Will Checking Your Credit Lower Your Score?

There's some truth to this, but it's not as bad as you think. The reason lenders don't like it when you get your credit checked often is because it could mean you are in need of cash. People who need cash may have a hard time paying their bills.

The good news is that most of the time, checking your credit will not lower your score.

There are two types of credit requests: hard inquiry and soft inquiry. A hard inquiry is when you apply for a loan or credit card and you specifically authorize the lender to view your credit history.

This type of inquiry does affect your score slightly, but the good news is that the credit rating agencies ignore most automotive-related loan requests made within any 30 day period.

They realize that smart car shoppers like to compare rates and so they give us a break on this. Same thing applies to home mortgage loans.

Just make sure you do all of your car loan shopping all within a 30 day period.

A soft inquiry, on the other hand, is when a lender checks your credit report without your approval in order to qualify you for a pre-approved credit offer. (This is all perfectly legal).

When you look at your own credit report, you will see many of these soft inquiries made by different credit card companies and sometimes insurance companies.

You really shouldn't worry much about lowering your credit score when shopping for a car loan. Even if your score is affected, you will still be much better off with the savings you're likely to get by comparison shopping your financing.