By How Many Points Do Credit Inquiries Affect My Credit Score

by Debbie
(Indiana)




Question: I am looking to purchase a new car and working on improving my credit score. I'm wondering by how many points do credit inquiries affect my credit score? I paid for quarterly updates and at last check on 8/11 I had a 634 credit score. I've had the same job for 18 years and my annual income is 68,000. Do you think I would qualify for a $30,000 loan?



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Answer: Hi Debbie,

Regarding credit inquiries and their affect on your credit score, it will depend on a couple of factors...One being what type of inquiry (whether soft or hard) and whether or not the inquiries are related to each other.

A soft inquiry would be one in where you pull your own credit, which has no affect on your credit score. Soft inquiries can also be when a company pulls a snapshot of your credit vs. your whole file.

These are common for let's say a credit card company that you currently have a card with to possibly extend you another offer. That's how you get those pre-approved letters in the mail, but the approval is not final until they make a hard credit inquiry.

A hard credit inquiry will affect your credit score usually in the 5-10 point range, but does not necessarily happen each time your credit is pulled.

For instance, if you were buying a car and I were to pull your credit, then you would get dinged the 5-10 points, but for every lender I submit your application to you will not be dinged.

According to the credit reporting agencies, if you are shopping for a loan all inquiries (after the first one) related to that loan will not count against your credit score if they are pulled within a 14 day period. This period is actually extended to 30 days if you end up purchasing.

So in other words, I could pull your credit and you'd be dinged once, but if I submitted your application to 100 different lenders for an auto loan within that 14 day period your credit score would not be adversely affected. The inquiry would show on your credit report for all 100 inquiries, but your score shouldn't change.

That was a bit of an extreme example of how credit inquiries affect your credit score or don't, but I hope it got the point across.

Regarding whether or not you can get a $30,000 auto loan, well that's a bit trickier and there are quite a few things that I don't know so it's hard to be really specific here.

Your job stability and income are very good and that's a huge factor for lenders, but they will also look at your past and present credit history as well.

Have you had a loan this big before? If so, how did you pay on it? Are you a homeowner? If so, how have you paid on that? Have you had an auto loan before? If so, how did you pay on that or those loans? Do you have any recent repossessions or foreclosures? Have you filed bankruptcy recently? If so, how has your credit been since then?

You don't need to answer those questions, but those are the types of things they will be looking at. The more major an event, then the more time you'll have wanted to pass. Don't get me wrong, there are lenders out there that will give you an approval if you had a repo yesterday, but they are going to charge you an arm and a leg in interest.

All in all, even with the limited information I have I'd say that you should be able to get approved for the $30,000 auto loan you're looking for, but it would be real hard for me to figure a rate for you.

If I had to guess, I'd say that you'd probably be in the mid teens, but possibly better than that if a credit union will approve your loan.

Hope this helps,
Justin

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