One of the biggest mistakes that we made when applying for credit was giving our Social Security numbers to prospective lenders. Why? Because it hurt our FICO credit score. We were not really dumb, just young and uneducated about credit. Here's what we do now...

You have to avoid creditors who insist on you giving up your Social Security number so they can check your credit report because each inquiry subtracts good points from your score. If your credit score is already marginal, say between 650 and 700, you cannot afford to lose a single point. In fact, in today's economy, the new marginal score is between 700 and 750!

When you permit a prospective lender to look at your credit report, their inquiry goes on your record. You can readily see how logging several inquiries while you are loan shopping can hurt you. It will make it obvious that you are searching for credit from many sources and that could appear that you are in some kind of financial trouble. It is especially negative if you have been rejected by one or more lenders as you shop around.

When you have many inquiries on your record and rejection by one or more lenders it chops away at your score and makes you look like a bad credit risk even though you might not be.

Here are some clever ways to get a loan quote without damaging your FICO credit score.

One clever way is to make your loan applications back-to-back in a very short time frame. The reason is, inquiries made within a few days of each other will generally be grouped together and counted as only one inquiry.

Another way is to do some advance research on line. By researching lenders you have already done business with and then others that you may be interested in doing business with you will cut down on the number of inquiries on your account . By researching first and approaching second you will have fewer lenders accessing your credit report at the same time, which can help protect your credit score.

My favorite technique is to give the potential lender only my credit score, not my Social Security Number, and ask for their loan availability and interest rate based on the score. If you do not know your current score, you need to contact one of the three credit bureaus and get it before you go loan shopping. They are: Experian, Equifax, and TransUnion.

We did this recently when we re-mortgaged our home for a better interest rate and shorter term. We will save about $25,000 in mortgage interest! This is one way we maintain our credit score between 810 and 830.

So, insist on an estimate without giving the lender permission to check your credit report. This is the best way, in my opinion, to reduce the number of inquiries and protect your credit score.

Let me give a word of caution about applying for loan rate quotes on line. Some quotes are easy to get. You type in some personal information and you can get a quote on your car loan, personal loan, student loan, or mortgage in seconds. Others will want to contact you by phone or email.

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