Understanding Credit Inquiries: What Car Buyers Need to Know
When you’re in the market for a vehicle, navigating the financing process can be daunting. One common concern among buyers is how multiple credit inquiries might impact their credit score. The good news is that if a dealership submits your credit application to multiple banks within a specific shopping window, it will only count as one inquiry on your credit report.
Understanding Hard Inquiries & Soft Inquiries
A credit inquiry happens when someone reviews your credit report to assess your financial history. There are two types: hard inquiries and soft inquiries. Hard inquiries occur when lenders check your credit as part of approving a loan, lease, or credit card application. These can slightly impact your credit score, especially if too many happen in a short time. Soft inquiries happen when you check your own credit or when a company pre-screens you for offers. These do not affect your credit score. Understanding the difference can help you manage your credit health, especially when shopping for financing or leasing a vehicle.
The Shopping Window Explained
Credit scoring models, such as FICO and VantageScore, recognize that consumers often shop around for the best loan terms. To accommodate this, they treat multiple inquiries for the same type of credit (e.g., auto loans) within a specific period as a single inquiry. This period, known as the “shopping window,” typically ranges from 14 to 45 days, depending on the scoring model.
Why This Matters
Understanding the shopping window can help you make informed decisions when financing a car. By allowing multiple inquiries to count as one, credit scoring models encourage consumers to seek the best loan terms without fear of damaging their credit score.
Tips for Car Buyers
- Time Your Applications: Try to submit all your credit applications within the shopping window to minimize the impact on your credit score.
- Stay Informed: Check your credit report regularly to ensure that inquiries are being reported correctly.
- Ask Questions: Don’t hesitate to ask your us about our process for submitting credit applications and how it might affect your credit score.
By understanding how credit inquiries work and taking advantage of the shopping window, you can confidently shop for the best auto loan without worrying about your credit score taking a hit.
Ready to begin on your vehicle purchase with Michael at Springfield Acura ? Submit a credit application at the link below to begin the process here!
Have challenged credit? Need special financing? Check out my article on how I can help you get approved by clicking here!
