How To Get A Loan Approval Amid A Global Crisis

The year 2020 shares the parallel story of Pandora’s Box, where it brings nothing but a worldwide burden and misery—putting humanity in the plight no one has ever anticipated. People are forced to adapt to the changing times, and to cope with the current race, one must be financially secure. But, how about those who will begin from scratch and have bad credit records in the bank? Will they be able to transcend and loan anew?

The answer is yes! There are lenders, bank companies, and loan services that permit individuals to apply for a loan despite their account status. It eases their lives since they can now purchase their needs and fix what needs to be repaired. Hence, to know more about how a credit check works and how it affects loan approval, this article will enlighten you.

What is a Credit Check?

Generally, a credit check means the lenders, bank companies, and loan services trace the borrower’s account payment history for the credit report before granting the loan application. Usually, this pre approval stage is done when a person lends money, applies for a credit card, etc.

Furthermore, the credit report is a detailed history of how responsible the borrower is when it comes to paying the bills and dues—mortgages such as loans and credit cards, house rent, and water bills. In Canada, two primary agencies process credit reports: Equifax and TransUnion.

When an agency makes the borrower’s credit report, they usually require both personal and credit information. They gather essential facts, such as if the applicant paid all his debts, including the past and current loans and credit card standing. The agency also seeks the borrower’s public records like in court.

Types of Credit Check

There are different types of credit checks that the agency conducts before approving the loan: the Soft Credit Check, Hard Credit Check, and No Credit Check.

Soft Credit Check

In a nutshell, a soft credit check is a type of inquiry that doesn’t affect the credit score at all, which is an excellent thing as it translates into a higher chance for loan approval.

A soft inquiry (commonly known as “soft pulls”) usually happens when an individual or a firm assesses the credit as part of the background check. This inquiry is applicable when the credit company’s issuer tracks and checks the credit without the borrower’s permission to determine if he is capable and qualified for a credit card proposal. Further, employers also administer a soft inquiry before hiring an applicant.

Hard Credit Check

Unlike the soft credit check, the hard credit check drastically affects the credit score, which is an unappealing credit history to banking companies and lenders. They also require authorization from the borrower to begin the hard credit check. Most often than not, people who have low credit scores don’t have any chance for loan approval.

A hard credit check (commonly known as “hard pulls”) is conducted by lenders and banking companies to run some hard pulls to credit history to determine if the borrower is eligible for a loan. A hard credit check is usually done in several applications such as auto rental, personal and student loans, credit cards, mortgage loans, etc. 

While a soft credit check doesn’t affect the credit score, a hard credit check does the opposite. Hard pulls will immobilize your credits from

No Credit Check

Who would’ve thought that there are lending companies and services that financially assist people amid skyrocketing credits without running a credit check to their account? Since it is done online, all they need to do is click apply, and in a matter of one day, fast cash is directly deposited to the bank account. The credit check’s assessment and evaluation report will determine the credit score, which could have an immense positive or negative effect on the loan’s approval.

A credit score is a three-digit number that is based on the credit check report. The concept of credit score is simple. If you have a well-managed credit, the score increases; if you don’t immediately address your troubled credit, the score decreases.  Thus, it reflects how responsible you are in managing your credit and one of the many aspects that lenders consider before they lend money.

How Hard Credit Check Affects the Credit Score?

While a soft credit check doesn’t really affect the credit score, a hard credit check does the opposite. The hard credit check will remain on the credit report for two(2) years, which immensely contributes to the deduction of scores. Further, having numerous consecutive hard pulls in a  short time creates an unpleasing impression to many lenders, hindering you from future loans.


Indeed, during these times, it is vital to be financially stable. However, not everyone walks on the same path—some are fortunate, and some are deprived. Today, most people hold on to loan firms, which they consider as their last resort. As a response, lenders and banking companies give hope by offering individuals flexible loan terms.

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