Question Regarding Hard Inquiry For Auto Loan

[southernme]

When a bank pulls hard credit for car loan the, score they received, is it the ALREADY lowered score or does the score drop after the pull?

Example is I go down to get a loan. They pull the credit (hard pull) and the score comes back as 750. Is the 750 the already lowered score from the hard inquiry or will the score drop to say 742 after the bank receives the first score of 750?

[HoldingOntoHope]

The score the bank receives is not going to factor their own pull. The good news is that if it is properly coded as an auto loan inquiry it will not immediately lower your score as seen by other lenders. The FICO scoring models have a de-duplication algorithm for auto loan inquiries and mortgage inquiries within a set time frame depending on the scoring version used. It is my understanding that the auto loan coded inquiries are not factored into scoring until this time frame has passed. They are then scored as a total of one inquiry.

Now please be aware that this does not mean that the individual inquiries will not display on any subsequent reports that are pulled from that CRA. In fact all of the inquiries will display and will be visible to others pulling the report. It is simply in the scoring algorithm that the one inquiry effect takes place. Also the negative effect of any inquiry is a matter of the individual reports. There is no defined level of an inquiry subtracts X points. The experience of most on here seems to be that they are grouped as in 1 - 3 in a six month or year period has X effect, more than 3 has Y effect and at some point the damage is done and whether you have 85 or 90 doesn't matter. Those numbers are obvious exaggerations but since we are not privy to the FICO scoring algorithms they are a good illustration.

[blackie1]

Very well explained, Although I realize that the number of inquiries does not affect you actual fico score I still wonder if it has a psychological effect on future lenders when they see all those inquiries on your report?

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@HoldingOntoHope wrote:

The score the bank receives is not going to factor their own pull. The good news is that if it is properly coded as an auto loan inquiry it will not immediately lower your score as seen by other lenders. The FICO scoring models have a de-duplication algorithm for auto loan inquiries and mortgage inquiries within a set time frame depending on the scoring version used. It is my understanding that the auto loan coded inquiries are not factored into scoring until this time frame has passed. They are then scored as a total of one inquiry.

Now please be aware that this does not mean that the individual inquiries will not display on any subsequent reports that are pulled from that CRA. In fact all of the inquiries will display and will be visible to others pulling the report. It is simply in the scoring algorithm that the one inquiry effect takes place. Also the negative effect of any inquiry is a matter of the individual reports. There is no defined level of an inquiry subtracts X points. The experience of most on here seems to be that they are grouped as in 1 - 3 in a six month or year period has X effect, more than 3 has Y effect and at some point the damage is done and whether you have 85 or 90 doesn't matter. Those numbers are obvious exaggerations but since we are not privy to the FICO scoring algorithms they are a good illustration.

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[guydiver]

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@blackie1 wrote:

Very well explained, Although I realize that the number of inquiries does not affect you actual fico score I still wonder if it has a psychological effect on future lenders when they see all those inquiries on your report?

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@HoldingOntoHope wrote:

The score the bank receives is not going to factor their own pull. The good news is that if it is properly coded as an auto loan inquiry it will not immediately lower your score as seen by other lenders. The FICO scoring models have a de-duplication algorithm for auto loan inquiries and mortgage inquiries within a set time frame depending on the scoring version used. It is my understanding that the auto loan coded inquiries are not factored into scoring until this time frame has passed. They are then scored as a total of one inquiry.

Now please be aware that this does not mean that the individual inquiries will not display on any subsequent reports that are pulled from that CRA. In fact all of the inquiries will display and will be visible to others pulling the report. It is simply in the scoring algorithm that the one inquiry effect takes place. Also the negative effect of any inquiry is a matter of the individual reports. There is no defined level of an inquiry subtracts X points. The experience of most on here seems to be that they are grouped as in 1 - 3 in a six month or year period has X effect, more than 3 has Y effect and at some point the damage is done and whether you have 85 or 90 doesn't matter. Those numbers are obvious exaggerations but since we are not privy to the FICO scoring algorithms they are a good illustration.

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Yes, too many inquiries, auto or not, can result in an automated system denial of a loan product.  That is when you have to do recon and get a manual review, a real person that can look at your report and see that you did not apply for 10 loans, only one car loan that was pulled by multiple lenders.  It happens.

[blackie1]

As i thought, thanks for the explanation!  Go cowboys against the Giants this weekend!!