{"id":122198,"date":"2018-07-24T18:28:54","date_gmt":"2018-07-24T17:28:54","guid":{"rendered":"https:\/\/www.finder.com\/uk\/?p=122198"},"modified":"2026-05-11T05:34:02","modified_gmt":"2026-05-11T04:34:02","slug":"loan-applications-credit-score","status":"publish","type":"post","link":"https:\/\/www.finder.com\/uk\/credit-score\/loan-applications-credit-score","title":{"rendered":"Do loan applications affect your credit score?"},"content":{"rendered":"

If you’re thinking of applying for a personal loan<\/a>, you could understandably be nervous about how this might affect your credit rating. This might be especially true if you’re hoping to take out a mortgage in the near future or if you’ve been working to improve your credit rating.<\/p>

Will loan applications be visible on my credit file?<\/h3>

Yes. Loan applications almost always involve a \u201chard\u201d credit search, which will be logged on your credit file<\/a>. It’ll be visible there to both yourself and to any future prospective lenders you authorise to run a credit check.<\/p>

However, lenders don\u2019t report to credit reference agencies ( CRAs) whether a loan application was successful or unsuccessful.<\/p>

A hard search on your credit file will usually remain there for 12 months. However, if a debt collector runs a search on your credit file, this will stay on your report for 2 years. <\/p>

Does a loan application affect my credit score?<\/h3>

Almost all applications for credit will have a small adverse impact on your credit score. That\u2019s because any responsible lender will always run a \u201chard\u201d search on your credit file before offering you a loan, and it\u2019s normal for this search to have a slight negative impact on your credit score.<\/p>

However, as the effect of a single application on your credit score is unlikely to be dramatic, if you borrow responsibly (making repayments on time, for example), your score should soon improve again.<\/p>

Most of us have to borrow money at various points in our lives, so 1 or 2 applications for credit every few years is fairly standard stuff. Anybody reviewing your credit record is unlikely to be alarmed by this. In fact, to build your credit score up to a high level, it’s necessary to use credit responsibly<\/em>.<\/p>

If a would-be lender can see in your credit file that you\u2019ve borrowed money in the past and always paid it back on time, that\u2019s reassuring (and it\u2019ll also have helped increase your credit score). But if you\u2019re asking to borrow a large sum of money, and there\u2019s no evidence in your credit file that you honour your credit commitments, then that\u2019s a bigger gamble for the lender to take.<\/p>

It\u2019s worth noting that there are 3 different widely-used CRAs in the UK – these are Equifax, Experian and TransUnion. As an individual, you don\u2019t have one definitive credit score as score ranges vary depending on the agency (although if you have a good score with one, you\u2019ll usually have a good score with the others). Additionally, different lenders interpret credit reports in different ways, so what might be a red flag for one lender, might not be an issue for another.<\/p>

You can check your Equifax credit score and report<\/a> through Finder for free.<\/p>

How can personal loans hurt your credit score?<\/h3>

If you have a personal loan and you don\u2019t keep up with your monthly repayments or you do not pay off your loan in full before the end of the term, this can have a negative impact on your credit score. <\/p>

The table below outlines some of the events that could occur during the life of your loan that could hurt your credit score, as well as how long they could stay on your credit report:<\/p>
Event<\/th>Length of time on credit report<\/th><\/tr><\/thead>
Hard search<\/th>1 year<\/td><\/tr>
Late or missed payments<\/th>6 years<\/td><\/tr>
County court judgments<\/th>6 years<\/td><\/tr>
Defaults<\/th>6 years<\/td><\/tr>
Bankruptcy<\/th>6 years<\/td><\/tr>
Individual voluntary arrangement (IVA)<\/th>6 years<\/td><\/tr><\/tbody><\/table>

How can loan applications affect my chances of securing credit in the future?<\/h3>

If you make multiple applications for credit in a short space of time, not only will this lower your credit score, but a potential lender might think you are in financial difficulty or rely too much on borrowing. While the lender won\u2019t know if you\u2019ve had applications rejected without asking you, it may draw conclusions from your credit file \u2013 for example, if you made a number of applications for credit but these were not followed by any repayments.<\/p>

Because of this, it\u2019s sensible to use an eligibility checker<\/a> before you apply for a loan as these only use a \u201csoft\u201d search which won\u2019t affect your credit score. Eligibility checkers will show you which loans you\u2019re more likely to be accepted for and will prevent you from wasting time applying for ones you\u2019ll be rejected for. Once you\u2019ve found the best loan for you to apply for you, you can then make your application in full. If you haven\u2019t already, you can also check your credit score and report<\/a>. You\u2019re entitled to request a free \u201cstatutory\u201d copy of your report from the three credit reference agencies. This will help you to see where your credit score sits and whether there\u2019s any incorrect information on your credit report – if there is, you should get it corrected straightaway.<\/p>

The overall impact of a single loan application on your credit score is believed to be minimal, so it\u2019s rare that it will make or break your application for a small loan. Your credit history in the months and years before your application will have a far bigger impact. However, if you\u2019re planning on applying for a mortgage or large loan in the near future, it\u2019s a good idea to avoid applying for any products that involve a credit check. With these large loans, the average applicant needs all the help they can get to be approved.<\/p>\n

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