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Question By
DuelleMarley

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

You can check how many inquiries you have at CK, just visit:

https://www.creditkarma.com/report/inquiries

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.

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Top Contributor
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Helpful to 9 out of 10 people

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.

You can check how many inquiries you have at CK, just visit:

https://www.creditkarma.com/report/inquiries

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.

Reply by
PaulYoungPak

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Because the law requires that your personal credit report list all organizations that have requested it, the inquiries cannot be removed.

However, most credit scoring systems allow people to shop for the best rates on car loans without having any significant negative impact on their credit scores. Today, credit scoring systems count all inquiries for auto loans within a given period of time, usually around 14 days, as a single inquiry.

Car dealerships often send your application to multiple lenders at the same time in a process called “shotgunning” to find the best loan terms. As a result, lenders compete for the loan and the consumer benefits by getting the best rates and finance terms available to them.

If the drop in your score was in fact due to the loan application with the auto dealer, it should have had the same impact, whether there were eight inquiries or just one.

It is also important to be aware that the impact of inquiries decreases over time, so your credit scores should rebound fairly quickly, assuming there are not other issues with your credit history.

source: Experian Q&A

http://www.experian.com/ask-experian/20120229-inquiries-for-multiple-car-loan-applications-cannot-be-removed.html

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Dear Moderator, I'm confused, please advise. You said about auto loan inquiries:

"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."

I aggressively shopped around for car loans well within 30 days' time before I bought my new car. However, ALL of these inquiries showed up separately (8 instead of 1) on my credit report, and as a result I have a VERY BAD inquiry score!!!! Why??? It doesn't seem fair, and what can I do to get this fixed?? Thanks for any help.... ~Meech

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I just wanted to say thanks to those that have answered questions. I've read the answers and have learned alot. 

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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.

Reply by
robynh66

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or try a credit union. mine will do a secured loan 18 months after discharge of a banko.

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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?

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.

Review by
CK Moderator

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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?

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.

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CK Moderator

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