A hard inquiry – also known as hard pull or hard credit check – usually occurs right before your lender, bank, or financial institution needs to make an underwriting decision. Multiple hard inquiries in a short period can signal to loan lenders that you could be a high-risk payday loans customer.
It can take place right before you take out a car loan, get a home mortgage, or get a credit card
A soft inquiry – also known as a soft pull or soft credit check – often happens when credit card companies or lenders check your credit score to see if you qualify for a product or service. Employers may also do a soft inquiry along with the background check before hiring you. Short-term lenders and installment loan lenders will often do some form of soft inquiry to determine whether they will lend money to you. A soft inquiry doesn’t hurt your credit score but is visible and will show up on your credit report.
Types of installment loans
- Personal loan – A personal loan is a “catch-all” term usually referring to a loan that is not secured by collateral and repaid in installments. Personal loans will usually have a term of 1 to 5 years and will need to be paid back in periodic installments, usually monthly. Because personal loans usually require no collateral, the bank or online lender has nothing to repossess if you cannot repay the loan. Therefore, many personal loan lenders will require some sort of credit check. Those with bad credit or no credit history will struggle to get a personal loan. Loan amounts can range anywhere from $1,000 to $50,000 and loans can be used on anything from home improvement, emergency expenses, vacations, etc. APRs will range depending on your credit score and the repayment terms and structure of your loan but they will usually not exceed 36% due to federal and state regulations on these types of loans
- Possible loan – A loan from Possible Finance is a type of installment loan that builds credit history. The direct lender does not check your FICO score or VantageScore and you can receive up to about $500* in minutes through your mobile app. The loan is paid back in multiple bi-weekly installments during a two month period or longer. Borrowers can reschedule payments if needed within the mobile app and there is a grace period on payments. Because Possible Finance reports all payments to major credit bureaus, on-time payments can build positive credit history and improve long-term financial health.
- Mortgage – A mortgage is a loan secured by real estate property. If you cannot repay the mortgage, the bank or online lender can repossess the property used as collateral on the mortgage – although specific rules and regulations will vary state by state. The most common types of mortgages are a 15 year and a 30 year fixed rate loan (very long-term loans). Principal and interest payments are monthly and total the same amount every month to make it simple for the borrower. During the early years of a mortgage, the interest proportion of the monthly payment will be higher while in the latter years of a mortgage, the principal proportion will be higher. Applying and getting a mortgage can be a lengthy process and will usually include an appraisal of the property secured by the mortgage. In addition, there are usually fees such as origination fees, appraisal fees, and other fees associated with getting a mortgage.
- Vehicle and car loans – The most common type of vehicle loan is a car loan. A car loan is a loan in which the borrowed amount is used to purchase a car. The loan is secured by the car itself and used as collateral. If you cannot repay the loan, the lender has the right to repossess your car. Before you get a car loan, know how much you can afford in terms of monthly payments. Applications will likely involve a credit check and your credit score may have an impact on the interest rate for the loan. Those with bad credit or no credit will have trouble getting an auto loan. Some vehical loans will come with an origination fee and other fees as part of the process. Typical car loans have a term of 24 months to 72 months and are repaid in monthly installments which include both principal and interest monthly payments. Therefore, these loans can be considered a monthly installment loan.