Every time you apply for credit, the lender pulls a copy of your credit report to review before he makes his decision. Part of what the lender looks at is your credit score, often referred to as your FICO score, after the company that created this commonly used scoring system. Your credit score goes up or down depending on many different factors, including how well you use credit, how much money you owe and how well you make your payments. Getting a quote for an auto purchase usually is not one of the factors that will affect your score.
Just The Quotes
When you obtain an auto quote, the dealer is promising you how much a certain car will cost if you buy it within a certain time frame and your credit is not a factor. In this case, you can get as many auto quotes as you want and it won’t impact your credit at all. If you want to get pre-qualified for a particular car or price range, the dealer may suggest checking your credit to make sure you can buy the car if you like the quote. In this case, the inquiry will show up on your credit report and may have an impact.
Soft Inquiry Basics
A soft credit inquiry, also called a soft hit, occurs when your credit report is requested for reasons other than for you to obtain new credit. This includes the times when you pull your own report to check for errors, when your credit report is viewed as part of a background check or when a company reviews batches of credit reports as part of a marketing plan. According to FICO, soft inquiries are ignored by the scoring system and don’t have any impact on your credit score.
Hard Inquiry Basics
A hard credit inquiry is when a creditor pulls your credit report because you have initiated some type of action that could result in new credit for you. This includes applying for a cash loan, filling out a credit card application or applying for an auto loan. FICO reports that hard inquiries typically result in a minimal impact to your credit score, usually dropping it by less than five points, if at all. One or two hard hits aren’t a problem, but more than six of them on your credit report can signal trouble, since people with that many are at increased risk of filing for bankruptcy.
Shopping For A Loan
The exception to the hard hit rule happens when you get a lot of hard hits in a short period of time because you are shopping around for a good loan. This is common behavior and the sign of a smart consumer, and the FICO scoring system takes that into account. Multiple hard inquiries related to a single type of loan, such as an auto or home loan, get ignored by the system as long as they all occur within a 45-day period. If they keep coming after that, they can drop your credit score.
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