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Auto Loan Inquiries and Credit Scores

Dear Experian,

We are going to purchase a car and would like the car dealer and two banks to check for interest rates. How does that ding my score, or since it is for car loans does it only ding once, like when you look for a mortgage rate?

– CKR

Dear CKR,

Inquiries for auto loans are treated the same way as those for mortgage loans by most scoring models, so having multiple lenders check your credit history when you are shopping for a car likely will have little or no impact on your credit scores.

An automobile is a very large purchase. For very obvious reasons you want the best terms possible, including loan interest rates. Dealerships often use a practice called “shotgunning” when you apply for a loan to try to find the best rates for you.

That simply means they will send your application to multiple lenders for consideration and will offer you the loan with the best rate. You might also have one or more lenders preapprove your application before negotiating with a dealership.

Typically, that process happens within a very short time, usually with 14 days. For that reason, many credit scoring systems count all inquiries for auto loans that occur within a 14-day period as only one inquiry. That minimizes or eliminates any impact on your credit scores so you can shop for the best loan offer.

Thanks for asking.
The “Ask Experian” team

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