People often confuse the terms “pre-approval” and “prequalification,” but they mean different things and have different implications for your credit.
Prequalification comes earlier in the mortgage application process. When you ask a lender to prequalify you, they’ll take a quick look at your credit history and finances and give you a tentative estimate of what kind of mortgage they think you can qualify for.
In contrast, pre-approval involves a more comprehensive overview of your credit and results in a clear offer of a specific mortgage. It’s still not 100% guaranteed that you’ll actually get it—nothing’s locked in until you formally apply—but pre-approval is a lot more definite than prequalification.
Why prequalification doesn’t hurt your credit
In contrast to pre-approval, mortgage prequalification only requires a soft credit inquiry, which is a type of credit check that doesn’t affect your credit. This means that, unlike pre-approval, mortgage prequalification doesn’t hurt your credit score.