: Soft vs. Hard Pulls
It's crucial to differentiate between the two main types of credit inquiries, as their impact on your credit score varies considerably.
What is a Soft Credit Pull?
A soft credit pull, also known as a soft inquiry, occurs when a person or company checks your credit report without you formally applying for new credit.
- No Impact on Credit Score: Soft inquiries do not affect your credit score. They are typically not visible to other lenders and serve more as a background check.
- Common Uses: Lenders use soft pulls for pre-approvals, pre-qualifications, identity verification, or when you check your own credit report.
- College Ave's Approach: When you check your potential rates with College Ave, they utilize a soft pull, allowing you to see your options without any negative impact on your credit history. This means you can confidently compare rates without fear of dinging your score.
What is a Hard Credit Pull?
A hard credit pull, or hard inquiry, happens when a lender formally checks your credit report because you've applied for a new line of credit, such as a loan, credit card, or mortgage.
- Potential Credit Score Impact: Hard inquiries can temporarily lower your credit score by a few points. This effect is usually minor and short-lived (typically a few months to a year), but multiple hard inquiries in a short period can raise a red flag to lenders, indicating a higher credit risk.
- Visibility: Hard inquiries are visible to other lenders on your credit report for about two years.
- When It Occurs: For private student loans like those offered by College Ave, a hard pull typically occurs only when you submit a full, formal application for the loan, after you've decided to proceed beyond the initial pre-qualification stage and commit to the borrowing process.
Soft vs. Hard Credit Inquiries Comparison
Understanding the distinction between these two types of inquiries is vital for managing your credit health, especially when exploring financial products.
Feature | Soft Credit Pull (Soft Inquiry) | Hard Credit Pull (Hard Inquiry) |
---|---|---|
Credit Score Impact | None | Can slightly lower your score (usually 1-5 points) |
Visibility | Only visible to you and sometimes the inquiring party | Visible to all lenders for approximately two years |
Purpose | Pre-qualification, pre-approval, identity verification, personal credit checks | Formal loan/credit card applications, mortgage applications, auto loans |
Example | Checking estimated rates with College Ave, getting pre-approved for a credit card, checking your own credit score | Submitting a final application for a College Ave loan, applying for a new credit card or mortgage |
By utilizing a soft credit pull for initial rate checks, College Ave provides a transparent and consumer-friendly process. This allows prospective students and their cosigners to explore private student loan options confidently, without worrying about their credit score being affected upfront. This approach helps borrowers make informed financial decisions without undue pressure.
For more general information on the differences between soft and hard credit inquiries, you can refer to resources from major credit bureaus like Experian.