Be careful when using Online Loan Comparisons
Be careful of online loan rate comparisons, timing is everything. Online loan rate quotes are easy to get – type in some personal information and you can get a quote on a car loan, personal loan, student loan, or mortgage in seconds. This is free and convenient, leading many people to compare several companies at once in order to make sure that they get the best deal possible.
The problem is that since online quotes are a fairly recent phenomenon, Credit Bureaus count each such quoted estimate as a “Hard Inquiry.” This means that if you compare too many companies online by asking for quotes, your credit score will fall due to too many “Inquiries.” This does not mean that you shouldn’t seek online quotes for loans – not at all. In fact, online loan quotes are a great resource that can help you get the very best rates on your next loan. What this information does mean, however, is that you should research companies and narrow down possible lenders to just a few before proceeding.
Timing is the key in this arena. We all do our research before making critical decisions in our life. Executing an online comparison is one way. But, say you run an online comparison and your decision is to wait a month or two to pull the trigger on that major purchase (car or mortgage). The next time you run a comparison your scores will be impacted greatly in the eyes of the credit bureaus. Statistically, people with six inquiries or more on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries on their reports. Plan your online research carefully, this will help ensure that the number of inquires on your credit report is small – and your credit rating will stay in good shape.