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Quite confused about auto loan credit inquiries

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Anonymous
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Quite confused about auto loan credit inquiries

Hello everyone,

 

My FICO score as of 3'ish weeks ago is in the 700's; Equifax being 763 and Transunion being 701. I have no auto loan history and recently began applying for auto loans towards a new car. I've been turned down by many and the one I was granted through a dealership for a car, I ended up changing my mind about wanting the car. My issue is I keep hearing and reading all kinds of wacky explanations on how auto loan inquiries hurt or don't hurt my credit. 

 

Some make it sound like ALL inquiries will hurt UNLESS you get approved for at least ONE auto loan so it looks like your rate shopping. Others just make it sound like you get hit for every inquiry. Some say you have 2 weeks to shop around, others say 45 days. It's all very confusing. I care a lot about my score and I don't want to kill it. At this point I'm afraid to pursue any further loan shopping.

 

About a week ago I applied for a Discover More credit card and was approved instantly. I needed another credit account anyway having only one secured credit card at the time. I know that may of knocked my score down a couple points.

 

If you have a good grasp of how this works, I'd greatly appreciate an explanation. As I mentioned before, I care greatly about my credit and don't want to hurt it any more than I may of already by misunderstanding what I was told/read by others.

 

Thank you

Message 1 of 4
3 REPLIES 3
llecs
Moderator Emeritus

Re: Quite confused about auto loan credit inquiries

Welcome to the forums!

 

Auto and mortgage inquiries are treated differently from the others because it makes sense to shop around for the best rate or deal. Because of that, auto and mortgage inquiries are lumped together for FICO scoring purposes if pulled within a two-week to 45 day window as you mentioned. So, if you apply 100 times for a car within a two-week window, you are only dinged for one of those inquiries.

 

The confusion comes as to what is what: two weeks or 45 days. The answer is both. Each CRA uses its own FICO score. So, for classic scores, there are 3 of them, one each for EX, TU, and EQ. To complicate things, for all three, there are different versions of classic FICO scores being used by various lenders. The older versions tend to use a 14-day window and the newer use a larger window, up to 45 days. I really don't know which is which anymore (I think TU98 uses a 14 day whereas TU08 (new FICO08 flavor) uses a 45). Then that varies between EQ and EX too. Maybe someone knows or might correct me on TU. To make things even more complicated, this site and virtually all mortgage lenders use a classic score. There are also industry-specific FICO scores. So, that car lender you visit might not be pulling a classic score as found on here, but might use an Auto-enhanced FICO score and then that varies between the three CRAs and the version will vary between the lenders.

 

It's safe to say, however, that if you plan things out, and get your shopping done within a two week period, then you'll only be penalized for one inquiry. Let's say that it takes a month, then two inquiries aren't bad. In fact, IMO, inquiry damage is overrated. It's nothing to worry about. At one point I had over 30 inquiries on EX and EQ and never had issues (other than apping too much).

 

BTW, it doesn't matter if you get approved or not. An inquiry won't show that. It only shows that you applied.

Message 2 of 4
Anonymous
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Re: Quite confused about auto loan credit inquiries

Thank you so much for explaining all this. It's much clearer now. Now I can worry a lot less about my score being ruined by hunting too much for a loan. Thanks again!

Message 3 of 4
Anonymous
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Re: Quite confused about auto loan credit inquiries

Hate to bring up an old thread, but this was just the answer I was looking for. Thanks much!!

Message 4 of 4
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