Does applying for a loan affect your credit score?

Yes, applying for a loan affects your credit score. When you submit an application, the lender performs a hard inquiry to check your creditworthiness, which typically results in a small, temporary dip in your score. Key impacts include:

• A hard inquiry is recorded on your credit report and may stay for up to two years.
• Multiple loan applications in a short period can signal high risk to lenders and further lower your score.
• Once approved, the new account may initially decrease the average age of your credit history.