Can You Remove Hard Inquiries from Car Dealership?

When you go to a car dealer to buy a new or used car, they may check your credit report more than once to find you the best financing options. This causes your credit report to show multiple hard inquiries, which can hurt your credit score. Can you get these hard credit checks taken off your report after the fact? Let’s find out.

What Are Hard Inquiries?

It’s called a credit inquiry when someone asks to see your credit report. A lender checks your credit report when you apply for new credit, like a mortgage, credit card, or auto loan. This is called a “hard inquiry.” When you or a company checks your credit for things like pre-approved credit card offers, this is called a “soft inquiry.”

Hard inquiries can slightly lower your credit score because applying for new credit is seen as a bigger risk. But the effect is usually small; most scoring models take away less than 5 points for each hard question.

Why Car Dealerships Check Your Credit

When you apply for financing at a car dealership, the dealer will submit your application to lenders to find the best loan terms. This process is known as “shotgunning” – they blast your application out to multiple lenders to incentivize competing offers.

Each credit check by an individual lender counts as a separate hard inquiry. So if the dealer sends your application to 5 lenders, you’ll likely see 5 hard inquiries on your report.

Dealers get multiple quotes because different lenders offer different customers the best rates and terms. This way, they can find you the best financing based on your credit history.

The 14-Day Grouping Period

The good news is credit scoring models don’t penalize people for rate shopping FICO and VantageScore both have a 14-day grouping period for auto loan inquiries.

That means if you have multiple inquiries from auto lenders in a 2 week period, they only count as a single inquiry rather than dinging your score for each one.

This grace period allows you to shop around for the best deal without extra damage to your credit. As long as the dealer concentrates inquiries in a short timeframe, the impact should be minimal.

Removing Hard Inquiries After the Fact

Unfortunately, you cannot have hard inquiries removed simply because you don’t like seeing them on your credit report. Here are some key facts about getting rid of inquiries:

• Credit bureaus are required by law to list all inquiries – The Fair Credit Reporting Act (FCRA) mandates credit bureaus report any entity that accessed your file. Even if inquiries negatively impact your score, they cannot be removed unless reporting them violates the FCRA.

• Dealerships need your consent to run credit checks – By law, a creditor like a dealership cannot pull your report without your written consent. However, most people sign the consent form without reading when applying for financing.

• Multiple hard inquiries are an expected part of the process – Car dealers are upfront that they will check your credit with multiple lenders to get you the best deal. As long as the checks occur in a short period, credit scoring models minimize the impact anyway.

• Inquiries fade with time – The negative influence of inquiries decreases over time. Many scoring models stop counting inquiries after 12 months. Continuing to build positive credit is more important than worrying about old inquiries.

The only way to potentially remove inquiries is by proving they were made illegally without your consent or knowledge. But again, consent is usually granted by signing applications.

How to Minimize Hard Inquiries When Buying a Car

To reduce the number of hard inquiries when car shopping:

• Get pre-approved financing – Being pre-approved gives you more leverage to negotiate since you already have an offer. The dealer may still run your credit to beat the terms, but it limits inquiries.

• Specify only 1 credit check is allowed – Inform the dealer upfront you will only allow them to run your credit with one lender. Decline to sign applications if they won’t comply.

• Compare rates online – Research current auto loan rates before visiting dealers so you know what terms to expect. Ask the dealer to beat the best offer you found.

• Consider paying cash – Paying the full amount in cash means no credit check needed. You can withdraw funds from your bank once the sale is finalized.

How to Recover from Credit Inquiries

If your score drops due to the hard inquiries from your auto loan application, here are some tips to rebuild it:

• Wait for inquiries to fall off – As mentioned above, inquiries matter less and less as time passes. Letting them age is the easiest way to recover points lost.

• Avoid new loan applications temporarily – Hold off applying for more credit and accruing additional inquiries until your score rebounds. Limit inquiries whenever possible.

• Pay all bills on time – Payment history is the biggest factor in credit scores. Being diligent about paying on time can help offset inquiry impacts.

• Lower credit utilization – Keep balances low on credit cards and other revolving credit to avoid high utilization rates that damage scores.

• Request credit limit increases – Higher limits results in lower utilization. Or request to shift limits between existing cards if one card has excess capacity.

• Add positive information – Opening new accounts responsibly can help build your score over time. Using credit boost services like Experian Boost can also have a positive impact.

Hard inquiries from auto loan rate shopping are an inevitable part of the dealership financing process. But understanding their impact and taking steps to minimize their damage can help you get the best deal on a new car without destroying your credit.

Unfortunately, hard inquiries resulting from a car dealership shotgunning your application cannot simply be removed after the fact in most cases. They will fade with time and prudent credit habits can offset their damage. Going in with eyes wide open, limiting checks, and taking control of your credit recovery are the keys to overcoming any negative impacts. With preparation and diligence, you can both get the ideal auto loan and maintain your credit score.