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Does applying for a car loan affect credit?
Does your credit go down when you apply for a car loan? I’ve been working on raising my credit score, but I don’t want it to go down after applying for a loan.
Phoebe Mah · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Great question!
While having a good credit score and credit history can improve your chances of being approved for a loan, applying for a
car loan
will lower your credit score.While it can be discouraging to see your credit score drop after improving it, it’s temporary. Once you finalize your loan and begin making consistent monthly payments, your credit will rebound.
That said, the drop in your credit score won’t occur until after the lender has reviewed your credit, so the drop shouldn’t affect your chances of approval. Because of this, experts recommend shopping for car loans in a specific time frame, usually 14 days. Most credit bureaus will consider any inquiries during this time frame as one single hit, lessening the impact on your credit.
Once you find a car and loan you like, make sure you have the best
car insurance
coverage with Jerry
. Jerry gathers personalized quotes from up to 50 top insurance providers like Travelers and Allstate to ensure you get the best rates and coverage for your new car. View full answer
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