The company that invented the credit score explains how people with extensive credit as well as those with no credit history can be affected by inquiries
What we know
Car buyers with poor credit who are in the process of applying for car loans should understand how this action will affect their credit scores.
Here at Auto Credit Express we believe it’s important to understand how this works in particular because we’ve spent the past two decades matching car buyers that have questionable credit with those new car dealers that can arrange for approved car loans for them.
It’s also the reason our website features a resource section – to share our understanding of the bad credit car loan process so they’ll know what to expect and hopefully give them a better chance of successfully completing their loans.
So today we’re going to go directly to the source – FICO – to show the impact on your credit scores of getting a car loan with no credit history when you go to apply for credit.
FICO Scores and inquiries—the facts
FICO, the company responsible for the original credit score, recently released an article with the above title covering this very topic. Here’s what it had to say:
There always seems to be a lot of interest in how the FICO Score is impacted when a consumer applies for credit. In truth, these credit inquiries account for a relatively small percent of the score (less than 10%, in fact). Because of ongoing interest, let’s walk through some interesting facts about inquiries:
• 49% of consumers have no inquiries, 24% have 1 inquiry, and 27% have 2 or more inquiries.
• 57% of consumers score the maximum number of points for inquiries; that is, inquiries are not a factor for at least 57% of consumers.
• If an inquiry does impact a score, it’s typically by a small amount—less than five points, on average.
• 89% of the time, inquiries are not even one of the top four greatest factors impacting the score.
• Only 0.4% of the time, inquiries are the score factor with the greatest impact.
• Only 14% of consumers lose more than 10 points because of inquiries. Only 4% of consumers lose more than 20 points because of inquiries.
So yes, inquiries can impact a FICO Score, but not by all that much, in the grand scheme of things.
The Bottom Line
Car buyers – especially those who have experienced credit problems either now or in the past – need to be aware of how a decision to apply for credit will ultimately affect their FICO scores.
Another thing to consider: if you’ve previously applied for auto credit and have been turned down for a conventional auto loan or if you have bruised credit and you need a new car, we want you to know that Auto Credit Express matches applicants with those new car dealers that can offer them their best opportunities for car loan approvals.
So if you’re ready to establish your auto credit, you can begin now by filling out our online car loans application.