How much do loan applications hurt your credit?

[FoxTrot]

I was told each time you apply for a loan whether its from bank, mortgage etc and if you get rejected it hurts your credit. So if you go to another place and try again, it hurts it even more. Is there anyway to avoid this? How bad does this hurt your credit?

[Calgaryrocky]

It doesn't necessarily "hurt" your credit if you apply for something. There is a big misconception about that. If you are going to have a lot of credit inquiries then yes it will bring your credit score down regardless of whether you get approved or declined. By a lot I mean more then 3 inquiries in a 12 month period.

There are several reasons why a company would inquire into your credit and then not have a subsequent trade line reporting (LOC, Loan, etc.) for example if you were rate shopping for mortgages some companies won't accurately quote you without taking a look at your credit...

What exactly are you applying for and what is your current credit situation like??? Income Like?? Debts like??

I don't like to see a lot of inquiries on credit bureaus so I usually do a paper application first and if your honest about credit/income/debts etc. we can usually tell you whether or not its worth taking a look at the bureau for a formal approval.

Hope that info helps, just try and keep it at 3 inquiries or less in a calendar year...

[canadian_hustla]

each hard pull will affect your credit rating by 2-4 points.

however, after x amount of inquiries, each additional inquiry will go down more than 2-4 points because it is a sign of credit seeking.

Keep in mind that you usually gain 3+ points/month for paying your bills on time so it evens out.



EDIT: My Source: I had a meeting with a representative from Equifax.