Q: Will getting denied for a loan or a line of credit hurt my score?
A: Interestingly enough, getting turned down for a loan, usually due to a poor credit score, won't cause that score to drop any further.
"The bureaus don't look at whether or not you're approved or denied," says CreditKarma.com CEO Kenneth Lin, so that information isn't going to end up on your credit report.
However, applying for a loan will generate a "hard" credit inquiry and, as previously reported, that can cost you some points.
Lin estimates that someone whose score was low enough to get denied for a loan (typically around 650 or lower) will see their score drop between three and 25 points per inquiry. (As a point of reference, if your credit is good, each hard inquiry will generally cost you up to five points.)
Those who get denied for a loan, however, need to tread carefully since not getting funding means they are likely to apply for another loan and subsequently generate another hard inquiry.
You can find a full explanation of the different types of credit inquiries in MainStreet's look at How Credit Inquiries Affect Your Score.
Want to know what can and can't affect your credit score? E-mail your questions to firstname.lastname@example.org
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