Comparison shopping for a personal loan won’t hurt your credit


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Dear Personal Loan Adviser,
I took out a personal loan for $10,000 about 6 months ago. The lender told me that applying for the loan wouldn’t impact my credit.

I recently reviewed my credit report and it shows the loan as a hard inquiry and lists both the loan and my payment history. I feel that the lender misled me about the personal loan’s impact on my credit history. Did they?

— Miffed Mike

Dear Mike,
Your lender didn’t mislead you. Most of the online personal loan lenders do a “soft pull” on your credit to decide how much money they’re willing to lend you and the interest rate they’ll charge on the loan. That lets you comparison shop across lenders without negatively impacting your credit score.

After you apply for a loan

When you decide to close on the loan, it’s going to show up on your credit report that you applied for the personal loan, and the lender will report your payment history to the credit bureaus over the loan term.

Stay current on your payments to keep your credit history clean and your credit score solid. The hard inquiry stays on your credit report for 2 years but impacts your credit score only for the 1st year, and that year’s half over.

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In addition to answering our readers’ questions about personal finance, Dr. Don Taylor has a financial planning practice, and teaches finance at Arcadia University. He holds a doctorate in finance and is a CFA charter holder and a CFP certificant.’s editorial, corrections policy

Posted: May 17, 2016