Overview
Understanding how loan applications affect your credit score can help you make informed financial decisions. This article explains the difference between soft and hard credit inquiries, how they appear on your credit report, and what you can do to manage their impact.
Soft vs. Hard Credit Inquiries
When you apply for a loan through Upstart, your credit report may reflect one or both of the following types of inquiries:
✔ Soft Credit Inquiry
Occurs when you check your loan rate or prequalify.
Does not affect your credit score.
May appear on your credit report, but only visible to you.
✔ Hard Credit Inquiry
Happens when you proceed with a loan application after accepting an offer.
Can lower your credit score, though typically by a small amount.
Remains on your credit report for up to two years, though its impact decreases over time.
How Multiple Loan Applications Affect Your Credit
Lenders and credit bureaus track the number of hard inquiries made on your credit report. Here’s what you should know:
Rate shopping for certain loans (e.g., mortgages, auto loans, student loans) within a specific time window (typically 14-45 days) may count as a single inquiry to minimize impact.
Hard inquiries typically result in a drop in your credit score, but responsible borrowing and on-time payments may help recover and improve your score.
Tips to Minimize Credit Impact
✔ Check your rate before applying – Using our rate check process, you can check your rate with a soft inquiry before deciding to proceed.
✔ Avoid unnecessary hard inquiries – Only apply for credit when needed and avoid multiple applications in a short period.
✔ Monitor your credit report – Reviewing your report regularly can help you track inquiries and ensure accuracy.
✔ Maintain healthy credit habits – Making on-time payments and managing debt responsibly can offset the impact of inquiries over time.
Final Thoughts
A soft inquiry allows you to check your rate without affecting your credit score, while a hard inquiry is recorded when you move forward with a loan application. While hard inquiries may temporarily lower your credit score, responsible credit use and timely payments can strengthen your financial profile in the long run.
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