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Posted in Auto Loans
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tristate33

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why did my score drop when I took out an auto loan?

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Inquiries are a Drag...

Helpful to 21 out of 24 people

1. The hard inquiries added to your reports drop your score; it's possible the auto dealer had multiple lenders run your reports to find a good loan. Each inquiry can drop your score, but the overall effect can be multiplied. E.g: 1 inquiry drops your score 10 points.  3 Inquiries could drop your score 60 points.

2. Initially an installment account (car loan) hurts your credit by adding more debt. As you pay it off on time in full, it will add length to your history and your score should naturally rise.

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