Article takeaways:
- To find you financing offers, dealers may submit your credit application to multiple lenders.
- If done within a certain timing window (14 to 45 days), credit bureaus may count multiple inquiries as one inquiry.
- The inquiry triggers a hard credit check. This may affect your credit score– but not significantly and only for up to a year.
- Multiple lender requests typically stay visible on your credit report for up to two years, even if you don't fund with them.
To help you find financing offers, an auto dealer will likely submit your financing application to multiple lenders. Understanding how this process works can help you confidently navigate your auto financing—and better understand why all of these lenders show up on your credit report later. Let's take a closer look.
Why would a dealer send your application to multiple lenders?
Financing offers can vary widely from one lender to the next. That's because dealerships work with a range of lending institutions, including credit unions, banks and online lenders. Some of those may be able to offer you a more competitive rate than the rest.
When you sign your financing application, you authorize the dealer to submit your loan application to multiple lenders for offers. The documents you bring to the dealer may get sent along with your application to support your creditworthiness.
Next, these lenders submit requests to review your credit report. Those inquiries generate a hard credit check (also known as a "pull," "inquiry" or "hit"), a necessary step to calculate an official financing offer.
How much do multiple lender inquiries impact your credit score?
When multiple lender inquiries occur within a certain timing window—14 to 45 days—credit bureaus treat them as one credit check. This is beneficial for you as a car buyer, because it lets you explore your options with multiple lenders. According to FICO®, the average credit score impact is about five points.
For example, if Capital One shows up on your credit report along with multiple other lenders, and you recently shopped for a car, the dealer likely submitted your loan application to Capital One Auto Finance on your behalf. So, even though these multiple lender requests are visible on your credit report, your credit score was likely only impacted once if they occurred within that 14 to 45 day timing window.
These lender inquiries remain visible on your credit report for two years, but they should only impact your credit score for up to one year.
If you seek out financing options on your own, those requests will also show up on your credit report.
All lender inquiries, whether they result in soft or hard credit checks, will show up on your credit report. However, only hard inquiries, such as financing applications will impact your credit score. Additionally, hard inquiries that occur within a certain timing window—14 to 45 days—are treated as one credit check by the credit bureaus.
If you have a question about Capital One Auto, please contact us.
Want to stay on top of any changes to your credit score over time? Get CreditWise for free to monitor your credit and more.