There is much discussion about this topic on the net. Here’s an excerpt from credit karma:
“So will rate shopping hurt my credit score?
Yes and no. You probably know that each time you apply for a new line of credit you’re normally hit with a hard inquiry. Hard inquiries can negatively affect your score, so moving from lender to lender and piling up a bunch of these in a small period of time is probably not a great idea.
Still, depending on what type of credit you’re shopping around for and what model you’re getting your score from, the extent of the damage can vary. If you’re looking for an auto loan or mortgage specifically, some credit score models will allow for some level of shopping around by essentially viewing multiple inquiries within a certain time period as just one. Bureaus usually identify the fact that you’re comparison shopping by noticing the types of credit lines you’re applying for and the size of your requested loan, so it may be best to stay consistent. The time period over which you can rate shop under these models without feeling the effect of multiple inquiries can vary and is often from around 14 days to up to 45.
Beware that a single inquiry could still have a somewhat negative effect on your credit. Also keep in in mind that this rate shopping adjustment is only adopted by some credit score models and usually only applies to auto loans and mortgages. So if you’re applying for a dozen credit cards over a month or two, you’re likely to still incur a bunch of hard inquiries.
What else can I do?
It’s great that many models will recognize when you’re shopping around, but there is a lot of variation between models so it’s good to have a backup plan.
Before having a bunch of institutions run your credit, do some research on your own. Consult the lender’s website as well as third party forums like Credit Karma’s review section to learn about the terms commonly offered to those with similar credit profiles. This way you can narrow down your choices before you start applying and your credit is run.
Another tip that could keep your credit score from dropping is to only apply for one type of credit account at a time. For example, if you’re in need of a mortgage, you may want to wait until later to get yourself a new car and the accompanying auto loan. Attempting to secure too much credit at one time may give lenders the impression that you’re desperate for cash or unprepared to handle your debts responsibly.
More generally, it’s best to go into the process with your credit health in great shape. Knowing that a few hard credit inquiries might dip your score a bit, prepare yourself by otherwise checking that your credit report is spick-and-span and ready for a little bit of a stress test. Monitor your credit and dispute any inaccuracies beforehand to help get you in the best position to get a great deal |
