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How much does a hard inquiry for a car loan hurt your credit?
I know that hard inquiries can impact your credit score. So when I apply for car loans, how much of a hit will my credit take? Is there any way to minimize the damage?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Unlike defaulting on a loan or missing payments, a hard inquiry on your car loan will only drop your score 5-10 points. Don’t sweat it too much.
Hard inquiries lower your credit score because they indicate you may be taking on new debt. Credit bureaus will see any new
car loan
as something you could potentially default on, which can cause your creditworthiness to decrease.There’s no way to avoid this temporary drop in your credit score, but there’s one thing you can do to “minimize the damage.” Make sure to apply for all the loans you’re interested in within a 14-day window and there will be only one hard inquiry on your credit.
While you’re shopping for car loan rates, make sure you’re also comparing car insurance quotes online to find the best rates for the coverage you need.
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