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A soft pull personal loan means that the lender only requires a soft credit check for preapprove or approval, which won’t impact your credit score. With a soft pull, a lender is able to look at information in your credit report without leaving a negative mark. It differs from a hard credit pull, which does have an impact on your score.

Read on for a closer look at what soft pull personal loans are and what skipping a hard pull means for borrowers.

What Is a Soft Credit Inquiry?

A soft credit inquiry (or pull) is a type of credit check that isn’t tied to a formal credit application and does not impact your credit score. It occurs when a creditor, employer, landlord, or other authorized individual looks over your credit report to see how you manage your debt. When you access your own credit report, it’s also considered a soft credit check.

A soft credit check can take place without your consent, or even your knowledge. If you’ve ever received a prequalified credit card offer in the mail, the company making that offer did a soft pull on your credit to prescreen you for the card.

If you apply to prequalify for a loan, the lender will also do a soft credit pull. If you like the rate and terms in your offer, you can then decide to officially apply for that loan, which will require a hard credit pull.

Other instances of a soft credit check can include renting an apartment or applying for a job. Getting a look at how you manage your money can prove reliability and bring peace of mind to an employer, landlord, or creditor.

How Soft Credit Checks Work

During a soft credit check, a lender or other third party reviews your credit report to gather specific information about your creditworthiness. Unlike a hard credit check, which requires your explicit consent and can impact your credit score, a soft pull is typically used for informational purposes or prequalification.

For example, let’s say you’re shopping around for personal loan offers and want to check your rate. Lenders may perform a soft pull to assess your creditworthiness and determine if you meet their initial criteria. This initial evaluation helps lenders provide you with personalized loan offers without affecting your credit score.

Information Provided for a Soft Pull

A soft credit pull generally provides a snapshot or a modified version of your credit report. Exactly what a third party will see depends on the purpose of the soft pull. A creditor will likely be able to see:

•  Your overall credit history

•  Your current debts and payment behavior

•  The length of your credit history

•  The types of credit accounts you have

Do Soft Pulls Affect Your Credit Score?

No, soft credit inquiries do not impact your credit score. They are not visible to other creditors, and they do not leave any trace on your credit report. Soft pulls are considered “soft” because they are only visible to you when you review your own credit report.

If you want to view the soft inquiries on your credit reports, you can request a free copy of your report from each major credit bureau (Experian, Equifax and TransUnion) at AnnualCreditReport.com. Keep in mind that each report could have different inquiries. A soft inquiry is only added to the credit report that was checked.

Soft Pull vs Hard Pull

Whether you’re shopping around for a personal loan or looking for a new apartment, it’s important to understand the difference between soft vs, hard credit inquiries. Here’s a quick summary of how the two compare.

Soft Pull	Hard Pull
Your permission is not required	Your permission is required
No impact on credit score	May lower credit score temporarily
Only visible to you on credit report	Visible to other creditors
Used for informational purposes or prequalification	Used for credit application or loan approval

The key difference between soft vs. hard credit inquiries is that soft inquiries don’t have any impact on your credit scores. Hard inquiries, by contrast, may remain in your credit reports for about two years and can impact your credit scores.

The impact of hard inquiry, however, is typically small, as well as temporary. As long as no additional negative information is added to your credit report, your credit scores will typically rebound within a few months.

While multiple hard inquiries in a short time frame can do more significant damage to your scores, scoring models will typically combine multiple inquiries that occur within one or two months to avoid unfairly penalizing people who are rate shopping.

What to Know About Personal Loans With Soft Credit Pulls

Some personal loan lenders look at your credit report using a soft pull, allowing them to prequalify you while letting you know your approved interest rate. This can be beneficial for both sides — the lender gets information about your creditworthiness while you get important information that can help you make borrowing decisions.

While prequalification for a personal loan with a soft pull isn’t a guarantee you’ll get approved for a loan, it can give you a good idea of the loan amount, rate, and terms you may be able to qualify for. If you choose to then apply for the loan, the lender will then do a hard credit pull.

Some lenders advertise that they will only do a soft pull, even when you apply for the loan. But you’ll want to approach these lenders with caution. If a lender doesn’t require a hard credit check, they will often make up for the increased risk involved by charging exorbitant interest rates and fees.

Be Aware of Predatory Loans

If you’re looking at soft pull personal loans, it’s important to be aware of predatory loans that may take advantage of individuals with limited credit history or poor credit.

Predatory loans, such as payday loans, often target individuals who may have difficulty obtaining traditional loans. However, these loans often come with high-interest rates, excessive fees, and unfavorable terms. When looking at this type of loan, you’ll want to be sure to research reputable lenders and read reviews to ensure you’re working with a legitimate and trustworthy institution.

Also be sure to read the loan agreement carefully and make sure you fully understand all the terms before proceeding.

Common Soft Inquiries

Soft inquiries are commonly used in various scenarios, including:

•  Prequalification for credit cards or loans

•  Employment background checks

•  Rental applications

•  Insurance quotes

•  Credit monitoring services

•  Checking your own credit

Compare Personal Loan Offers With SoFi

A personal loan is a flexible kind of financing that you can use the funds to cover virtually any type of expense, including home renovations, credit card consolidation, medical costs, a wedding, and more.

If you’re interested in exploring your loan options without triggering a hard credit pull, SoFi can help. SoFi personal loans offer competitive, fixed rates and a variety of terms, and checking your rate won’t affect your credit score. Plus, it only takes just one minute.

See if a personal loan from SoFi is right for you.

FAQ

Do personal loans do hard or soft credit inquiries?

Personal loans can involve both hard and soft credit inquiries. When you apply for a personal loan, the lender may perform a hard credit inquiry, which can temporarily lower your credit score. However, some lenders also offer prequalification or preapproval processes that involve soft credit inquiries. These soft pulls do not impact your credit score and provide lenders with a basic overview of your creditworthiness.

Do lenders see less of your credit history with a soft pull?

With a soft inquiry, a lender or creditor will typically see a modified version of your credit report. They likely won’t be able to see information like your account numbers but will see things like your payment history and if you have any accounts in collections.

Can a soft credit pull affect your credit score negatively?

No. Soft inquiries are not visible to other lenders and do not leave a trace on your credit report. They are used for informational purposes or prequalification and do not have any direct impact on your creditworthiness. Only hard credit inquiries, which occur when you apply for credit or a loan, may temporarily lower your credit score by a few points.

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Photo credit: iStock/Hispanolistic
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Home siding replacement costs typically run around $11,400, though that’s just a ballpark figure. The amount you could pay will depend on factors such as home size, materials, location, and project timing.

While house siding replacement isn’t a cheap solution, it can be a transformative one. After all, as a homeowner, you know that the appearance of your home reflects your style, pride, and investment.

Before you dive headfirst into this exciting project, it’s important to understand house siding replacement costs so you can proceed with confidence.

What Impacts House Siding Replacement Costs?

Numerous factors influence the cost of replacing house siding, including the size and shape of your house. Here are some important ones to keep in mind.

Home Size

Your home size impacts the cost of your project because a larger house requires more siding. The following is an estimate of potential siding costs for different square footage. Remember, if you live in a two-story home, you’ll add 15% to 30% of the total cost. The additional floor means more hours and materials are needed to finish the job.

Square Footage	Average Cost to Replace House Siding with Vinyl, Aluminum, or Fiber Cement	Average Cost to Replace House Siding with Stone or Brick Siding
1,000	$1,000 to $13,500	$9,000 to $50,000
1,500	$1,500 to $20,250	$13,500 to $75,000
2,000	$2,000 to $27,000	$18,000 to $100,000
2,500	$2,500 to $33,750	$22,500 to $125,000
3,000	$3,000 to $40,500	$27,000 to $150,000

Source: Angi

House Shape

A home with a traditional or simple shape tends to incur lower siding costs. For example, a conventional, square house will likely be less expensive than an H-shaped home when installing siding.

Type of Materials

The material you select for your siding is crucial, and each type has its pros and cons. For example, although bricks cost more than vinyl, they are more durable. So, the higher upfront cost means longevity, while vinyl siding means you could face another siding repair job in several years.

Home Design

Whether your home has multiple stories or gables, for example, the overall design could impact how much you pay to replace the siding. That’s because any differences from a conventional home build could require more time and modified cuts of siding.

Removal of Old Siding

Removing old siding is a possibility when installing new siding. For example, your contractor may want to eliminate pests or rotting material underneath the original siding. On the other hand, if the current siding is in decent condition and you want to cut costs, you may decide to install the new material over the old material.

Condition of Old Siding

Your old siding can increase the project cost if it requires more work to remove. On the other hand, uncomplicated siding removal will help streamline the project.

Time of Year

Generally, homeowners hire contractors during warmer weather. However, some contractors might have deals for homeowners who want work done outside the high season. So, timing your project wisely could save you hundreds or thousands of dollars.

Location

As with other exterior home remodeling projects, location plays a role in how expensive it is to replace your house siding. For instance, this list demonstrates the differences across the country:

City	Average Cost Range
Boston, MA	$9,800 to $24,300
New York City, NY	$8,300 to $20,500
Des Moines, IA	$7,600 to $12,900
Denver, CO	$7,000 to $19,200
Chicago, IL	$6,700 to $18,700
Los Angeles, CA	$3,200 to $10,100
Miami, FL	$1,800 to $6,300

Source: Angi

Siding Installation Cost: Labor

Labor is an unavoidable cost when replacing house siding. The materials, complexity of the job, and your region will affect labor costs. Typically, you’ll pay between $1 and $15 per square foot, with $4 per square foot being the most common rate. So, siding installation costs for labor for a 1,500-square-foot house will likely cost about $6,000.

Permit Costs

Your municipality may also require you to obtain a permit from your county and/or state before you begin work on replacing your house siding. Building permits cost between $150 and $3,000, depending on your location and project scope. However, in some regions, permits aren’t mandatory for minor projects, so ask your county or a contractor before applying for one.

Siding Costs by Type

The type of siding is another major influence on your total project cost. Here’s a breakdown of common materials and their average price:

Siding Type	Cost Per Square Foot
Vinyl	$2 to $13
Wood	$1 to $15
Engineered Wood	$1 to $6
Aluminum	$3 to $6
Fiber Cement	$5 to $14
Brick	$10 to $20
Stone	$7 to $30
Stone Veneer	$5 to $11

Source: Angi

Vinyl

Replacing house siding with vinyl costs $2 to $13 per square foot. Plus, it isn’t challenging to install, and provides dozens of color options. However, it may dent easily and is more susceptible to weather damage than other types. For example, storms and extreme temperatures can make vinyl deteriorate quickly. You can expect vinyl siding to last between 20 and 40 years.

Wood

Wood costs $1 to $15 per square foot, making it an affordable siding option. While it’s vulnerable to pests, water, and rot, its unique aesthetic can be desirable to homeowners. Plus, certain types of wood, such as cedar, can have a higher resistance to damage. Remember, wood siding requires paint jobs and chemical treatments every five years or so to prevent degradation. Wood siding that’s been well cared for can last 20 to 40 years.

Engineered Wood

Costing between $1 and $6 per square foot, engineered wood can be an attractive choice for those on a budget. As the name implies, the manufacturer pretreats the wood to enhance its durability. Mass production methods drive down the cost, and engineered wood needs paint less frequently than conventional wood.

In addition, DIYers often use this material because of its straightforward installation. However, faulty installation can result in moisture damage, so it may be best to hire a contractor. With the right installation technique and proper care, engineered wood lasts between 20 and 40 years.

Aluminum

Another low-cost option, aluminum siding costs $3 to $6 per square foot. This material helps with temperature control and is resistant to temperature changes, rust, and pests. However, it can produce loud sounds during storms and can develop scrapes and discoloration. As with the previous options, aluminum siding lasts 20 to 40 years.

Fiber Cement

Although you could mistake this material’s appearance for wood, fiber cement tends to stand up better to insects and the elements. It needs less care and painting than wood as well. However, because it is made of cement bound by cellulose fibers, its weight can be a drawback. The siding’s price ranges from $5 to $14 per square foot and will last about 50 years.

Brick

When you change the siding on a house to brick siding, it costs $10 to $20 per square foot and provides a solid, traditional look. While heavier than other materials, brick is touted for its resilience and longevity. Brick siding will last 100 years or more.

Stone

Usually the most expensive option, stone siding costs $7 to $30 per square foot. It provides a dignified, stately aesthetic and ultimate sturdiness. Unlike wood or vinyl, stone is extremely slow to deteriorate and is impervious to rot and pests. Stone siding lasts at least 100 years.

Stone Veneer

If you like stone but not its cost, stone veneer may offer you the happy medium. It costs $5 to $11 per square foot and looks like natural stone, although it’s a mix of cement, aggregates (like gravel or concrete), and iron molecules for coloring. Stone veneer is an excellent insulating material and lasts between 20 and 75 years.

DIY Home Siding Replacement Cost

Installing new siding by yourself may not be the most suitable DIY endeavor. For starters, there’s the safety of you and your home to consider. Plus, the weight and cumbersome nature of siding make it challenging to handle. And improper installation can result in substantial water damage, insulation problems, or pest infestations.

That said, if you have the expertise, installing siding is feasible, with vinyl being the most doable. Having the necessary tools and securing a construction permit without a contractor’s help can reduce labor costs by $1 to $3 per square foot.

Professional House Siding Replacement Cost

A professional house siding replacement job can cost $2 to $50 per square foot, depending on the materials and the other factors listed above. However, a skilled contractor can provide peace of mind through quality work, not to mention saving you hours sweating in the sun while you install material.

How to Reduce the Cost of Home Siding Replacement

Going with a professional for a house siding replacement project doesn’t have to mean burying yourself in debt. Here’s how to decrease the costs of your project without sacrificing quality:

Research and Compare Quotes from Multiple Contractors

A price comparison between contractors can help you get the best deal. When you’re searching for contractors for your project, referrals are an excellent place to begin. Ask neighbors, family, and friends who recently had siding repairs or replacements for their recommendations. There’s a good chance you’ll find plenty of siding installers in your area, and referrals will help you narrow down your choices.

As you research contractors, it’s wise to reach out to at least three different companies to gather price estimates. Then, request a detailed quote to gauge the pricing options available in your area. When comparing prices, remember that not all contractors solely focus on siding. Some general contractors and handypersons offer siding installation as part of their broader range of services.

To ensure a fair comparison, contact at least two companies specializing in siding and one general contractor. Keep in mind that while a general contractor may be versatile, they may not have the same level of expertise and experience as a dedicated siding professional.

Negotiate with Contractors

You can haggle with contractors to get a discount. For example, you might decide to delay your project until late autumn, when contractors have more gaps in their schedules. Likewise, you can ask for lower prices for tearing off the existing siding yourself or getting the required permit on your own. These tactics could help you shave hundreds off your final bill.

Consider Financing Options

If affordability is keeping you from replacing siding, financing the project can help you get started sooner instead of later. For example, a personal loan is a straightforward option that can get the necessary money in your account within a few days.

In addition, you could leverage your home equity to obtain a home equity loan or home equity line of credit (HELOC). These options turn your equity into cash, meaning they’re helpful for homeowners who have paid off a significant amount of their mortgage. Remember, financing means paying the loan plus interest every month, so it’s best to ensure your budget has the space before you borrow.

What to Consider Prior to Replacing House Siding

Because changing the siding on the house is an investment, you must consider a few things before starting your project. Here’s what to keep top of mind before shopping for siding materials or ripping off the old siding.

HOA Rules

Read your HOA covenants, conditions, and restrictions (CC&Rs) to ensure you’re correctly following guidelines on allowed siding materials, colors, and more. In addition, you may need to apply for preapproval from your HOA board before starting the project.

Likewise, your HOA may require you to hire a licensed and insured contractor to perform the work. Remember, not every contractor has the same licensure, insurance, and certifications, so it’s best to shop around. Plus, you’ll need to communicate your HOA’s rules and standards to the contractor so they understand the project’s parameters. It’s also crucial to obtain permits from your municipality. Your HOA might also require notification when the project is finished.

Siding Quality

Various siding materials have different durability and appearance, so it’s best to ask yourself what kind of siding you want. Siding quality will also affect pricing and maintenance.

Siding Colors

Next, it’s time for the fun part: choosing a color. While you may have an initial preference, it’s beneficial to follow these tips and steps:

•  Determine your siding type. Different types of siding may have limitations on color options. For example, brick and wood sidings offer fewer choices, whereas vinyl sidings offer endless possibilities.

•  Consider your home’s style. Your home’s architectural style can guide you in selecting the most suitable siding colors. For instance, white, gray, and subtle colors complement colonial homes, while bold colors and textures work well with Victorian-style homes.

•  Evaluate the front door, windows, and roof. Choose a siding color that harmonizes with other exterior elements. You can contrast a dark front door or roof with lighter-colored siding. And remember that you can always replace your front door affordably to match your new siding.

•  Explore neighboring homes. Walk around your neighborhood to gather inspiration and ideas from other homes. Look for houses that you admire and share a similar style and construction. Additionally, if homes are for sale nearby, check their values online to see if the siding color has contributed to a higher resale value.

Maintenance

To ensure the longevity of your new siding and prevent potential damage to your home, be sure to provide proper care and maintenance. Regular cleaning and inspections will help you identify any areas that require attention.

Remember, various siding types have specific maintenance and cleaning requirements. Therefore, becoming an expert in the siding type of your choice can add years to its life. Simple tasks like caulking and painting can make a significant difference in high-moisture climates. By addressing these maintenance tasks proactively, you can save hundreds of dollars in costly structural repairs.

Energy Efficiency

Siding guards your home against adverse weather, such as strong winds and extreme heat, can influence your home’s energy usage. In addition, energy-efficient siding offers superior insulation to traditional siding, reducing energy consumption for temperature control. It does so by including insulation (like spray foam or foam board) beneath your chosen siding material. In contrast, traditional siding often lacks this feature.

While uninsulated siding may be more affordable initially, the long-term savings on monthly utility bills through insulation can offset the project cost. Additionally, opting for energy-efficient siding increases your home’s value if you sell it.

To gauge the return on investment (ROI) for energy-efficient siding, consult a siding contractor and inquire about the typical energy bill savings experienced by homeowners in your area after installing insulated siding. Depending on your location, your savings could be 20% off your previous energy bill.

The Takeaway

Several factors influence the cost of house siding replacement, including the size and shape of the house, the type of siding materials chosen, the condition of the old siding, and the house’s location. Other factors, such as the time of year and the need for permits, may also affect the expenses. Researching and comparing quotes from multiple contractors, negotiating with contractors, considering financing options, and planning may help reduce the cost of a siding replacement project without compromising quality.

If you’re ready to roll up your sleeves and get some home repairs or renovations done, see what a SoFi personal loan can offer. With a SoFi Home Improvement Loan, you can borrow between $5k to $100K as an unsecured personal loan, meaning you don’t use your home as collateral and no appraisal is required. Our rates are competitive, and the whole process is easy and speedy.

Turn your home into your dream house with a SoFi Home Improvement Loan.

FAQ

How long does it take to replace the siding on a house?

The time it takes to replace siding on a house usually takes about 10 to 14 days. However, the exact time depends on various factors, such as the home’s size and the siding material.

What are the benefits of replacing siding on a house?

Replacing house siding can improve insulation and temperature control, protect against pests, and beautify the house’s appearance. As a result, replacing siding can often increase a home’s value.

Can I replace the siding on my house myself, or do I need a professional?

A DIY siding replacement project eliminates labor fees ranging from $40 to $90 per hour, which leaves materials as the sole expense. However, DIY can be challenging if you lack experience. Hiring a professional siding contractor ensures the job is done correctly, efficiently, and with access to better material prices, along with their expertise and knowledge of potential risks.

How do I choose the right type of siding for my home?

It’s best to choose siding for your home according to your priorities. For example, your budget, preferred materials, and insulation concerns will influence the type of siding for your project.

Are there any tax credits or incentives for replacing house siding?

Installing energy-efficient insulation with your siding can make you eligible for the Energy Efficient Home Improvement Credit. The credit is up to 30% of the project cost.

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Photo credit: iStock/patty_c
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Loan modifications change the terms of your loan with the goal of making the payment more manageable. Unlike refinancing a loan, having a loan modified means the loan remains with the same lender — just under revised terms.

Loan modifications can be challenging to obtain and typically decrease your credit score. But for some borrowers, they may be the only option, if the lender agrees to the terms.

So what is a loan modification and how does it work? Let’s explore the details below.

Loan Modification Defined

A loan modification is a revision to the terms and conditions of an existing loan. The lender and borrower agree to new terms that make the monthly payments more manageable for the borrower and prevent the lender from having to take more expensive, drastic actions, like foreclosing on a property.

While loan modifications are most common for secured loans, like home mortgages, it’s also possible to get student loan modifications and even personal loan modifications.

How Do Loan Modifications Work?

The goal of a loan modification is to make a borrower’s monthly payments more manageable. Typically, borrowers will consider this option if they’re at risk of defaulting on their loan (or if they already have). In the case of mortgages, loan modifications can help prevent foreclosure.

Borrowers may also look for loan modifications in times of hardship, like a serious illness or injury. In this case, borrowers might also request a loan deferment.

So how do loan modifications work? They’re a two-way street: The lender and the borrower must come together and agree to a change of the loan terms. The approach can vary, but strategies may include:

•  Adjusting the interest rate: If interest rates were high when you first took out your loan, your lender may agree to lowering the interest rate on your loan. Doing so typically reduces your monthly payment. SoFi’s personal loan calculator is one tool that might be helpful in determining how a new interest rate can affect your monthly payments.

•  Extending the length of the loan: Extending the loan could reduce your monthly payment, though adding more years to a loan may mean you’ll spend more on interest in the long run. Still the immediate relief it offers might be worth it.

•  Changing the structure of the loan: If your loan has an adjustable interest rate structure, you might benefit from modifying it to a fixed rate. This can make your monthly payments more predictable.

•  Reducing the principal balance: In some cases, a lender may agree to temporarily reduce the amount owed on your principal to make it easier to manage your monthly payments. Note, however, that you’ll have to make up for those reduced payments later. In the case of mortgages, this is a rare strategy that is typically only considered to avoid foreclosure. Student loan forbearance is also possible.

When Should You Use Loan Modification?

Loan modifications are often a last resort. Here are some scenarios when it might be time to consider loan modification:

•  Risk of foreclosure: If you’ve missed multiple payments on your mortgage or cannot afford to make future payments at the current amount, a lender may be open to modifying. This can prevent you from losing your home to foreclosure and may save the lender money in the long term.

•  Underwater on a mortgage: An underwater mortgage (also called an upside-down mortgage) occurs when you owe more on your home than it’s worth. This can happen if your home’s property value plummets or if you miss payments early on and are playing catchup on accumulated interest. Loan modification may be the right solution for you and your lender.

•  Defaulting on a personal loan: If you cannot afford your upcoming monthly personal loan payment or have already missed one or more payments, it may be worth seeing if you can have your loan modified, likely by extending the life of the loan to reduce your monthly payments. This may be more agreeable to a lender than having to take expensive legal action against you.

•  Financial hardship: If you are undergoing some kind of hardship, such as a debilitating medical condition or loss of job, you may want to work with your lender to see if you can modify your loan before you miss a payment.

Does Loan Modification Hurt Your Credit Score?

A loan modification will show up as a negative entry on your credit report and thus could drive down your credit score.

That said, if you’re missing payments on your loan because you can’t afford them — or worse, verging on home foreclosure in the case of a mortgage loan — that can have an even more dramatic impact on your credit.

Recommended: What Credit Score Is Needed For a Personal Loan?

How Often Do Loan Modifications Get Approved?

While getting a personal loan can be a simple process, approval for loan modifications vary by lender, loan type, and the borrower, but they’re typically more challenging to get than refinancing. Lenders are not obligated to approve your loan modification, but it may be in their best interest to avoid an expensive foreclosure process.

You might be able to improve your chances of approval by working with a debt settlement company. These companies advocate on your behalf with the lender and have more time and experience to negotiate.

However, debt settlement companies aren’t free, and there’s no guarantee that they’ll be successful in getting your loan modified.

What Does It Mean to Refinance Your Personal Loan?

Personal loan modification is possible, but for many borrowers, it may make more sense to refinance a personal loan. You might consider refinancing a personal loan to achieve one of several goals. Here’s a look at a few of them:

Shortening Your Term

If you initially took out a personal loan with a particularly long term, you could try to refinance for a shorter term and pay it off sooner. While your monthly payment would go up, you might pay less in interest over the life of the loan.

Lowering Your Monthly Payment

On the flip side, you could extend the length of your loan when refinancing to lower your monthly payment. While you might pay more in the long term, this strategy could be helpful if you’re struggling to pay your bills each month.

Lower the Interest Rate

If you took out a personal loan when interest rates were higher — either because of your credit score or the state of the market — it could be worth refinancing to get a better personal loan rate. Depending on the difference in the interest rate and the size and length of the loan, refinancing could save you a considerable amount of money.

Recommended: Loan Modification vs. Refinancing

How to Get a Loan Modified

Lenders are under no obligation to modify your loan, but it’s worth a shot if you don’t see any other options.

Qualifying for modification usually requires missed payments and a demonstration of personal hardship. In some cases, borrowers may qualify for a government loan modification program.

Thinking about applying for loan modification from your lender? You’ll need to assemble a wide range of documents for your application, including:

Proof of Income

Or rather, proof of lack of income. Demonstrating to the lender that you do not currently earn enough income to afford your loan payment is crucial to making your case.

Self-employed individuals may need to supply a profit and loss balance, while salaried and hourly workers can supply an employment contract demonstrating their pay.

Your most recent tax return can also offer insight into your income and overall financial standing.

Bank Statements

Lenders typically want to see your bank statements as well. This will verify how much money you have but will also show them your spending habits.

Hardship Statement

A hardship statement is your chance to make your case. You can use this formal letter to explain your hardship — medical issues, divorce, unemployment, etc. — and how it has affected your finances.

You may be more successful if you include documentation to support your argument. This might include medical bills, divorce paperwork, or a termination letter.

The Takeaway

A loan modification can help make monthly payments more manageable for borrowers and can be a useful strategy for those who are at risk of defaulting on their personal loan or having their house foreclosed. The lender and the borrower must agree to a change of the loan terms. Strategies may include adjusting the interest rate, extending the length of the loan, changing the structure of the loan, and reducing the principal balance.

Are you looking for a personal loan with no hidden fees at competitive interest rates that makes it much easier to manage your monthly payments? Consider a personal loan from SoFi. Check your personal loan rate with SoFi in as little as 60 seconds.

Get competitive rates, no hidden fees when you take out a SoFi personal loan.

FAQ

Does a loan modification hurt your credit?

A loan modification results in a negative mark on your credit report, which can lower your credit score.

However, the alternative for many borrowers is missed payments and, in the case of a mortgage or car loan, eventual foreclosure or vehicle repossession. These can have an even worse impact on your credit score.

What qualifies as a loan modification?

Loan modification is a revision to the terms of an existing loan. The borrower and the lender must both agree to those terms. Modifications can take many forms, but often the lender will reduce the borrower’s interest rate, increase the length of the loan, or change the rate structure from adjustable to fixed.

What are the types of loan modifications?

Borrowers can seek out loan modifications for various types of loans, but mortgage modifications are the most common. Borrowers with unsecured loans, like personal loans and student loans, may also be able to get modifications. Modification types include changes to the interest rate, rate structure, and length of the loan. In some cases, lenders may temporarily adjust the principal balance as a type of loan modification.

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Personal loans can provide much-needed financial assistance, but it’s important to be aware of potential scams that lead to financial loss and identity theft.

Unscrupulous lenders can hook you in by offering a loan with seemingly good terms when, in fact, you could be charged exorbitantly high interest rates and hidden fees. Scam artists, on the other hand, might take upfront fees and/or your personal information and then disappear without ever giving you a loan.

You can protect yourself, however, by understanding common personal loan scams and knowing how to identify legitimate lenders. Here’s what you need to know.

What Are Examples of Personal Loan Scams?

There are a few types of personal loan frauds that crop up with some regularity. These include debt consolidation scams, no-credit-check-loan scams, and loan fees scams. Here’s a closer look.

Debt Consolidation Scams

Debt consolidation is a legitimate way to pay off debt. It entails taking out a new loan (ideally with better rates or terms) and using it to pay off other existing loans or credit cards. There are many legitimate debt consolidation companies that can help individuals pay down their debt. And then there are scammers.

Scammers may offer debt consolidation loans that promise to lower your monthly payments and interest rates. However, they often charge high upfront fees and fail to provide the promised services, leaving you in a worse financial situation.

No-Credit-Check Loan Scams

No-credit-check loan scams target borrowers with a poor or limited credit history. There are legitimate lenders that consider factors other than your credit score, but they are likely to do at least a soft pull on your credit score (which will not affect it).

Scammers, on the other hand, often promise funds without any kind of credit check. They may ask for fees and personal information upfront and then disappear. Or, they might provide a loan but charge exorbitant interest rates.

Loan Fee Scams

Scammers may request upfront fees for processing or guaranteeing a loan. Generally, you should never pay anything upfront — it’s highly likely that your money will disappear, and you will not receive a loan. Legitimate lenders typically deduct any fees from the loan amount.

How Do I Know if I’m Being Scammed for a Loan?

Identifying loan scams requires vigilance and attention to detail. Here are 12 warning signs to look out for.

1. Phone Offers

If you receive a phone call offering you a guaranteed personal loan or unusually low interest rate, it’s most likely a scam. Reputable lenders do not cold-call potential customers. It is illegal, in fact, to make loan offers over the phone. You ‘ll want to look for lenders that advertise through traditional online and mass media.

2. Upfront Fees

While some upfront fees are charged by legitimate lenders, such as origination fees, these fees are usually deducted from the loan amount before the borrower receives the funds and only after the loan is approved. Be wary of any lender that asks for payments before providing the loan funds.

3. Wire Transfers

Scammers will often request loan payments via wire transfer. Legitimate lenders, on the other hand, typically accept payments through recognized and secure channels, such as automatic debit, online payments, or mailing a check to the lender. If you wire funds, there is no way to recover them.

4. Credit History

Be wary of lenders who claim to offer loans without checking your credit history. Trustworthy lenders typically base their loan terms on your ability to repay the loan. This involves looking at your credit, sometimes getting reports from all three major consumer credit bureaus (Equifax, TransUnion and Experian).

5. Copycat Name

Online loan scammers may use a business name or website that seems genuine. They may copy a well-known logo and website to trick you. Be sure to verify the lender’s identity by conducting thorough research online, including a lender search by name with both the Better Business Bureau (BBB) and the Consumer Finance Protection Bureau (CFPB).

6. Personal Information

Scammers will often try to get your bank account details, passwords, Social Security number, and other personal information in order to drain your checking account and/or run up charges on your credit card.

If they have enough of your personal information, they may even be able to take out loans or obtain credit cards in your name. Always check if a lender is legitimate before giving them any of your personal information.

Recommended: How to Report Identity Theft

7. State Registration

A lender or loan broker must register in the states where they do business. One way to vet a lender is to go to their website and make sure it lists the states where the company can legally conduct business. If you don’t see a list of registered states, it’s a sign the company is fraudulent.

If they do list states, it’s a good idea to verify the information with your state regulator or attorney general.

8. Reviews

It can be helpful to research the lender online and read reviews from previous customers. Genuine lenders will have positive reviews and a good reputation. You can also check the BBB’s website to see if there are complaints connected with its business profile. The BBB also has a Scam Tracker that is worth checking as well.

9. Customer Service

Reputable lenders that offer personal loans generally have phone numbers you can call and speak with a live person, rather than a chatbot. It’s a good idea to call the lender’s customer service number, ask questions, and gauge their responsiveness and professionalism. Legitimate lenders prioritize customer service.

10. Hidden Fees

Some legitimate lenders do not disclose their fees on their website; however, they are required to be transparent about fees and terms when they give you a loan offer. Be sure to carefully review loan documents for hidden fees or terms that differ from what was initially discussed.

11. Prepaid Credit Card

Scammers often request payment via prepaid credit cards. Legitimate lenders typically accept payments through secure methods, such as bank transfers or online payment platforms.

12. No Physical Address

Trustworthy lenders have physical office addresses. Be cautious if the lender only provides a PO Box or has no physical presence. If they provide an address, it’s a good idea to look it up on Google Maps or other mapping software. If their address is suspect, their services most likely will be too.

What to Do if You Are Scammed

If you believe you have fallen victim to a personal loan scam, you’ll want to take the following steps.

1. Gather Documents

Compile all relevant documents, including loan agreements, payment receipts, and communication with the scammer.

2. Contact Authorities

It’s a good idea to contact your local law enforcement — by filling out a police report, you’ll have an official record.

It’s also wise to contact agencies specializing in oversight, including your state attorney general’s office, the Federal Bureau of Investigation (FBI), the Federal Trade Commission (FTC), and the BBB. When they have your information, these agencies can better serve and protect other consumers.

3. Contact Your Bank and Creditors

You’ll want to notify your bank and credit card company about the scam. They can advise you on necessary steps to protect your accounts and finances.

4. Set Up Fraud Alerts

You may want to contact one of the three credit bureaus, Experian, TransUnion, and Equifax, and ask them to place a fraud alert on your credit report. This notifies lenders that you’ve been a victim of fraud so they can take extra measures to verify your identity when they get an application for credit in your name. You only need to contact one bureau — that bureau will contact the other two automatically.

Signs of a Legitimate Loan Company

You can be assured that a company is a legitimate lender by doing your due diligence. Here are key things to look for.

Valid Contact Information

Legitimate lenders have valid contact information, including a physical address and a working phone number.

Registered

You’ll want to make sure the lender is registered and authorized to operate in your state. You can check with your state’s regulator or attorney general.

Better Business Bureau

It’s wise to verify the lender’s rating and accreditation with the BBB. A good rating and positive customer reviews indicate legitimacy.

Good Reviews

Be sure to read reviews from previous customers to get a sense of their experiences. Legitimate lenders will have positive reviews and a good reputation.

Get a Legitimate Personal Loan

To secure a legitimate personal loan, follow these guidelines:

•  Research potential lenders thoroughly.

•  Compare loan offers and interest rates from multiple reputable lenders.

•  Read loan agreements carefully, ensuring you understand all terms and fees.

•  Ask questions and seek clarification before signing any contracts.

•  Protect your personal information and be cautious about sharing it with a lender you’re unsure about.

The Takeaway

Unfortunately, there are a lot of loan scammers out there. The good news is that you can protect yourself by familiarizing yourself with common scam playbooks and knowing how to identify legitimate lenders.

Remember to thoroughly research lenders, review loan terms carefully, and never provide personal or financial information without verifying the lender’s legitimacy.

If you’re interested in exploring your personal loan options but not sure where to turn, SoFi could help. SoFi personal loans offer competitive, fixed rates and a variety of terms. Checking your rate won’t affect your credit score, and it takes just one minute.

See if a personal loan from SoFi is right for you.

FAQ

What are some examples of personal loan scams?

There are several examples of personal loan scams to be aware of:

•  Advance fee scams Scammers ask for upfront fees before providing the loan but disappear once they receive your payment.

•  Guaranteed approval scams Fraudsters claim to offer guaranteed loans, regardless of credit history, but ask for upfront fees or personal information.

•  Identity theft scams Scammers pose as legitimate lenders and use the personal information you give them during the loan application process for identity theft.

•  Phishing scams Scammers send fraudulent emails or text messages pretending to be from a reputable lender, requesting personal and financial information.

How do I know if I’m being scammed for a loan?

Some signs that you may be being scammed for a loan include:

•  Upfront fees Legitimate lenders deduct fees from the loan amount, so be cautious if a lender asks for payment before providing the loan funds.

•  Unsolicited offers Unsolicited phone calls or emails offering guaranteed loans or unusually low-interest rates are red flags. Reputable lenders do not make unsolicited offers.

•  Unsecure payment methods Scammers often request loan payments via wire transfer or prepaid debit cards. Legitimate lenders usually accept payments through recognized and secure channels.

•  No credit check Be cautious of lenders who claim to offer loans without checking credit history. Legitimate lenders typically assess creditworthiness before approving a loan.

•  Lack of state registration Check if the lender is registered to operate in your state. Legitimate lenders comply with state regulations.

•  Negative reviews Research the lender online and read reviews from previous customers. Negative reviews or multiple red flags are signs of potential scams.

What do I do if I get scammed?

As soon as you suspect that you have been scammed, consider taking the following steps.

•  Gather documents: Collect all relevant documents, including loan agreements, payment receipts, and communication with the scammer.

•  Contact law enforcement: Report the scam to your local law enforcement agency and provide them with all the information you have gathered.

•  Contact your bank and creditors: Inform your bank or credit card company about the scam. They can advise you on necessary steps to protect your accounts and finances.

•  Set up fraud alerts: Place a fraud alert on your credit report to prevent further unauthorized activity and protect your identity and credit.

•  Monitor accounts: Regularly monitor your financial accounts and credit reports for any suspicious activity or unauthorized transactions.

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Photo credit: iStock/Moyo Studio
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Debt consolidation is a debt payoff strategy that involves taking out a new loan (often a personal loan) to pay off high-interest debts in an effort to streamline monthly payments and save money on interest.

While it can be challenging to get a debt consolidation loan if you have bad credit, you aren’t necessarily out of luck. Some lenders look at factors beyond credit score, such as your income and job history. There are also several actions you can take to increase your odds of getting approved for a debt consolidation loan. Here’s what you need to know.

How to Get a Debt Consolidation Loan With Bad or Average Credit

Even with fair or poor credit, you can often still qualify for a debt consolidation loan. Here are a few ways to increase your chances of getting approved.

Check Your Credit Reports

Before you apply for a debt consolidation loan, it’s a good idea to comb through your credit reports (you have three) to see if there are any errors that could be negatively impacting your score. You can check your credit report for free at each of the credit reporting bureaus credit bureaus (Experian, Equifax, and TransUnion) using AnnualCreditReport.com .

If you notice any incorrect information (such as wrong accounts, incorrectly reported payments, inaccurate credit limits, or partial information), on any of your reports, you’ll want to reach out to the appropriate credit union and file a dispute. By law, the credit bureaus usually have up to 30 days to review your claim and respond.

Shop around

You can find personal loans for debt consolidation at local banks, national banks, credit unions, and online lenders. To find the best deal, it’s a good idea to shop around and compare qualification requirements, loan amounts, repayment terms, and fees from multiple lenders. You can often prequalify for a loan online without impacting your credit score.

Apply with a cosigner

Having a cosigner with a good credit history can significantly improve your chances of getting approved for a personal loan for debt consolidation. It can also potentially help you get approved for a larger loan amount and better rates. A cosigner agrees to take responsibility for the loan if you default, which significantly reduces the risk to the lender.

Provide Collateral

Secured personal loans, which require you to provide collateral (such as a vehicle or property) to back up the loan, can be easier to get if you have bad or average credit. The downside is that you’re putting your asset on the line. If you run into trouble repaying the loan, the lender can seize the collateral to get their money back.

Build your credit score

If you’re not in a hurry to consolidate your debt, you may want to focus on improving your credit before you apply for a consolidation loan. Steps that can help include paying your bills on time, reducing credit card balances, and (as noted above) addressing any errors on your credit report.

You might also consider signing up for a service where your rent payments are reported to the credit bureaus. In turn, this could help build your credit (however, there may be a fee for this service).

Where to Get a Debt Consolidation Loan with Bad Credit

Trying to find consolidation loans for bad credit can feel overwhelming. Here are some places to start your search.

Local Banks and Credit Unions

Traditional banks and credit unions tend to be stringent in their lending criteria. However, if you already have a relationship with a local bank or credit union, they may be willing to work with you based on your overall financial profile, and not simply look at your credit score. You might want to talk to a loan officer about getting a personal loan to consolidate your debt and what rates and terms you could potentially qualify for.

Online Debt Consolidation Lenders

Online lenders tend to have more flexible qualification criteria for personal loans than banks, and can be a good place to look for debt consolidation loans for bad credit. These alternative lenders also typically offer a simpler application process and are faster to fund than traditional lenders. While rates tend to be higher, some online lenders will offer competitive rates on personal loans.

Payday Lenders

Payday lenders should be approached with caution due to their sky high interest rates and short repayment terms. This type of personal loan should be considered as a last resort if other options are not available.

How to Apply for a Debt Consolidation Loan

To apply for a personal loan to consolidate your debt, you typically need to provide the following information in your application:

•   Personal information

•   Employment information

•   Income information

•   Collateral or cosigner information (if applicable)

It’s helpful to gather these documents:

•   Government-issued ID (i.e., driver’s license, passport)

•   Proof of residence

•   Pay stubs

•   Bank statements

The lender will look over your application and likely perform a hard credit check, which can have a small, temporary negative impact on your credit score. They will typically take these qualification criteria into consideration:

•   Credit score

•   Income

•   Debt-to-income ratio

What Are the Benefits of a Debt Consolidation Loan?

The benefits of getting a debt consolidation loan include:

•   Simplified finances Combining multiple debts into one payment can make it easier to manage your finances and reduce the risk of missing payments.

•   Lower interest rate If you can secure a debt consolidation loan with a lower interest rate than your existing debts, you can save money on interest charges over time.

•   May help improve your credit Making regular, on-time payments towards your consolidated loan can positively impact your credit score over time.

Debt Consolidation Alternatives

If you’re not entirely sold on getting a debt consolidation loan or don’t think you’ll get approved because of your credit situation, here are some other options to consider.

•   Credit counseling You might want to work with a nonprofit credit counseling agency to create a personalized debt management plan and receive financial guidance. These agencies reach out to the creditors and lenders on your behalf and try to negotiate for a lower rate. Instead of paying your creditors directly, you would pay the counseling service each month.

•   Debt settlement It may be possible to negotiate with your creditors to settle your debts for less than what you owe. However, this option may have a negative impact on your credit.

•   Balance transfer credit card If you qualify for a credit card with lower interest rate or a promotional 0% APR period, you might want to transfer your high-interest credit card balances to this card.

•   Manage it yourself To tackle your debt on your own, you’ll want to make a list of all your existing debts, interest rates, and balances, then choose a DIY debt payoff plan, such as the snowball or avalanche method, to pay them down.

•   Home equity loan If you own a home and have significant equity in it, you may be able to take out a home equity loan to pay off your existing debts. This isn’t technically a debt consolidation loan, but you might be able to reduce the amount of interest you’re paying because your home secures the loan.

The Takeaway

Debt consolidation can be a valuable tool to simplify your finances and work towards becoming debt-free. While it may be challenging to get a debt consolidation loan with bad credit, it’s not impossible. By exploring different lenders, improving your credit profile, and considering collateral or a cosigner, you can increase your chances of approval.

If you’re interested in exploring your debt consolidation options, SoFi can help. With a low fixed interest rate on loan amounts from $5K to $100K, a SoFi personal loan for debt consolidation could substantially lower how much you pay each month. Checking your rate won’t affect your credit score, and it takes just one minute.

See if a personal loan from SoFi is right for you.

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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