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Will car loan pre-approval impact by score and by how much?
I want to get preapproved for a car loan so I know what I can spend. How much will this impact my credit score?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
A
car loan
pre-approval should only have a slight impact on your overall credit score, typically in the range of five to 10 points.The reason that your credit score will drop five to 10 points is due to the hard inquiry on your credit report (when a lender pulls your credit). A hard inquiry is one of the factors that impact your score the least, comprising about 10% of your total credit score. Credit bureaus also allow you to get as many hard inquiries as you want in a 14-day period and it only counts as one, so if you’re shopping around, make sure to do so within this window.
As you continue to make your car loan payments on time, you should find that your credit score rises. After about a year or two, depending on the credit bureau, the hard inquiry will fall off your credit report altogether, giving you a strong credit score.
Although it doesn’t build your credit, don’t needlessly waste money by overpaying on car insurance. Team up with
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