If I apply for a car loan with two different lenders, will that lower my credit score?

Credit Q&A

Question

If I apply for a car loan with two different lenders, will that lower my credit score?

Answer

When you apply for a car loan, the lender will do a hard inquiry on your credit report, meaning they pull your credit report to check your history and credit score to determine approval for your loan application. Hard inquiries show up on your credit report for two years. Credit inquiries are one of the five key components that affect your credit score and every hard inquiry will slightly lower your credit score. A lender may perceive a consumer who has had too many credit inquiries as desperate for credit or as a potential credit risk. So be mindful of how many different lenders you go to apply for an auto loan because it can add up to bigger drop on your credit score than expected. Check out the graph of the distribution of credit score to number of credit inquiries from the Credit Karma community for a sense of how many hard inquiries can impact your credit score.

By the way, checking your credit score through Credit Karma is a soft inquiry, not a hard inquiry, and will not lower your credit score.

Filed under: Credit

Comment on Q&A Receive Comment Alerts Send to a Friend Print This Q&A

USER COMMENTS(5)

ledenila
Nov 12
7:33 pm

I applied for car loan and shop with 3 dealers and 3 banks( Done within 30 days) but reflected as 6 new hard inquiries. It should be one inquiry only as you pointed out. What should I do?

CK Moderator

The inquiries will count as one when calculating your credit score. But the 6 inquiries are accurate if you applied at all 6.

Cland1236
Nov 14
4:37 pm

Two years ago I refinanced my mortgage. I had 5 inquires from my looking. I had always been told they would count as ONE since they were all mortgage related and withing 30 days or less. THAT DID NOT HAPPEN. I was hit on all 3 bureaus just as if I had applied for 5 separate loans. My score has just now recovered and in December the last one will fall off.

I wish it were the way you say CK, but realty is they all effect the score, regardless of what they tell you - at least they did mine.

CK Moderator

A few things to note, the inquiries have to happen within a specific time frame usually 30-90 days. Secondly, the inquiries will all appear on your report. However, they will only be counted as one if they are within the right time frame. Regardless all will appear on your credit report.

ltorgeson
Nov 6
6:46 am

I had an two inquiries on my account for a re-finance on my mortgage where I did not take on any new debt and ultimately re-financed with one of the companies. Additionally, I had an inquiry for an auto loan, to see what it would cost. I decided not to get the loan, but the inquiry is on my record. I have not take on any new debt in the last year, and have in fact lowered it. How long do these inquiries remain on my record, and is there any way to request them removed...like the auto financing that I was looking in to, but did not get?

CK Moderator

Inquiries generally stay on your credit report for 2 years. There is no way to remove them if they are accurate. Most lenders only look at recent inquiries but so it should not affect your score after a few months.

nsyncit
Oct 20
2:58 pm

I am looking for a loan for $2000.00. I got scammed in 2007 for $1800 and am still in the hole. I just need this boost to get back on track. I had a bankruptsy in Feb 2009 and now all other debt is coming off and and can pay off the rest. Any suggestions.

smosser
Oct 17
3:40 pm

What is the best way to shop around for good auto lending then? If each credit check by auto lenders is a hard inquiry, is there a way for them to do soft inquiries until you go to actually do the deal?

CK Moderator

Inquiries for big purchases like auto and home are considered a single inquiry if you apply within 30-45 days. This is done so that shopping for rate on large purchases don't hurt your score.

Browse Comments: