If done incorrectly, making student loan inquiries can actually negatively affect your credit score. Your credit history plays a key role in future loans approval. It also affects the interest rate of your loan. With that in mind, it is important to know how to make loan inquiries in a way that they do not affect your credit history.
There are two ways to make loan inquiries.
The first way is to approach a lender directly. If you decide to apply for a loan with that lender, they will initiate a credit inquiry to check your credit history. When you make a credit inquiry, 5 points or sometimes more ar taken off your FICO score. While this one inquiry may not do much damage to your credit score, multiple inquiries will. A damaged credit score means you will find it difficult to get a loan at a lower rate of interest. With a damaged credit score, most lenders will impose much higher interest rates.
The best way to make loan inquiries without damaging your credit history is by making a soft inquiry using an online multi-lender marketplace. These are not lenders. They are simply facilitators who help you to compare loans and get customized rates and terms without actually applying for a loan or triggering an inquiry that impacts your credit score.
Use College Raptor’s new Student Loan Finder to discover personalized loan options. Compare lenders and interest rates to find the ideal student loan—for FREE!