Should I apply for multiple personal loans?


By ,
Ask a Lender
December 9, 2016 | Updated September 22, 2017


Key Points

Need an additional personal loan?

  • Make sure your credit report is accurate before you shop around.
  • Compare lenders to find the best interest rates.
  • Too many inquiries could harm your credit score.

Situations come up where you need to apply for a personal loan. Maybe you need to consolidate credit card debt, or perhaps you need to make necessary home repairs.

One of the first questions that arise when one begins applying for personal loans is, should I apply for multiple loans at the same time or only apply for one?

There are several benefits to applying for multiple personal loans at the same time, but there are a few drawbacks as well. The answer depends largely on how large a hit your credit score can take.

Check your credit

Before you even start looking for loans to apply for, check your credit score. You want to ensure you get the best interest rate on your loan, and the best way to do that is to make sure your credit score is the best it can be.

First, obtain a copy of your credit report from each of the three major credit reporting agencies, TransUnion, Experian and Equifax. Check to see if there are any errors on the report. You have the right to contest the completeness or accuracy of information in your credit report. If you find errors, you should file a dispute with the credit bureau as well as the company that provided the information to the bureau. Both parties are legally obligated to investigate the dispute.

If the dispute is not resolved to your satisfaction, you have a right to add a summary explanation to your credit report.

Shop around

One of the main benefits of applying for multiple personal loans is that it allows you to shop around for the best interest rate. Getting a lower interest rate potentially can save you a lot of money over the life of the loan.

Look at other aspects of the loan as well, such as the length of repayment, or any fees or balloon payments. Take everything into consideration and choose the loan that works best for you.

Credit inquiries

Every time you apply for a loan, it gets reported to the three major credit reporting agencies and counts as an inquiry on your credit score. Each of these inquiries has the potential to lower your credit score — and although the effect of each inquiry on your score is small, multiple inquiries can add up and have a significant impact. It is therefore prudent to weigh the benefit of shopping around for the best rate against the negative impact to your credit score.

One way to lessen the impact on your score is to evaluate the lending criteria for each loan you’re interested in, and avoid loans for which you have a lower chance of qualifying in favor of loans that are a better fit.

According to myFICO, inquiries for loans that commonly involve rate-shopping, such as mortgage, auto and student loans, are often treated differently than inquiries for other types of borrowing, such as for credit cards.

“For these types of loans, FICO Scores ignore inquiries made in the 30 days prior to scoring,” myFICO states on its website. “So, if you find a loan within 30 days, the inquiries won’t affect your scores while you’re rate shopping.”


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