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Multiple loan applications

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Member

Multiple loan applications

If I apply to 5-10 banks or lenders like SoFi for a personal loan, will each of these applications lower my credit score, or is there only one deduction (perhaps 50 points) as long as all the applications are within the same  2-4 week period? In other words, if other factors that determine my credit score remain unchanged, I would like to understand what are reasonable assumptions about how many loan applications I can make and how closely together these applications should be clustered.

Message 1 of 9
8 REPLIES 8
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Frequent Contributor

Re: Multiple loan applications


@GoodHowie wrote:

If I apply to 5-10 banks or lenders like SoFi for a personal loan, will each of these applications lower my credit score, or is there only one deduction (perhaps 50 points) as long as all the applications are within the same  2-4 week period? In other words, if other factors that determine my credit score remain unchanged, I would like to understand what are reasonable assumptions about how many loan applications I can make and how closely together these applications should be clustered.


Are you going to literally be applying for multiple loans or are you checking the respective sites for pre-approval status?  If you are actually applying, each company is going to hard pull your credit and that will impact your score.  If you are just checking for pre-approvals, then it'll be a soft pull with no impact to your scores.

Message 2 of 9
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Moderator

Re: Multiple loan applications


@GoodHowie wrote:

If I apply to 5-10 banks or lenders like SoFi for a personal loan, will each of these applications lower my credit score, or is there only one deduction (perhaps 50 points) as long as all the applications are within the same  2-4 week period? In other words, if other factors that determine my credit score remain unchanged, I would like to understand what are reasonable assumptions about how many loan applications I can make and how closely together these applications should be clustered.


Hi and welcome to the forums 

 

If you actually do end up applying for multiple personal loans, each inq will be separate. 

Inquries for personal loans are not scored the same way as inq for car and/or mortgage rate shopping. 

Message 3 of 9
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Member

Re: Multiple loan applications

Good comment. In fact, I already have more preapproval offers than I would use--most of them I never requested. But for the next step, I have no idea what makes sense. It would seem to me that I should request "firm," as opposed to preapproval, offers from a group of lenders to see who has the best rate. For isn't it a fact that the preapproval amount can change after a hard pull, and that the preapproval rate, if given at all, is just a guess? (There invariably is fine print saying that the offer is subject to further review.) However, if each firm offer, requiring a hard pull,  lowers my credit score, what would be prudent in trying to see  what company has the best loan that is an actual offer (not just a solicitation to apply)?

Message 4 of 9
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Member

Re: Multiple loan applications

Thanks. Also good comment. Please see my reply to the other contributor and tell me what is recommended in terms of following up on preapproval offers.

Message 5 of 9
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Community Leader
Valued Contributor

Re: Multiple loan applications


@GoodHowie wrote:

If I apply to 5-10 banks or lenders like SoFi for a personal loan, will each of these applications lower my credit score, or is there only one deduction (perhaps 50 points) as long as all the applications are within the same  2-4 week period? In other words, if other factors that determine my credit score remain unchanged, I would like to understand what are reasonable assumptions about how many loan applications I can make and how closely together these applications should be clustered.


There is a little more to it than that.  Let's say in theory that you had no score loss from each inquiry and your score remained constant through 20 personal loan applications.  Let's also say that these 20 banks used the same bureau for credit decisions.  The number of recent inquiries WILL matter.  Some are more lenient than others with regards to lending but nobody here will agree that 20 inquiries in a short period of time is good credit behavior.

 

In fact, with the above mentioned scenario, banks will see that as "aggressive credit seeking" and the amount of inquiries alone can get you denied where you would otherwise have been approved even though your score would remain constant.

 

I don't know what creditors you currently have but your upcoming rate shopping spree may/may not have unintended consequences.  You don't want to spook the lenders that you currently have a relationship with.

 FICO 8
Message 6 of 9
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Community Leader
Super Contributor

Re: Multiple loan applications


@GoodHowie wrote:

Good comment. In fact, I already have more preapproval offers than I would use--most of them I never requested. But for the next step, I have no idea what makes sense. It would seem to me that I should request "firm," as opposed to preapproval, offers from a group of lenders to see who has the best rate. For isn't it a fact that the preapproval amount can change after a hard pull, and that the preapproval rate, if given at all, is just a guess? (There invariably is fine print saying that the offer is subject to further review.) However, if each firm offer, requiring a hard pull,  lowers my credit score, what would be prudent in trying to see  what company has the best loan that is an actual offer (not just a solicitation to apply)?


Unfortunately, you’re not going to get a “firm” approval or denail until you apply.  It doesnt work that way. And as the fine print says, each application goes under review. Also note that the very best terms, which are the ones advertised, is really slated for those with the strongest credit profile.

 

If you want to provide your stats, we can provide you with an educated guess of where you stand. 

 

So can you provide following:

3 FICO scores

AAOA 

# of inqs in last 24 months

Any baddies

# of revolving accounts

UT


DEC 2019: EX 816, TU 820, EQ 810
DEC 2018: EX 777, TU 783, EQ 799

|| AmX Cash Magnet $40.5K || NFCU CashRewards $30K || Discover IT $24.7K || Macy's $20K || NFCU CLOC $15K || CitiCostco $12.7K || NFCU Platinum $12.5K || Apple Card $6.5K ||
Message 7 of 9
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Member

Re: Multiple loan applications

Thanks. What is a good strategy in terms of following up on preapproval offers since (1) unless I apply to perhaps 3-5 lenders I would never know who has the best rate, but (2) each hard pull of my credit report will lower my score, though by how much each time I would like to learn?

I assume that the preapproval offers, over half of which were unsolicited, are just a guess, advertisement, or throwback to a period nine months ago before my credit utilization was high as it now is. In other words, I doubt that the preapproval offers provide much of a guide to terms that I would get after an actual loan application.

I wonder if I should try to get a new round of preapproval offers,  but my chief question is: what is the best overall strategy from start to finish?

Message 8 of 9
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Member

Re: Multiple loan applications

Thanks. Well-taken. Given these facts, what is the best overall strategy in terms of finding the best rate which likely varies from lender to lender? I doubt that the preapproval offers will mean very much when I make an actual loan application.

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