Rate Shopping? Here's How You Can Guard Your Credit

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Rate Shopping? Here's How to Protect Your Credit
Scoring formulas put similar credit checks together and take them into account when you search for certain loans.
Written by Erin El Issa Senior Writer Personal finance, analysis of data credit cards Erin El Issa writes data-driven research on personal finance, credit cards, travel, investing, banking and student loans. She loves numbers and strives to make data sets understandable to assist people in improving their finances. Prior to becoming an Nerd at the beginning of 2014, Erin worked as an accountant for tax purposes and freelance personal finance writer. Erin's work has been mentioned by The New York Times, CNBC, on the "Today" show, Forbes and elsewhere. In her spare time, Erin reads voraciously and struggles to keep on top of her two kids. She is based in Ypsilanti, Michigan.




and Bev O'Shea personal finance writer | MSN Money, Credit.com, Atlanta Journal-Constitution, Orlando Sentinel Bev O'Shea is a former NerdWallet authority on consumer credit, scams and identity theft. She has a bachelor's degree of journalism at Auburn University and a master's in education from Georgia State University. Before joining NerdWallet, she worked for daily newspapers, MSN Money and Credit.com. Her work was featured in The New York Times, The Washington Post, the Los Angeles Times, MarketWatch, USA Today, MSN Money and other publications. Twitter: @BeverlyOShea.





Feb 3, 2023


Written by Kathy Hinson Lead Assigning Editor Personal finances, credit scoring financial management and debt Kathy Hinson leads the core personal finance team at NerdWallet. Previously, she spent 18 years working at The Oregonian in Portland in roles including copy desk chief and team editor and designer. Prior experience includes writing copy as well as news editing for various Southern California newspapers, including the Los Angeles Times. She graduated with a bachelor's in mass communication and journalism at the University of Iowa.







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If you're planning to take out a large loan to finance a car or house, it's smart to look for the best terms available. Even tiny variations in interest rates could add up to some big figures over the duration of a loan. It can be a mistake to accept one loan you're offered without looking for alternatives.
Here's the best way to rate shopping and the best way to do it .
How do you define rate-shopping?
A loan isn't like shopping for groceries -- people pay different amounts to get the same amount of money. The cost of the loan can be determined through your credit rating, debt and income.
You cannot compare shops without actually applying. Credit scores could take a small, temporary dip when a lender checks your credit because you've applied for an loan.
However, scoring models take the possibility that you are shopping for just one loan into consideration. Similar credit checks are grouped together and counted as oneThe scoring models know that you're not shopping for several homes, student loans or car loans.
This gives you the freedom to examine different interest rates of lenders on an auto loan before you go into an auto dealer, for example. It also lets you know if the dealer can beat your highest offer. Similar is the case with the mortgage and students loans.
Rate shopping and how it affects credit
There are two kinds that credit check: hard and soft.
The kind of credit inquiry that affects your credit score, called the " ," happens when you apply for credit. Every inquiry can take some points from your credit score. That's why you want to be careful to rate shopping within a certain amount of time, so multiple hard inquiries can be treated as one in scoring purposes.
The other type of credit inquiry, called a "soft inquiry" won't harm your score. It happens when you , or a marketing professional or potential employer pulls your credit report.
Your time frame for rate shopping
Depending on the scoring system that you use, your rate-shopping window will range from 14 to 45 days. Similar requests within this time frame should barely dent your score.
The duration of the time period varies across scoring companies. The most recent FICO scores provide an opportunity to rate shopping, and VantageScore employs 14 days. However certain older FICO scoring models that are still being used have a 14-day window. The best way to ensure security is to group applications in a single 14-day window.
Certain credit card and lending institutions issuers offer an "prequalification" procedure that doesn't alter your credit score in any way. It's a method of determining whether you are likely to be eligible prior to applying. Your credit score doesn't change in the event that you decide to apply.
Be aware of how your credit score is scored
Find your score free of charge and the factors that influence it, and get tips on how to continue building.










How often can you rate shops?
While loans for homes, cars and even education are able to be grouped for rate-shopping but you'll not be able to batch your applications for credit cards, or debt consolidation loans.
Individuals who are in a very short time frame are considered high-risk and the inquiries are counted. NerdWallet suggests spreading credit card applications apart for at least 6 months if possible.
Have a rate shopping strategy
The purpose in rate-shopping is find the most competitive rates, and you can do it without putting your credit at risk. Here's how:
Apply for loans in a fairly short period. If you're not certain how long your application window is, play it safe and limit your application for a period of 14 days.
Don't make other credit applications in the same way if you can avoid it. If you're looking for a mortgage, avoid applying for a credit card in the same transaction.

Getting the best deal for a substantial loan can help you save a significant amount of cash. When you apply for a loan once you have built an understanding of how to batch your applications should help you get the best conditions.


Authors' Bio: Erin El Issa is an expert in credit cards and a writer for studies at NerdWallet. She has had her work highlighted by USA Today, U.S. News and MarketWatch.


Bev O'Shea is a former credit writer at NerdWallet. Her work has appeared in publications such as the New York Times, Washington Post, MarketWatch and elsewhere.







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