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How does applying for credit affect your credit score?

I was answering a question about getting a loan and realized I don't have detailed information on how applying for credit (even if you do not get the credit) can affect your credit score.

If I apply for new credit at all, does my score go down? Is once per 12 months ok? If I get denied, how often can I reapply without negatively impacting my credit score?

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yes, when you apply for a new loan the loan originator will do a 'hard pull' on your credit history which will result in your score going down. In my experience your score may go down by 20 points or so. You should be able to recover it fairly soon by making timely payments.

I was also told that you can do as many hard pulls as you want within 48 hours and it will effect your just like one pull. So when shopping around for a mortgage probably a good idea to allow them to check your credit score on the same day.

Unlike soft pulls when credit card companies just check it for marketing purposes. This doesn't effect your credit score. Here some information explaining the difference Soft Credit Pull Vs. Hard Credit Pull

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    I couldn't get that link to work, here's another one: Hard Pull and Soft Pull. They also claim that "...a single inquiry is not going to have any significant impact on your credit score." – Cyclops Oct 5 '10 at 0:50
  • Just an added note: a "hard pull" stays on your credit history for 2 years. – Sean W. Sep 11 '12 at 18:27

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