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Will Multiple Loan Applications Hurt My Credit Score?

Struggling with financial crunch? Need to take up a loan? Looking for a right loan deal by the right lender? Well shopping around for any type of loan before applying is always a good idea, but that doesn’t mean you should apply for every loan offer that comes your way. Every time you apply for a loan, the lender does a hard credit enquiry and how it affects your credit varies from different credit scoring models.

If you don’t have any idea about this already, you must know that having a good credit score is much more important than having a lot of cash. Many people don’t left with much cash after they pay their monthly expenses, as they live their life paycheck-to-paycheck. To get a loan with a better deal, you need to have a good credit score.

What is a credit score? A credit score is a statistical number that evaluates a customer’s credit worthiness. It is based on credit history of a person. It ranges from 300 to 850 and your credit score is calculated using FICO. It was created by Fair, Isaac Company. The higher the credit score, the higher are the chances to get a loan at a best rate and also the person is considered financially trustworthy.


  • A credit score is a three-digit number that represent the likelihood you will pay your bills on time
  • There are different forms of credit scores and scoring models
  • Higher credit scores result in more favorable credit terms

How credit scores are calculated? Credit scores are calculated using information in your credit reports like your payment history, the amount of debt you have, and the length of your credit history. Higher scores of a person make potential lenders and creditors more confident when evaluating a request for credit.

Here is a general look at credit score ranges:

  • 300-579: Poor
  • 580-669: Fair
  • 670-739: Good
  • 740-799: Very good
  • 800-850: Excellent

There are many different scoring models, and some use your income when calculating credit scores. Credit scores are used by potential lenders and creditors, such as banks, credit card companies or car dealerships, as one most important parameter for deciding whether to offer you a loan or a credit card.

Why credit scores are so important? Higher credit scores generally receive more flattering credit terms, which convert into lower payments and less paid in interest over the life of the account. Everyone’s financial situation is different. Therefore, different lenders have different criteria when it comes to granting credit. The most common factor that every lender used to consider while granting credit is your source of income.

Credit scores may vary according to the scoring model used, and also based on which credit bureau delivers the credit report used for the data. It is likely possible that not all creditors report to all three nationwide credit bureaus namely Equifax, Experian and TransUnion. Some may report to only two, one or none at all. In addition, lenders may also use a blended credit score from the three major credit bureaus.

When will shopping around for a loan affect my credit score?

While submitting your personal and financial details as part of a loan application will result in a hard inquiry and it will make a mark on your credit report. While applying for a loan you need to provide your personal information, including your name, physical address, contact number, email address, income proof and more to look at your credit report and list the inquiry. Well to get loan quotes and for pre-approvals a soft inquiry happens by the lenders which don’t affect your credit, though you need to check this with the lender.

What’s the difference between a soft and hard credit inquiry?

A soft credit inquiry is used for pre-approvals and doesn’t affect your credit score. It gives a surface-level look at your credit to the creditors, without digging in to your payment history or credit use.

On the other hand, a hard credit inquiry is usually happens when you apply for a loan application or a credit card. Each hard credit inquiry typically drops your score five or so points, though it varies.

It has been advised that you should do plenty of shopping and research around before taking out a personal or home loan. By doing that, you are ensuring that can find the best value product that fit your needs. However, it is important for you to know that multiple hard inquiries listed on your credit report in a short span of time could negatively affect your credit score.

How many inquiries are too many?

There is no specific number, but generally, one credit inquiry every 3 to 6 months is not considered to be risky behavior by lenders and that don’t affect your credit score too much. Multiple factors determine how many inquiries will affect your score, including the length of your credit history and how many accounts you have. You need to keep in mind that hard credit inquiries remain on your credit report for 3 years.

It is not generally a good idea to apply to multiple lenders at once. When you apply to several lenders, every loan application will appear on your credit report and this can be accessed by any lender or financial institution you do business with. Multiple loan applications signify how desperately you are in need of cash and this could portray you in a negative manner in front of the creditor.

It is a much better idea to do a good research and make careful comparisons first and only then apply for a loan. Once you have picked the right loan for your needs, follow the loan applying process and get the approved cash right into your checking account.

Will multiple loan applications affect my credit rating?

The good news is that applying to multiple lenders won’t have a huge impact upon your credit rating. It is also true that multiple applications don’t look great on your credit history, but you have not done anything that suggests you won’t be able to repay a loan. There are some major things that could negatively impact your credit rating such as missing repayments or late repayments on your loan installments or your credit card, defaulting on loans, or filing for bankruptcy. All of these are indicators that you have not been able to repay your debts. If any of these have happened to you in the past, you can still able to improve your credit score by taking certain actions.

How I improve my chances of being approved?

Having a good credit report is very important, but if you don’t have one then you can maximize your chances of being approved for a loan is by paying off your existing bills on time, building up your savings, having steady income and having transparent discussions about your finances with the lender. What happens if I don’t get approved for a loan?

If you don’t get approved for a loan, it is better to wait for few months to apply with another lender. This will give you enough time to strengthen your application. This can happen by improving your credit score, paying off your debts on time or coming up with larger down payment. You can also consider loan online loan comparison websites, which can help in finding lenders you might qualify with by filling out an online form.

How do I check my credit report and credit score?

You can get credit reports directly from the three nationwide credit bureaus namely Equifax, Experian and TransUnion for free. It is important to review your credit report once or twice in a year to keep a check on your finances and your credit score.

Can I apply for a loan if I have a bad credit history?

Yes it is likely possible to get a loan of your choice without worrying about having blemished credit score. There are many modern lenders today who offer multiple loan options to the borrowers with bad credit history. Today lenders are focusing more on borrower’s current financial standing and his/her ability to repay the loan. However, the interest rate on loans for people with bad credit score is comparatively higher than those with good credit score. You can figure out how much you can reasonably afford to pay each month by using loan calculators available online. Then you can start your research and comparison by collecting loan quotes from different lenders to find the right loan deal.

Bottom line

There are many ways to improve your credit score if you don’t have one. Get a copy of your credit report and look for errors. You are allowed to look at your credit report for free from three major credit bureaus. Find the best ways to eliminate those errors. More than worrying about having multiple inquiries on your credit score, it is good to concentrate of having a good credit score. Your credit score, either good or bad, is a numerical reflection of your ability to manage your finances. Be responsible towards managing your finances and protect your credit rating from falls. Keep monitoring what is happening to your credit report as the score simply reflects the quality of your report.

Representative Example

  • Total Amount of Credit: C$300
  • Duration of the Agreement: 30 days
  • Total Amount Repayable: C$370
  • Interest is Fixed at a rate of 296% per year
  • Representative APR 1737%

The operator of this website is not a lender and does not make credit decisions. The information you provide will be used in securing you a payday loan with one of our carefully selected panel of leading Payday Loan Lenders in Australia. The personal, financial and employment information that we collect is stored electronically during the duration of the application and is removed from our system upon acceptance from the lender.

Please note that payday loans are meant to be used for short term financial emergencies and are not designed to provide long term solutions

We expect you to repay your loan on the date agreed, so if you do not think you are in a position to make your repayment, please do not apply with us in the first place. It is not worth risking your credit rating for such a small amount.