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Does applying to multiple loans affect your credit score?

The short answer is yes: if you make multiple loan applications in a short time period, then it is likely to have a negative impact on your credit score.

Loan applications will always be visible on your credit file, although credit reference agencies (CRAs) do not have to report whether the application was successful. Loan applications will remain on your credit file for two years, loan repayments however will remain on your credit history permanently.

Responsible lenders will always run a ‘hard’ search on your credit history when you apply for a loan, and this search will impact on your credit score. However, it is not hard to get your rating back up through sensible financial behaviour. Applying for loans a couple of times every few years is pretty normal, so CRAs are unlikely to worry about this.

The thing to avoid is making simultaneous loan applications or making multiple loan applications over a short period of time. Lenders will be able to see the number of applications and view you as a higher risk. Even though lenders can’t see if your applications are successful, they can infer by a lack of loan repayments that your applications were unsuccessful.

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