Does Applying A Loan Hurt Your Credit Score?

Whether you’re already there or not, one thing’s for sure: you’re probably concerned about not hurting your credit. That’s especially true if you’re hoping to use your credit for something soon, like buying a house or renting an apartment.

That brings up the question: does applying for a loan hurt your credit? It turns out that it can go both ways—in the short term it can temporarily drop your credit score by a few points, but in the long run, it can actually help. Here’s what to know.

Can applying for a loan hurt your credit?

If you’re looking to take out a loan, whether it’ll affect your credit or not depends on what type of application you’re doing.

Soft credit checks

If you’re just shopping around for rates, you’ll generally fill out a smaller form. After you hit submit, the company will do a “soft credit check”—where it checks a limited version of your credit report. From that, they’ll tell you whether you’re likely to be approved, and if so, at what rates.

This is handy because soft credit checks are not typically recorded as official credit applications on your credit report, and thus they have no effect on your credit score. You can have companies do soft credit checks all day, and there may be no penalty.

Hard credit checks

On the other hand, when you’re ready to actually complete the loan application and formally take out a loan, that’s when the company will do a “hard credit check.”

However, depending on the type of credit you apply for, you could get a saving grace here. If you’re shopping for the same type of loan over a short period of time—typically two weeks— any hard credit inquiries are generally bundled up and recorded as a single credit inquiry. As long as you do your loan shopping within a short period of time, you’ll be OK no matter whether it’s recorded as a hard or a soft inquiry.

How can I know whether a company will do a hard or a soft credit check?

In general, when you’re just checking your rate and not formally applying for a loan, it’s usually a soft credit check. Hard credit checks aren’t normally done until you’re actually going through with your loan application.

You can also look for clues. Usually, when you apply for loans online, it’ll specifically say things like “checking your rate won’t impact your credit” or “we’ll do a soft credit pull.”

And if you’re ever unsure, you can always ask the company you’re checking your rates with.

How does your credit score change after you’ve applied for a loan?

Just about everyone will see a temporary drop in their score due just to the hard inquiry that’s now listed on their credit report. But after that, having a new debt can impact your credit in different and hard-to-predict ways.

First, the bad news. If you’re taking out a new loan, it increases the amount of money you owe, which can harm your credit score. Taking out a new loan can lower the average age for all of your debts combined, which can also lower your score.

But there are also factors that can swing in the opposite direction too, and actually help your credit score. If you’re taking out a new type of debt, it can diversify your “credit mix” and show lenders that you can handle different types of debt too. This can help your credit score. In addition, if you make all of your payments on time, that can add a big boost to your credit score over time, especially as you start to pay down your debt.

Keep tabs on your credit progress

Overall, you can expect your credit score to lower by just a little bit after you formally apply for a new loan. But after that, there are a lot of factors that interplay together and cause your score to either go up or down. If you make all of your payments on time, though, it’ll generally trend upwards.

Consider signing up for a free credit monitoring service to see how your credit score changes over time. That way, you can see exactly how your new loan is hurting or—hopefully—helping you grow your credit score further.

Upstart Network, Inc. (NMLS #936133) is not a lender. All loans on its marketplace are made by regulated financial institutions.

All mortgage lending is conducted by Upstart Mortgage, LLC dba Upstart Home Lending. (NMLS #2443873). Equal Housing Opportunity.

Checking your rate won’t affect your credit score: When you check your rate, we check your credit report. This initial (soft) inquiry will not affect your credit score. If you accept your rate and proceed with your application, we do another (hard) credit inquiry that will impact your credit score. If you take out a loan, repayment information may be reported to the credit bureaus.
Upstart’s model considers education: Neither Upstart nor its lending partners have a minimum educational attainment requirement in order to be eligible for a loan.
41% more approvals and 33% lower rates than a traditional model: As of publication in April 2026, and based on a comparison between the Upstart model and a hypothetical traditional model using Upstart data from Jan – Dec 2025. For more information on the methodology behind this study, please see Upstart’s Annual Access to Credit results here.
Unsecured Loans: While most loans through Upstart are unsecured, certain lenders may place a lien on other accounts you hold with the same institution. There may be an option to secure your personal loan through Upstart with your vehicle, which will require a lien to be placed on the vehicle. It is important to review your promissory note for these details before accepting your loan.
Loan amounts from $1,000 -$75,000: Your loan amount will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will qualify for the full amount. Minimum loan amounts vary by state: GA ($3,100), HI ($1,500), MA ($7,000). Maximum loan amounts may vary by state.
Closing and funding timeline: In April 2026, 10% of funded HELOCs achieved a closing timeline of 2 days or less and a funding timeline of 7 days or less. This timeline assumes consumers close with our remote online notary, provide supporting documentation promptly, and ensure the information provided is accurate and consistent with our verification process. Delays, discrepancies, and other unforeseen factors may impact the closing timeline. MBA’s 2025 Home Lending Study reports an average industry closing time of 37 days.
APRs from 6.2% – 35.99%, with 3 or 5 year terms: The full range of available rates varies by state. The lowest rates are only available to the most qualified applicants. A representative example of payment terms for an unsecured Personal Loan is as follows: a borrower receives a loan of $10,000 for a term of 60 months, with an interest rate of 17.50% and a 7.25% origination fee of $725, for an APR of 21.23%. In this example, the borrower will receive $9275 and will make 60 monthly payments of $252. APR is calculated based on 5-year rates offered in March 2026. There is no downpayment and no prepayment penalty. Your APR will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will be approved.
Instant deposits: To receive instant funding, your bank account must support instant transfers. If your account does not support instant transfers, funds will be available to you depending on your bank’s transaction processing time and policies.
Always On Commitment: We are committed to maintaining your credit limit as long as you continue to meet program eligibility and account requirements. To ensure the safety and security of all our members, we reserve the right to adjust or close lines in specific circumstances, including account default or late payments, suspected fraud, violation of our terms of service (including abusive behavior), or when necessitated by legal or regulatory requirements.
Cash Line draws: You may request a draw at any time. Only one draw may be outstanding at a time; after it is fully repaid, you may request another.
HELOC APRs as low as 6.52%: Terms shown here are subject to change without notice. APRs for initial advances range from 6.52% to 18.00% based on rates offered as of April 2026. The lowest rate is only available to consumers willing to become a member of a credit union and to those who meet a minimum FICO score of 780, CLTV under 70%, and DTI under 45%. Your actual rate will depend on many factors such as your credit history, combined loan-to-value ratio (CLTV), line amount, loan term, lien position, and property state. Origination fee to open an account is between 0% and 4.99% of the approved credit limit. The Annual Percentage Rate (“APR”) is variable and based on the Prime Rate as published in the Wall Street Journal “Money Rates” table plus or minus a margin. Your APR will never be less than 3.99% or greater than 18.00%. Property insurance is required.
No annual fee, prepayment penalty, or fees to redraw: Terms shown here are subject to change without notice. Origination fee to open an account is between 0% and 4.99% of the approved credit limit. The Annual Percentage Rate (“APR”) is variable and based on the Prime Rate as published in the Wall Street Journal “Money Rates” table plus or minus a margin. Your APR will never be less than 3.99% or greater than 18.00%. Property insurance is required.
2,500+ Variables:As of 3/31/2026. “Variables,” often also referred to as “features,” refers to raw variables and combined variables considered in our AI models. A “raw” variable is a non-combined, conceptually distinct unit of data, such as “applicant-reported savings.” A “combined” variable is data that has been transformed, combined, or otherwise engineered from a raw variable or set of raw variables, such as “applicant-reported savings” divided by “loan amount.
Fully automated loans: In Q2 2026. Percentage of Loans Fully Automated, which is defined as the total number of loans in a given period originated end-to-end (from initial rate request to final funding for personal loans and small dollar loans, and from initial rate request to signing of the loan agreement for auto loans) with no human involvement required by the Company divided by the Transaction Volume, Number of Loans in the same period.