Made Multiple Loan Inquiries? Here's How It Can Hurt Your Credit Score

Maintaining a strong credit score is crucial to building trust with lenders, ensuring faster and smoother approvals if you ever need an emergency loan. A good credit score not only reflects financial discipline but may also help a borrower secure a loan at lower interest rates.

Several factors can affect your creditworthiness, and one often overlooked aspect is the impact of frequent loan-related enquiries. Experts warn that making multiple loan or credit card enquiries in a short period can negatively affect your credit score and may reduce your chances of approval in certain cases.

Financial experts explain that credit score dips usually occur when enquiries are initiated by lenders. These are known as hard enquiries. In contrast, when individuals check their credit scores (called soft enquiries), it typically has no impact on the score.

It is important to be mindful of hard enquiries, which usually happen when you apply for a loan or credit card. Having multiple hard enquiries in a short span of time can raise red flags for lenders, suggesting that the individual may be overly reliant on credit or facing financial stress.

When individuals check their own credit scores, known as soft enquiries, it usually doesn't affect the credit score. The same applies when lenders perform routine background checks for pre-approvals; these checks do not impact the borrower's creditworthiness.

One should avoid applying for multiple loans or credit cards in a short span. If you need to apply for credit, spread out your applications over time. 

Instead of approaching lenders directly, try to check your own credit score using trusted platforms. These soft enquiries do not affect your credit score.

To build trust with lenders, one should maintain a good repayment history on existing loans. 

These days, several pre-approved loans are offered by lenders. When requiring a loan, one can weigh these options provided by trusted lenders.