Soft vs hard pre-approval

What a soft pre-approval actually is

A soft pre-approval is the lightest possible indication of available credit. It's calculated from three inputs:

• The information you provide at intake (revenue, time in business, credit tier, use of proceeds)
• A soft credit inquiry — which the bureaus do not report to lenders and which has no effect on your score
• Current market averages for the product category

The output is a non-binding indication: an estimated rate range, term, and facility amount. It is explicitly not an offer of credit, not a rate lock, and does not obligate the lender to fund. Magnara's portal returns soft indications within 24–72 hours.

What a hard pre-approval actually is

A hard pre-approval is materially different. It happens further along the underwriting process, after:

• You authorize a hard credit inquiry (which is reported to bureaus and visible to other lenders)
• You provide supporting documentation (pay stubs, tax returns, bank statements as applicable)
• The lender's underwriter reviews your verified profile against their actual credit box

The result is a conditional offer of credit — a stated rate, term, and amount the lender is willing to fund subject to final documentation, valuation (for collateralized products), and clean closing conditions. It still isn't a binding commitment, but the path from a hard pre-approval to funding is significantly more deterministic than from a soft.

Where each fits in the funding process

Credit-score impact

Soft pre-approval

Zero impact. Soft inquiries appear on your credit report only when you pull your own report — they're invisible to lenders and have no scoring effect. Magnara's soft pre-approval intake performs only soft inquiries.

Hard pre-approval

Marginal impact, usually 5 points or less per inquiry. The effect fades over 3–6 months. Critically: FICO and VantageScore both treat multiple hard inquiries for the same loan type within a 14–45 day window as a single inquiry. So if you shop a mortgage with three lenders in two weeks, your score is hit once, not three times.

Hard inquiries unrelated to the same loan shopping (a mortgage inquiry plus a personal loan inquiry plus a credit card inquiry, for example) are scored separately.

How accurate are soft pre-approval numbers?

For Magnara's intake, soft indications are calibrated to current market averages for each product category — they reflect what an applicant with your stated profile typically sees from our active lender partners. Final pricing usually lands within 50–150 basis points of the soft indication.

The biggest source of variance: stated information at intake differs from what verification reveals. If you indicate $50K monthly revenue but bank statements show $35K, the rate will move accordingly. The soft pre-approval is only as accurate as the information that goes into it.

Common misconceptions

• "Pre-approved means I'm guaranteed funding." No. Even a hard pre-approval is conditional. Only a signed loan agreement is binding.
• "Multiple soft pulls hurt my score." No. Any number of soft inquiries are scoring-neutral. Some applicants check soft offers from many lenders.
• "Pre-qualified and pre-approved are the same thing." Industry usage varies, but in general "pre-qualified" is even softer than "pre-approved" — often just a quick eligibility check based on minimal information. Read the disclosure to understand which it is.
• "My pre-approval rate is locked." No. Soft pre-approval rates are indicative, not locked. Even hard pre-approvals can move if benchmark rates change before closing.