However, most credit scoring systems allow people to shop for the best rates on car loans without having any significant negative impact on their credit scores. Today, credit scoring systems count all inquiries for auto loans within a given period of time, usually around 14 days, as a single inquiry.
Car dealerships often send your application to multiple lenders at the same time in a process called “shotgunning” to find the best loan terms. As a result, lenders compete for the loan and the consumer benefits by getting the best rates and finance terms available to them.
If the drop in your score was in fact due to the loan application with the auto dealer, it should have had the same impact, whether there were eight inquiries or just one.
Although inquiries can have an impact on credit scores, that impact is typically small and temporary. Some credit scoring systems no longer count them at all after one year.
It is also important to be aware that the impact of inquiries decreases over time, so your credit scores should rebound fairly quickly, assuming there are not other issues with your credit history.
If you are trying to improve your credit score, pay close attention to the list of risk factors you received along with your score. This list will help you understand the top factors within your credit history that are currently impacting your credit scores. Addressing these factors will help to increase all your credit scores, regardless of the scoring system or formula being used.
The factors are typically listed in order of importance. You usually receive four or five factors. Inquiries must be listed if they have any impact on scores at all. They are always the least important so will almost certainly be listed last. That’s why in the credit reporting industry inquiries are referred to as “the fifth factor.”
Inquiries won’t affect a lending decision unless there are other, more serious issues, that are causing your scores to be marginal.