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When people go shopping for a car, it is natural for them to visit many different dealerships checking out different cars and asking for finance options. Each time you ask for the type of financing you qualify for, the dealership makes a credit check on your records and your report reflects that inquiry.

Inquiries lower credit scores and each inquiry deducts about 5 or 6 points from your score total.

FICO is different in that it treats multiple inquires for car loans or mortgage loans within a thirty day time frame as one credit inquiry and not multiple inquires. This means that all the inquiries are clubbed and treated as only one single inquiry in the thirty days prior to the calculation of your credit score.

This helps when you are rate-shopping and protects you from getting dings on your credit score from what looks like multiple inquiries or “hard pulls”, when you are really only seeking one loan.

Things You Should Remember

* Credit cards are not covered under this rule: All inquiries will be treated as separate pulls and not clubbed together as one if you have applied for multiple credit cards within a thirty day period.

* Try to get your loan within a thirty-day period: Plan out how you can visit all the dealerships that you want to explore and make your final decision within a month. This can protect you from an extended period of credit inquires.

* Check with your credit union or bank first: If you have decent credit, chances are that you will get better finance terms from your credit union or bank. It is always a sound financial practice to check with them first before getting financing from the dealer.

Rate shopping and car shopping will not impact your credit score significantly if you plan your purchase in advance and are able to wrap everything up within a month. However, be ready for a few inquiries to show up on your credit report if your car shopping does get prolonged over the thirty-day period.

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