I want to know if there's a difference between getting personal loan from a finance company or a bank, considering the drop of credit score/grade (assume all other aspects are exactly the same)? I've heard from someone that it's better to get loan from a bank instead of a finance company to keep higher credit score/grade. Is it true?

  • As far as I know, there's no difference. And the finance company will almost certainly promptly sell your loan to a bank anyway.
    – keshlam
    Oct 16, 2014 at 17:54
  • 1
    A finance company may be willing to extend credit to someone who might not meet a bank's standards, but will likely charge a higher interest rate than the bank because of the greater risk. That is, it may be hard to find offers that are "exactly the same" in all respects. Oct 17, 2014 at 3:47
  • True, but assuming the loan is at the same terms (as stated), I believe there's no difference in effect on credit score (as asked).
    – keshlam
    Nov 8, 2014 at 14:26
  • Would you consider other factors besides a drop in credit score as significant? Or are you asking strictly in regards to credit score? Nov 9, 2014 at 4:51

2 Answers 2


It should not really matter who you go to purely in terms of credit score. Generally if you have a higher credit score you may get better loan terms from a bank, where a finance company will often be less discerning, but charge more.

Your credit report only really cares about the number of inquiries as well as the average age of credit in this situation. The loan source doesn't matter.

Please note applying at multiple banks should be fine if you want to shop around, a whole bunch of inquiries for loans of similar terms should not hurt your score significantly more than a single one. As long as you do them close together (all within a couple of weeks.)

My advice is to shop around both banks and finance companies and find out the best terms you can get. As long as you apply to them all and decide which you want to go with within a couple of weeks this should not impact your score significantly.

Note some free credit monitoring apps will incorrectly say each inquiry will reduce your score even if close together. And will not correctly fold together similar ones in a close time period, making your score appear lower than it is.


Each time you ask a bank or financial institution for a loan, they do a hard pull on your credit rating. You will be signalling to lenders that you're shopping for money. If you visit a mortgage broker he does a single hard pull on your credit score and offers your loan query to a dozen or more lenders, some of which you may not have even heard of.

  • 4
    According to this answer and other mentions I've seen around PF&M, this may not always be the case: multiple enquiries, for the same "type of thing", can (with caveats) effectively count as one pull.
    – TripeHound
    Jan 28, 2019 at 8:16
  • 1
    "This costs you 2 points instead of 24." citation needed
    – 0xFEE1DEAD
    Oct 24, 2019 at 23:54

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