People ask this question in two forms: “will applying for multiple personal loans affect my credit?” and “is it bad to have several loans running?” The answers are different, so we take them one at a time. For how individual factors build your score, see what creates a good CIBIL score.
Part 1: applying for multiple loans
When you apply for a loan or card, the lender pulls your credit report. That pull is recorded as a hard enquiry. One or two enquiries spread over a year are normal and barely register. Several in a few weeks tell lenders you are looking hard for credit, perhaps because others have turned you down.
Does not affect your score
Checking your own score or report, a lender’s pre-approved offer based on a soft check, and your existing lenders’ periodic reviews.
Can affect your score
Each formal application to a bank, NBFC, loan app or card issuer that pulls your report, especially several close together.
The bigger problem is not the points. It is what a human underwriter sees: five enquiries from five lenders in three weeks, and no new loan. That pattern looks like rejection after rejection, and the sixth lender often follows the first five.
How to compare lenders without piling up enquiries
Check your own report first
You are entitled to one free full credit report from each bureau every calendar year, and checking your own score is a soft enquiry. Fix any errors through the dispute process before you apply.
Shortlist using published criteria
Compare minimum score, minimum salary and documents on lenders’ websites. Skip lenders whose criteria you clearly don’t meet.
Apply to one lender, then wait for the answer
Only move to the next lender after a decision. Ask why you were declined; the reason tells you what to fix.
Read the Key Fact Statement before accepting
The KFS shows the APR and all charges, so you can compare offers on total cost, not just the headline rate.
Part 2: holding multiple loans at the same time
Having a home loan, a car loan and a credit card is not a black mark. Paid on time, a mix of loan types can even help, because it shows you can handle different kinds of credit. Where multiple loans do hurt is in four specific ways:
- More due dates, more chances to miss one. Payment history carries the most weight in your score, and every extra EMI is another date to remember.
- Many new, small accounts. Several personal or app loans opened within months lower the average age of your accounts and suggest dependence on credit.
- High card usage. If the loans are partly card balances, using most of your limit is read as stress. Keeping use below about 30% of the limit is the usual advice.
- Your EMI-to-income ratio. This does not change your score, but it is often the deciding factor in whether a lender approves your next loan.
The number lenders look at: EMIs as a share of salary
Lenders call it FOIR (fixed obligations to income ratio): your total monthly EMIs divided by your take-home pay. Every lender sets its own comfort level, but the higher the share, the less room there is for one more EMI.
Same salary, different number of loans
Illustrative profile with a take-home salary of ₹60,000 a month; bars are to scale, with the full width equal to 100% of salary. Lenders’ limits differ and depend on income, existing loans and credit history.
Notice that the person with five loans may have a decent credit score and still be declined, simply because there is no room left in the salary. This is the most common reason salaried borrowers with several app loans get turned down.
If you already have too many loans
The fix is usually to reduce the number of loans, not to add another one on top. Close the smallest, most expensive loans first, or replace several of them with one longer-tenure loan so the monthly outgo falls. If most of your loans are short-term app loans, SmartSwitch pays one Omozing loan into your own account; you close each app loan within about seven days and share the NOCs, leaving one EMI. Our post on what to do when you are under many loans covers the wider plan.
How Omozing reads a report with several loans
Omozing is the digital lending brand of Aparampaar Finance, an RBI-registered NBFC in Bengaluru. We lend to salaried people across India, with loans up to ₹25 lakh and rates starting from 11% a year. A credit officer reads your full report: several loans repaid on time are read very differently from several loans with delays. We consider credit scores from 600 and a take-home salary of ₹40,000 or more, and need only two documents.
Thinking about your next loan?
Check what you need to apply for an Omozing personal loan, and apply once rather than to several lenders at the same time.
Frequently asked questions
Will applying for multiple personal loans affect my credit score?
Each formal application usually adds a hard enquiry. Several in a short time can lower your score slightly and, more importantly, make lenders cautious. Apply to one lender at a time and wait for a decision.
Does checking my own CIBIL score reduce it?
No. Checking your own score or report is a soft enquiry and does not affect your score.
Is it bad to have two or three loans at the same time?
Not by itself. If every EMI is paid on time, several loans can sit comfortably on a healthy report. Problems start when due dates are missed or when total EMIs take up too much of your salary.
How many loan enquiries are too many?
There is no single number, but several enquiries from different lenders within a few weeks, without a new loan following, is the pattern lenders worry about most.
Does closing loans improve my credit score?
Closing a loan after paying it in full does not usually raise your score straight away, but it reduces your EMI burden and the number of due dates, which makes on-time payments easier and new loans more likely to be approved.
Can I get a new loan if I already have several running?
Possibly, if your EMIs still leave room in your salary and your repayment record is clean. Omozing considers salaried applicants with scores from 600 and a credit officer reviews the whole report.
Omozing is the digital lending brand of Aparampaar Finance Private Limited, an RBI-registered non-deposit-taking NBFC. Loans are subject to credit assessment. See our regulatory disclosures and grievance redressal process.