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Multiple inquiries when you cosign for a car loan

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Topics addressed on July 26, 2006:

Multiple inquiries when you cosign for a car loan

Dear Max,

My dad co-signed with me to purchase a car. The car dealership sent it to approximately eight lenders to get a good rate. Will those inquires hurt his credit score? He is upset, and I feel horrible because he was only trying to help me get a car.

- AMU

Dear AMU,

Tell your dad he doesn’t have to worry. The inquiries will have very little if any impact on his credit scores.

Sending an application to multiple lenders seeking the best loan terms is a common practice in auto lending. It’s called “shotgunning.” Lenders recognize that practice and understand you are buying only one car.

Credit score developers also recognize the practice and have adapted their systems to count multiple auto loan inquiries within a short period of time as a single inquiry. As a result, the impact of those multiple inquiries is very minimal. They may have no impact at all if your dad has a strong credit history.

What he really needs to worry about is whether you will make the payments on time.

Because he cosigned for the loan, it will appear on both your credit report and his. Any late payments also will appear on both credit reports. So, if you fail to make a payment on time, it will hurt his credit history, not just yours.

That puts the pressure on you to make sure your dad’s credit history isn’t hurt because you were late making a payment. It sounds like you have a great relationship with your dad, so I’m sure you won’t let that happen.

Thanks for asking.

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