Applying for a loan definitely does bring your score down. The reason this happens is because the loan companies open your report and every time someone opens your report, it lowers your score. This can vary according to what type of inquiry has occurred. If you do have a lot of inquiries, it can really damage your credit score. It shows that you have been rejected when there are several inquiries from loan companies.
If there is one inquiry and then your debt is paid, it brings your score up if you continue to keep your debt down. Loans are great when you lower your debt, but if you start charging right away and run the debt back up again, it lowers your credit score all over again. One of the best reasons for acquiring a refinance loan is to pay off all debt and hopefully lower your house payment. Most of the time, people end up with higher payments, but they pay off their debt. Then, they start charging again and their score is even lower after they have just refinanced their home. The reason for this is that your house payment is higher and your debt is going up again.
Loans are great to help you out of debt, but most of the time we tend to charge ourselves right back into debt again. This is what causes our credit scores to go down again even more. It may have seemed like a great idea to re-finance, but if you are going to run your debt back up again, you are also facing a lower credit score in the long run.
There is a lot of confusion for some people who do not have enough knowledge about loans. These people will have you convinced that you are making your debt better by refinancing, but if you get stuck with an adjustable rate loan then you may as well have not gotten a loan at all. Fixed loans not only look better on your credit score, but they are more affordable in the long run. Adjustable rate loans will usually end up causing you more problems than what they are worth. You may start out with a real low house payment, but when it starts going up, it can put you into debt real fast. Then, after having to be late on all of your charge cards and house, your credit score is going to go down and keep going down every time you are late.
It is best to just talk to the loan officers first and ask them not to check your credit score. Keep a copy of your credit score the first time you apply and show this to them. Let them base an estimate on your recent score and then if they cannot help you, it will not be an inquiry on your credit. They have to have your permission to do an inquiry. So, instead show them your report. It is up to you, not them. Do not let them convince you that it is okay.
You would probably not believe some of the stories some of these loan officers will tell you until you face them yourself. They will lie to you and convince you to choose the wrong kind of loan. Do not let them even start unless they can give you what you want based on your most recent report. If they tell you they have to do an inquiry to see if you qualify and you have just had a report done, tell them forget it. You could go through fifty loan companies and not even realize that you are ruining your credit.
So many people are fooled by computer letters that are sent out to everyone. They think because they receive a letter that they will be able to get some kind of loan. This is not true. They send those letters out to just about anyone. They usually do not even know enough about you to know whether you could qualify or not. Do not let them convince you that the letter was personally sent to you. They are not. Even if they show information about you, it does not mean that you have qualified for their loan. Always read the fine print. You do not want to call these guys every time you get a letter. This is how people ruin their credit scores.
Loan companies want your your money and Loan Officers want their commission. Do not fall into their sweet talking promises. They will make you all kinds of false promises and in the long run all they are doing is messing up your credit. When they make their inquiries, remember this. It will not just be one inquiry. Sometimes they call them more than once or when they call some creditors, that creditor will check your credit for some other reason. And if you owe them money, they can check your report. Do not be fooled into thinking that they have to have special permission. They can devise all kinds of reasons for checking your report. You do not want all of your creditors checking your credit just because a loan company called them and opened up a can of worms. This could be because you are late with their payment while awaiting that check you may or may not get from the loan company.
Just remember this, never get a loan solely based on a letter you received in the mail. Always check the company out by calling the Better Business Bureau and even go on line and check them out that way. The same goes for random phone calls you get with some unknown loan company calling you and offering you a loan. This can happen just by clicking on a little dot on line, saying you are interested in a loan. Sometimes there are companies that are big scams and end up stealing your identity and your money. In the long run, they mess up your credit score. Inquiries take a few points each time they are made, but late payments and repossessions lower your score tremendously. Stay away from generic companies. If you have never heard of the company, then they probably are just out to scam you. Even companies that you see advertised on television can be the type who end up talking you into an adjustable loan. Just be careful how you handle your credit. Loan companies do not care about your credit score except for one reason. They want your money.