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Duplicative Hard Inquiries for Auto Purchases

Your FICO® Scores can impact your loan interest rates, terms, approvals and more.
Established Contributor

Duplicative Hard Inquiries for Auto Purchases

Has anyone else experienced this phenomenon when purchasing vehicles at dealerships? I'm not referring to dealers shopping for financing among several lenders. Rather, what happened to me is that both the dealers and their own finance companies pulled my credit as part of the same transaction.

 

Over the holidays, I acquired two new vehicles. One was a new Ford truck and the other a CPO Mercedes Benz. For both transactions, I sought "captive" financing from Ford Motor Credit (FMC) and Mercedes Benz Financial Services (MBFS), respectively, to take advantage of very low interest rates. In both cases, I specifically told the dealership finance staff that they were allowed only a single hard inquiry.

 

Nonetheless, both the Mercedes and Ford dealerships hard-pulled my scores just to make sure I was eligible for top-tier financing before they sent the deal to MBFS and FMC. Then, both finance companies pulled my FICO Auto 8 scores again to lock in financing. It was irritating but I really didn't mind since the financing deals at the end of the year were so good. I just wasn't prepared for both the dealer and their finance companies to pull my scores nearly simultaneously.

 

Why Ford and Mercedes can't share a single HP between the dealer and the finance company is beyond me. It's speculation, but I suspect the finance companies got tired of dealers sending them buyers with marginal credit and instructed the dealers to verify creditworthiness first prior to submitting the deal for company financing. But that's just a guess...

 

Anyone else have similar experiences to share? Or cases where the dealer and finance company shared a single HP?

 

6 REPLIES 6
Contributor

Re: Duplicative Hard Inquiries for Auto Purchases

Could be worse... in November 2017 we purchased a new vehicle. The dealership pulled my credit report every day for a week, capital one pulled my reports for three days two different credit unions pulled my reports every day for five days.

The only company that pulled multiple reports and corrected the error was Ally, the bank I agreed to go with the day we looked at the vehicle and signed papers. Everyone else claimed I didn't know how to read a report!

Apparently when 6 banks add 152 inquiries to your report in 7 days it's all in your head. CRA's told me they all count as one pull, no harm no foul (effectively refusing to address the issue).
Starting Score: EQ:608, EX:617, TU:625
Score 10/2018: EQ:669, EX:686, TU:668
Score 11/17/2018: EQ:682, EX:681, TU:683
Current Score 7/7/2019: EQ:705, EX:672, TU:694
12/24/2018 -- EQ Beacon 5.0: 678, EX Fico II: 690, TU Fico Classic 04: 716

Goal Score: 740+


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Message 2 of 7
Super Contributor

Re: Duplicative Hard Inquiries for Auto Purchases


@chiefone4u wrote:
Could be worse... in November 2017 we purchased a new vehicle. The dealership pulled my credit report every day for a week, capital one pulled my reports for three days two different credit unions pulled my reports every day for five days.

The only company that pulled multiple reports and corrected the error was Ally, the bank I agreed to go with the day we looked at the vehicle and signed papers. Everyone else claimed I didn't know how to read a report!

Apparently when 6 banks add 152 inquiries to your report in 7 days it's all in your head. CRA's told me they all count as one pull, no harm no foul (effectively refusing to address the issue).

While you only take a single ding for all the inquiries, they're still going to harm you when you apply for credit. If someone denies you credit due to number of inquiries, you'll have to recon. But with a bank Ike cap1, who doesn't do recon, you just wasted 3 pulls. Pretty sure you can hold them all accountable if you suffered financial penalties such as denial of credit, higher interest rates, etc. due to their negligence. @RobertEG would probably be the best person to clarify if that's the case.








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Message 3 of 7
Super Contributor

Re: Duplicative Hard Inquiries for Auto Purchases

Yes, it's normal. I used to work for Chase and I went directly through an old co-worker for my financing. She let the dealership know I was applying for financing online through the dealer site so they could grab it and forward it to her. After she got it, she ran her own check. I ended up with 2 on EQ and 2 on TU since chase ddouble pulls.








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Message 4 of 7
Frequent Contributor

Re: Duplicative Hard Inquiries for Auto Purchases


@ridgebackpilot wrote:

It's speculation, but I suspect the finance companies got tired of dealers sending them buyers with marginal credit and instructed the dealers to verify creditworthiness first prior to submitting the deal for company financing. But that's just a guess...


Yep, you essentially answered your own question. The dealers will now pull credit to verify identity. Oftentimes, they claim they are required to by law... Patriot Act, Money Laundering and all that mumbo jumbo; but I don't believe they are actually required to pull credit, specifically, in order to verify identity... it's just how they choose to do it. They could just as easily pull LexisNexis, as well; or better yet, just ask for a couple forms of ID. But, it's probably more cost effective for them to just pull credit, rather than a background check. Plus, pulling credit, they get to determine the potential for a viable deal, anyway.

 

The finance companies - unless the dealer is doing financing directly - are typically separate financial organizations. The dealer is a privately owned business, that basically runs a franchise for the auto brands that they sell... and ultimately forwards the customers to their preferred lender.

 

So yes, it's quite common, nowadays, to have credit pulled multiple times to buy a car, even from just one finance company. The dealer will pull your credit - even if you want to pay cash, too.

 

I personally keep a regular freeze or lock, on all of my reports, for the majority of the year; and I will only unlock, on demand. But, each time I purchase a vehicle, from the same brand name dealer - that I've purchased 4 cars in a row, over 10 years - they will still pull my credit the day of the sale, and again, the finance company always tries to pull credit the day after.

 

I've started freezing my report, so that I only get one inquiry. The last 2 cars, I believe that the dealer just forwarded the dealer-pulled credit report - to the finance company - and just let it slide, because they already know that I pay on time and don't miss payments. But, a few times, initially, the sales manager had called and asked me to unfreeze my credit the day after the purchase, because the finance company couldn't get in.

 

In my case, if I decided to bring in a cashier's check and pay cash for a car... since I have an ongoing relationship with the dealer, I'm pretty sure that they wouldn't even need to pull my credit, at this point, because they know me. But, I've heard stories from others that tried to buy a car with cash... and the dealer still pulled their credit. Hopefully, only one credit pull for cash, though.

Message 5 of 7
Frequent Contributor

Re: Duplicative Hard Inquiries for Auto Purchases

This situation is very common, and almost always the way dealership's go about obtaining financing for a person. They pull credit themselves for multiple reason's, to verify indentity, verify that they have the correct matching SSN, and to clear any red flag alert's that may appear. In addition they do it in order to review your credit history and profile in order to make sure they submit you to the lender's that you most qualify for.

 

In addition many lender's/dealer's have a look-to-book quota, meaning that a lender will require to book (fund) a certain percentage of the deal's a dealer send's over for underwriting. If the dealer bombard's the lender with application's that don't end up getting booked because the lender declines/counter's, they are liable to get cut-off from that particular lender. The dealer wants to ensure that they aren't wasting the lender's time and resources with application's that won't be approved which is why they review credit upfront themselves.

 

It can be frustrating for those who are inquiry conscious but it is very much a normal way of doing business for dealer's.

AMEX BCE ($39,500) CITI AAdvantage ($20,500) Region's Platinum Card ($14,400) Discover IT ($23,000) Macy's ($7,000) Chase FU ($10,000) Barclay's Aviator ($22,000) TU:778 EX: 781 EQ:791
Message 6 of 7
Established Contributor

Re: Duplicative Hard Inquiries for Auto Purchases


@ridgebackpilot wrote:

Has anyone else experienced this phenomenon when purchasing vehicles at dealerships? I'm not referring to dealers shopping for financing among several lenders. Rather, what happened to me is that both the dealers and their own finance companies pulled my credit as part of the same transaction.


Yup, that's fairly normal.

 

 


@chiefone4u wrote:
Could be worse... in November 2017 we purchased a new vehicle. The dealership pulled my credit report every day for a week, capital one pulled my reports for three days two different credit unions pulled my reports every day for five days.

That, on the other hand, is NOT normal. Good grief!

 

(I'd put the blame for that one squarely on the dealership, not the lenders, though.  That dealership probably had some idiot shotgunning your application out to their whole list of lenders each day, rather than the lenders doing multiple pulls randomly on their own...)

 

 

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Message 7 of 7