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What is a hard inquiry for car loan? According to, Equifax, Edmunds, and Bankrate, a hard inquiry occurs when you apply for financing and the potential lender pulls your credit report and checks your score. When a creditor accesses your report for this type of inquiry, your score may decrease by five to 10 points, so you should be mindful of this impact each time you apply for a new credit card or loan.

Exploring the Hard Inquiry Process

Equifax, Edmunds, and Bankrate note that although you may be wary of applying for credit because of the impact of a hard pull on your FICO score, the inquiry is a necessary step to qualify for new credit. However, when an existing customer applies for new credit, the lender may waive the hard inquiry as a courtesy.

According to and Edmunds, the hard inquiry begins when the lender requests your score from one or more of the three major credit bureaus (Equifax, TransUnion, and Experian). Each bureau notes the type of inquiry, date of the inquiry, and who made the inquiry on your credit report.

According to, Edmunds, and Bankrate, shopping around for the best terms and interest rates for an auto loan or mortgage counts as a single hard inquiry. If you have several hard pulls for the same type of financing within a 45-day period, it won’t impact your score as much as several hard pulls over a few months. On the other hand, multiple hard pulls for credit card accounts within a few days could be a red flag to a lender, since this suggests the person is desperate for funding rather than simply shopping around for the best deal., Equifax, and Edmunds note that most credit score models keep hard pulls on your account only for a year. After 12 months, these inquiries no longer impact your report. In addition, and Edmunds report that only 10 percent of your FICO score is determined by your number of inquiries and new credit accounts, so the impact of shopping for an auto loan is generally minor.

According to, Equifax, and Credit Glory, you can dispute a hard inquiry to have it removed form your credit report if a creditor pulled your scores without your permission.

Minimizing the Credit Impact of Hard Inquiries and Equifax recommend these strategies to lessen the impact of hard inquiries on your FICO credit score:

  • When seeking new credit, make all your loan applications within a 14-day period so that the credit bureaus will count all the pulls as a single hard inquiry.
  • Carefully monitor your credit reports and dispute anything that doesn’t look right. You should also look at your credit scores and reports before you apply for an auto line, credit card, or mortgage. This helps you narrow down your search by targeting the best financing for which you are likely to qualify. In addition, and Edmunds report that checking your credit regularly reduces your risk for identity theft and other forms of fraud. It can also detect inaccuracies that can damage your credit score. Removing these items can help boost your credit profile. You may notice unauthorized accounts by keeping track of who is pulling your credit.
  • Opt out of preapproved credit offers if you don’t want these companies to have access to your credit report. Visit the Federal Trade Commission online to learn more about how to stop preapproved loan junk mail.
  • When you learn that a company plans to run your credit, ask what type of inquiry they will make before you give permission. A hard inquiry impacts your score while a soft inquiry does not. You can also confirm the answer they give with the three credit bureaus by checking the inquiry section of your credit report.
  • Credit Glory suggests professional inquiry removal if you are struggling to raise your credit score. This process can help you figure out which actions are negatively impacting your credit and take steps to make corrections.

    Understanding Soft Inquiries

    According to, Equifax, and Edmunds, if you receive a preapproved credit offer, it’s likely the lender has done a soft inquiry on your credit. This type of inquiry, also called a soft pull, does not lower your credit score and is not triggered by applying for a loan or credit card. However, it provides the same information as with a hard pull, including how well you manage your debt, your payment and credit history, negative marks, and your overall credit score.

    Pulling your own credit score or a review of your credit by an existing lender also constitute soft inquiries and will not appear on your credit report. and Edmunds note that you’ll also receive a soft inquiry if an insurance company checks your credit for coverage purposes or if an employer checks your credit in conjunction with a possible job offer.

    Peer-to-peer lending firms, which allow individuals to invest in unsecured auto loans, student loans, and personal loans, also typically use soft credit inquiries. Examples including Upstart, Lending Club, and Prosper. With these options, you can prequalify for auto loans without a hard inquiry on your credit report. This provides peace of mind for borrowers who need financing but have average or below-average credit. In addition, you can apply online and have a decision in just a few minutes.

    Disputing Hard Inquiries reports that consumers can take steps to dispute hard inquiries. First, get in touch with the lender who pulled your credit and ask them to remove this mark from your credit report. You can also dispute the hard inquiry by providing proof that you authorized this action. Applying for credit with the lender constitutes authorization for a credit pull.

    When you dispute a record on your credit report, the credit bureau may place a fraud alert on your account. This alert requires lenders to verify your identity if you apply for new credit within 90 days of the alert. This provides an extra layer of protection for your credit report.


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