When shopping for a new car, you may notice the dealership running your credit multiple times. This can seem alarming, but it’s actually a standard industry practice. Here’s an explanation of why dealerships check your credit repeatedly and what it means for you.
Why Do Dealerships Run Credit Checks Multiple Times?
A dealership will check your credit more than once in order to get you the best interest rate on an auto loan.
Here’s how it works:
-
You apply for financing at the dealership to purchase a car
-
The dealer submits your application to various lenders to shop for the best loan terms
-
Each lender runs a hard credit inquiry to review your application.
By using this “shotgun” method, the dealer can get several quotes and give you the best interest rate. Most of the time, the fact that different lenders are asking a lot of questions is good for you.
What’s the Difference Between Soft and Hard Credit Checks?
When a lender checks your credit, there are two main types of credit inquiries:
Soft inquiry – Also called a soft pull, this is when a lender pre-screens you for an offer but doesn’t guarantee approval. Soft inquiries don’t affect your credit score.
Hard inquiry – Also known as a hard pull, this checks your credit when formally applying for a loan. Hard inquiries can lower your score temporarily.
Dealerships initially make soft inquiries to see if you pre-qualify. Once you apply for financing, they do hard pulls to send your application to lenders.
How Do Multiple Inquiries Affect Your Credit Score?
The good news is that mortgage and auto loan inquiries within a certain period count as just one inquiry. This prevents your score from dropping every time a lender checks your credit.
Here are the timeframes that various FICO versions use:
- FICO 98: 14 days
- FICO 04: 30 days
- FICO 08: 45 days
As long as the dealer does the hard inquiries within the time limits, they shouldn’t have a big effect on your credit score.
Tips to Limit Hard Inquiries When Car Shopping
If you want to reduce hard credit checks while getting a car loan, here are a few tips:
-
Pre-qualify with a lender first before visiting dealers. This lets you know your rates without hard inquiries.
-
Limit your car shopping to a couple weeks. Hard inquiries in a short span are grouped together.
-
Ask the dealer to limit credit checks to 3-4 top lenders to find you the best deal. More may be unnecessary.
-
Review your credit report regularly and dispute any erroneous information that may be affecting your rates.
-
Consider getting pre-approved financing from your bank or credit union before shopping.
As long as the dealer groups the hard credit inquiries within the designated timeframe, they shouldn’t excessively damage your credit score. But it never hurts to monitor your credit report and limit hard checks where possible.
The Bottom Line
It’s common for a car dealership to submit your loan application to multiple lenders when financing a car purchase. This rate shopping allows them to secure the best loan terms and interest rate for you. As long as they complete the hard inquiries within the designated period, it will minimize the impact on your credit. While too many hard inquiries isn’t ideal, some are to be expected when shopping for an auto loan.
What Happens When a Car Dealership Runs Your Credit?
If you decide to let the car dealership handle your financing, then you are allowing them to run a hard credit check that they then send to their lender, or lenders, of choice. While letting dealerships handle the financial aspect of your purchase may be convenient, it also means a lack of control over which lenders are available to you and who has access to your financial information.
Unless a dealership provides their own in-house financing, its likely they will pass along your financing contract to the bank, credit union, or third-party lender of their choice. Although dealerships may have a preferred lender, some dealerships choose to “shotgun” your credit information to multiple lenders, which is a tactic dealers use to make lenders compete to give you the best rate.
Many dealers contact around five lenders and then choose a single loan offer to present to you. If this is a privacy concern for you, be sure to check with your dealership to understand their process before submitting an application.
How Car Dealers Check Your Credit
Car dealerships tend to have their own individual systems to complete, file, and organize credit applications. These include a variety of dealer-specific tools, such as RouteOne and Dealertrack.
These tools help dealerships process and send your credit report to lenders, and they might store your financial information â even after your application is approved. For example, RouteOne holds onto this data for up to 60 days so dealers can go back and review as necessary.
Car Dealer RUINED My Credit!! – How many times can my credit be pulled when buying a car?
FAQ
Why did the dealership run my credit multiple times?
Car dealers will run your credit across multiple banks/credit unions/lenders in order to try and find the lowest APR. Totally normal. While they will all appear on your credit report, it will only count as one “hard pull,” because credit bureaus lump all the hits together within a certain window.
How many times is your credit run when buying a car?
If you’re shopping for a new auto or mortgage loan or a new utility provider, the multiple inquiries are generally counted as one inquiry for a given period of time. The period of time may vary depending on the credit scoring model used, but it’s typically from 14 to 45 days.
Can a car dealership keep running your credit?
Because they don’t hurt your credit score, car dealers may do a soft inquiry on a shopper without their knowledge or permission. However, a car dealer can’t perform a hard inquiry without your written consent because a hard pull will diminish your credit score.
What happens if your credit is run multiple times?
Often no points are subtracted. However, multiple hard inquiries can deplete your score by as much as 10 points each time they happen. Jan 6, 2025.