I am trying to get a loan and have applied to a few banks online. I was told that by applying for a loan to a few banks it could lower my credit score, which could cause me to be rejected for the loan. This makes no sense to me, as you need to make an application to get a loan, and I am looking for the best deal on a loan. Any help here is greatly appreciated.




You ask a really good question, and one not every one understands, about how applying for a loan(s), can affect your credit score.

If you look at the five aspects of what currently makes up our credit scores, which are payment history, how much we owe, the types of credit we have, how long we have been credit active, and access to new credit, you can see currently 10% of your credit score is affected by applying for new credit.

When you apply for a loan or credit, an inquiry or “footprint” shows on your credit report. This footprint shows the date and time, and who looked at your credit file.

Lenders get nervous if they see too many inquiries in a short period of time, as they think you you may be trying to get a lot of loans. Credit bureaus reduce your credit score as well.

Some credit bureaus will not lower your score depending on who the footprints are from. If they see 3 inquiries or footprints from a car loan or HP car place, they will treat these as one (1) inquiry if within a certain time frame; say 24 hours.

The reason for this, is that they know you are shopping around for a good deal.

There are 2 types of footprints or inquiries on your credit file:

I hope this explains things, and feel free to ask any other questions.



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