Loan Application – Protect Your Credit Score Now

Are you planning to apply for a loan but worried about how it might impact your credit score? You're not alone. Many Australians share this concern, especially when they're navigating the complex world of loans and credit scores. Understanding the relationship between loan applications and credit scores is crucial to making informed financial decisions, and we're here to help you through the process.

Understanding How Loan Applications Affect Credit Scores

When you apply for a loan, lenders perform a credit check to assess your creditworthiness. This process is known as a 'hard inquiry' and can affect your credit score. In Australia, a hard inquiry can stay on your credit report for up to five years, and multiple inquiries in a short period can signal financial distress to lenders.

Your credit score is a numerical representation of your creditworthiness, typically ranging from 0 to 1200 in Australia. Lenders use this score to evaluate the risk of lending to you. The higher your score, the more favourable your terms are likely to be. However, each loan application can reduce your credit score by a few points, which might seem minor, but can add up if you're applying for multiple loans.

Current Loan Rates, Requirements, and Options

In 2026, the Australian loan market is vibrant, with interest rates varying significantly based on the type of loan and the borrower's credit profile. Here's a snapshot of what you might expect:

Esteb and Co, with access to over 83 lenders, can provide options tailored to your specific credit profile and financial needs, ensuring you find the best rates available.

Steps to Minimise Impact on Credit Score When Applying for a Loan

If you're concerned about how a loan application might affect your credit score, follow these steps to minimise any negative impact:

1. Check Your Credit Score: Before applying, obtain a copy of your credit report to understand your current score and any factors affecting it.
2. Research Lenders: Use the services of Esteb and Co to compare lenders. With access to a wide panel, they can help you find lenders who offer pre-qualification with a soft inquiry, which doesn't affect your credit score.
3. Limit Applications: Apply for loans strategically. Multiple applications in a short period can lower your score, so try to space them out.
4. Pre-Approval Process: Consider getting pre-approved. This process often uses a soft inquiry, allowing you to understand potential terms without impacting your score.
5. Use a Broker: A mortgage broker like Esteb and Co can provide insights and guidance, helping you understand which lenders are most likely to approve your application without unnecessary inquiries.

Expert Tips and Considerations

Here are some expert tips to keep in mind when applying for a loan:

• Maintain a Good Credit Mix: Having a mix of credit accounts (such as credit cards, a mortgage, and a personal loan) can positively impact your score.
• Timely Payments: Ensure you make all payments on time, as missing payments can significantly harm your credit score.
• Monitor Your Credit Report: Regularly check your credit report for errors and dispute any inaccuracies that might negatively impact your score.
• Avoid Closing Old Accounts: The length of your credit history affects your score, so keep older accounts open where possible.
• Seek Professional Advice: Consult with a mortgage broker to navigate the complexities of loan applications effectively.

Frequently Asked Questions

• How long does a hard inquiry stay on my credit report? A hard inquiry can remain on your credit report for up to five years.
• Can I apply for multiple loans at once? While technically possible, applying for multiple loans simultaneously can harm your credit score due to multiple hard inquiries.
• What is a soft inquiry? A soft inquiry occurs when you or a lender checks your credit score for informational purposes. It does not affect your credit score.
• How can I improve my credit score? Pay bills on time, reduce debt levels, avoid applying for too much credit at once, and check your credit report for errors.
• Does checking my own credit report affect my score? No, checking your own credit report is considered a soft inquiry and does not affect your credit score.
• Can a mortgage broker help improve my chances of loan approval? Yes, a broker can guide you through the application process, help you understand your credit profile, and connect you with suitable lenders.