Car Shopping-Why do I have so many inquires?
Your Credit Minute Show Notes:
- 00:00 YouTubers, what’s up? This is Nik Tsoukales with Key Credit Repair. Guys, awesome question of the day, super duper popular question, so if you’re wondering about this, I’m going to break it down for you. So, the question of the day is: Why is it when I go for a car loan, I end up with dozens of inquiries although I only went to one dealership, one finance manager, one place, okay? The reason for that, really, is, um, um, in most cases, it’s, uh, it’s your credit, okay? So, let’s say the dealership is, uh, Toyota, okay? You went to an official Toyota dealership and you’re expecting them to run the financing option through Toyota Financial, but you can’t get approved because of a credit issue, okay? All of a sudden, the dealer, uh, needs to shop that deal around, okay?
- 00:45 So, typically what they’re going to do is they’re going to take that application and they’re going to submit it to a bunch of different, uh, lenders. They’re going to submit it to credits unions. They’re going to submit it to, um, car loan companies. They’re going to submit it to Chase, this company, that company, um, and they’re going to shop that deal for you just like a mortgage broker would shop the deal for you, okay? And what’s going to happen, each of those companies, in order to give you a proper quote, uh, in order to give you an accurate, uh, rate, what they’re going to do is they’re going to pull credit within their own automated underwriting systems, um, and if it’s approved, obviously they’re going to issue that approval, okay?
- 01:20 Uh, when this happens, you can get, you know, you can get five increase, maybe even a dozen increase. It really depends on how many banks the lender has submitted that application to. There is software now as well that will actually do that- that submission to multiple lenders at the same time, so sometimes it’s literally just the finance manager clicking one button in their, uh, in their software that submits it to all those banks. Now, here’s the good thing, okay? I know you’re scared now. You’re scared to go to the car dealership, okay? But, just like always with inquiries, we’re going to turn that frown upside down, okay?
- 01:55 Let’s actually talk about why this is no big deal, okay? It’s no big deal because FICO has stated that multiple similar inquiries for the same purpose have no adverse effect on their credit score. Why? Because they know you’re shopping for a deal. You’re, quote/unquote, rate shopping, so those multiple inquiries from that car dealership or that home lender or whoever’s shopping a deal for you with various banks, that those inquiries are going to be counted as one inquiry, okay? It’s not going to hurt your credit score.
- 02:27 Now, if you do this once a month for the next year, that could cause some adverse actions in your credit score [inaudible 00:02:33] because there’s a perception at that point that you could be a flight risk of getting some weird financing or doing something funny. Um, but regular car shopping, guys, there’s no drop to your, uh, credit score. Shop around, get the best deal, let the car dealership, uh, do its thing. Thanks, guys. Nik Tsoukales with the Key Credit Repair. Click below to learn more and to find out more about our company. Thanks, guys.