{"id":13979,"date":"2021-03-25T09:39:08","date_gmt":"2021-03-25T09:39:08","guid":{"rendered":"https:\/\/www.mymoneysouq.com\/financial-blog\/?p=13979"},"modified":"2021-03-25T09:39:09","modified_gmt":"2021-03-25T09:39:09","slug":"what-is-a-pre-approved-loan","status":"publish","type":"post","link":"https:\/\/www.mymoneysouq.com\/financial-blog\/what-is-a-pre-approved-loan\/","title":{"rendered":"What is a Pre-Approved Loan?"},"content":{"rendered":"\n

\u201cPre-Approved Loan\u201d is a term every individual looking for a loan would have come across. A pre-approved loan is a loan approval provided by the bank without actually applying for it. Loan approval is a crucial part of the loan processing and it can have an impact on the credit report irrespective of the approval or rejection. But getting a loan pre-approved will work in a different way where it doesn\u2019t hurt your credit report if rejected but makes you learn if you are eligible for a loan.<\/p>\n\n\n\n

Check: <\/strong>How to improve credit score with the loan?<\/strong><\/a><\/p>\n\n\n\n

Working of Pre-Approved Loan\u00a0<\/strong>
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The working of a pre-approved loan is simple. Banks or financial institutions usually partner with the Al Etihad Credit Bureau to get the borrower\u2019s credit profile based on which a loan is approved. So when the lender requests the credit bureau for profile review for a new loan, this is added to the credit report with the date and the status that is rejected or approved. Rejected status in the credit report might have a bad reputation on the borrower\u2019s credit profile affecting future loan applications as well unless any existing loans or bills are cleared that would eventually help in increasing the credit score.  
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When a loan applicant requests a pre-approval, the lender performs a soft enquiry at the credit bureau and checks if the borrower is eligible for a loan. They also provide additional details like the maximum loan amount the borrower can borrow.\u00a0
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Getting a Pre-Approved Loan Invitation from Lender\u00a0\u00a0<\/strong>
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There can be times where the lender offers you a loan by themselves. If a bank or financial institution finds a customer\u2019s credit profile good with a solid credit history, high debt to burden ratio (DBR), they offer a pre-approval loan. 
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Though it is tempting when the bank or financial institution itself is offering a loan that involves less documentation and quick processing time, the borrower must check and analyse does he really needs that loan. Accepting a loan when there is no requirement can land you in a bad debt pit if you don\u2019t repay it on time.\u00a0\u00a0<\/p>\n\n\n\n

Also, check: <\/strong>Is it wise to take a Personal Loan to clear the Credit Card Debt?<\/strong><\/a><\/p>\n\n\n\n

How to get a loan pre-approved?\u00a0<\/strong>
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In order to get your loan pre-approved, ensure you meet the basic eligibility criteria of the bank like minimum salary, good credit score, DBR above 50% with the right set of documents. 
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Once you meet the eligibility criteria, you can visit the bank and request a pre-approval. 
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If the pre-approval is positive, you can proceed with a regular loan application according to the bank\u2019s guidance. 
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Advantages of a Pre-Approved Loan<\/strong>
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