The terms of your loan will be decided by the finance department when you apply to purchase a car. After persuading you of the terms, they will forward your application to three or four lenders so they can bid against each other for your business.
Your application will likely be submitted to more than four lenders if your credit score is 620 or lower because it will be more challenging to get approved on favorable terms.
It can be confusing to navigate the intricacies of hard inquiries and credit scores, particularly in the context of auto dealerships. Just when you think you’ve found the ideal car, several hard inquiries appear on your credit report, possibly lowering your score.
But don’t give up! Although it may seem impossible to get hard inquiries removed from a car dealership, there are tactics you can use to lessen their impact and possibly have them removed.
Let’s dive into the world of hard inquiries and explore your options,
Understanding Hard Inquiries: The Credit Score Culprit
Hard inquiries, also known as “hard pulls,” occur when a lender accesses your credit report to evaluate your creditworthiness for a loan application. This includes car loans, mortgages, personal loans, and even credit card applications. Each inquiry leaves a mark on your credit report for up to two years, potentially lowering your credit score by a few points.
Here’s the catch: Multiple hard inquiries within a short period can significantly impact your score, especially if you’re already on the edge. This is where car dealerships can become the villain in your credit score story.
Imagine this: You’re shopping for a car, excited to find the perfect ride. You visit several dealerships each eager to secure your business. Each dealership runs a credit check resulting in multiple hard inquiries on your report. This can lead to a noticeable drop in your credit score, making it harder to secure the best loan rates.
So, what can you do?
Strategies to Minimize the Impact of Hard Inquiries
While removing hard inquiries from a car dealership might not always be possible, there are ways to minimize their impact and protect your credit score
1. Shop Around Strategically:
- Do your research online first. Identify dealerships with competitive rates and terms before visiting them in person. This way, you can limit the number of dealerships that run hard inquiries on your credit.
- Be upfront about your credit situation. Inform the dealership that you’re concerned about multiple hard inquiries impacting your score. They might be willing to work with you by checking your credit with only one bureau.
- Consider pre-qualification. Some dealerships offer pre-qualification options that allow you to get an estimated loan rate without a hard inquiry. This can give you a good idea of your options without affecting your credit score.
2. Dispute Inaccurate Inquiries:
- Review your credit reports regularly. You can access free copies of your credit reports from the three major bureaus (Experian, Equifax, and TransUnion) through AnnualCreditReport.com.
- Look for any unauthorized or inaccurate hard inquiries. If you find any, file a dispute with the credit bureau. They are obligated to investigate and remove the inquiry if it’s found to be inaccurate.
3. Leverage the 14-Day Rule:
- Most credit scoring models group multiple inquiries for the same purpose within a 14-day period as a single inquiry. This means that if you apply for multiple car loans within 14 days, it will only count as one inquiry on your credit report.
- Plan your car shopping accordingly. If you know you’ll be visiting multiple dealerships, try to do so within a 14-day window to minimize the impact on your credit score.
4. Consider a Secured Credit Card:
- Building positive credit history can help offset the impact of hard inquiries. Consider getting a secured credit card, which requires a security deposit. Use it responsibly and pay your balances on time to demonstrate your creditworthiness.
5. Be Patient:
- Hard inquiries eventually fall off your credit report after two years. While you can’t remove them immediately, their impact on your credit score will gradually diminish over time.
Removing Hard Inquiries: A Delicate Dance
While the strategies above can help minimize the impact of hard inquiries, removing them completely from a car dealership can be tricky.
Here’s the reality:
- Dealerships typically don’t remove hard inquiries unless there was a clear error or miscommunication. For example, if they ran your credit without your consent or for a loan you didn’t apply for, you might have a stronger case for removal.
- Even if you have a valid reason for requesting removal, dealerships are not obligated to comply. It’s ultimately their decision.
However, it doesn’t hurt to try.
Here’s what you can do:
- Contact the dealership’s finance manager. Explain your situation and why you believe the inquiry should be removed. Be polite and professional, and provide any supporting documentation you might have.
- Be prepared for rejection. If the dealership refuses to remove the inquiry, don’t get discouraged. Focus on the strategies mentioned above to minimize its impact and improve your credit score over time.
Remember, credit scores are dynamic and constantly changing. While hard inquiries can be a temporary setback, they don’t have to define your financial future. By being proactive and managing your credit responsibly, you can overcome this hurdle and achieve your financial goals.
Shotgunning Won’t Hurt Your FICO Scores
In actuality, FICO (the organization that supplies the credit scores used by lenders) is aware that consumers must compare prices when making significant purchases, such as home and auto loans. For the purpose of credit scoring, they therefore combine all of the auto inquiries made over a given time frame and treat them as a single inquiry.
That means your scores won’t be negatively impacted by “shotgunning”, though there are other possible consequences.
The Process of Sending Your Application to Various Lenders is Called “Shotgunning”
The financing department must submit your application to multiple lenders at once since they are unable to determine exactly where to send it in order to receive the best rate. Both you and the lender benefit from this competition. You get a lower rate and the car dealership gets to maximize their profit.
The problem is that most consumers shopping for a car aren’t aware of the process. All you know is “inquiries can lower your credit scores”. It makes sense that when you see a number of inquiries from multiple lenders and you can only recall granting permission to one, you become upset.
How Do Multiple Car Loan Inquiries Impact Your Score? Can They Be Removed?
FAQ
How do I get rid of hard inquiries on my car loan?
Why do I have so many hard inquiries after buying a car?
What is the secret way to remove hard inquiries?
What happens if a car dealership runs a credit check?
Hard Inquiries: When a car dealership runs a credit check, it is considered a hard inquiry, which can temporarily lower your credit score. Hard inquiries indicate that you are actively seeking credit, and repeated inquiries within a short period of time can suggest financial instability and increase the perceived risk to lenders.
Can hard credit inquiries be removed?
While looking for a new car the auto dealer shopped the best rate for a loan, generating seven or eight hard credit inquiries, which have dropped my score. Can I have these hard inquiries removed? Because the law requires that your personal credit report list all organizations that have requested it, the inquiries cannot be removed.
What is a hard inquiry?
A hard inquiry occurs when you apply for a new loan or credit card. It involves the lender checking one or more credit reports to determine whether you meet its creditworthiness criteria. This is also sometimes called a hard credit check or hard pull. Hard inquiries differ from soft inquiries in two major ways.
Do car inquiries lower your credit score?
The problem is that most consumers shopping for a car aren’t aware of the process. All you know is “inquiries can lower your credit scores”. You understandably get upset when you see a bunch of inquiries coming from several different lenders when you only remember giving permission to one lender.