We all know that the better the interest rate you get on a loan, the more you will save over the life of the loan. If you are like me, you like to shop around for the best rate possible and this means that several financial institutions may run your credit in order to determine what rate you’ll qualify for.
But, what do multiply credit inquiries mean for your credit score?
Does it ding you every time another inquiry is done on your credit?
Does it look bad to potential lenders that you have so many inquiries?
Applying for new credit creates what is known as an inquiry on your credit report and multiple credit requests in a short period of time can impact your credit score.
BUT there is an exception when it comes to shopping for an auto, home, or student loan.
For these types of loans, inquiries made in the 30 days prior to scoring are ignored. So, if you find a loan within 30 days, the inquiries won't affect your score while you're shopping for the best rate.
Tips for Rate Shopping
- When searching for a mortgage, auto, or student loan do your homework ahead of time to decide which financial institutions to approach for a quote
- Don’t be afraid of getting multiple quotes
- Make sure you do your rate shopping in a reasonably short period of time so your credit score will not be affected