Did they just ruin my credit rating?
I only had a credit card for about two months. I’ve been using it very responisibly, trying to build a good credit score.
Two weeks ago, I went out and bought a new used car, with my dad as a cosigner. We filled out the papers to authorize one credit check, got approved, and we got the car.
The past few days, I’ve been getting several letters in the mail saying I’ve been approved and declined for various loans. I noticed that they were all in the range of the car’s price. Curious, I called the dealer, and they said that to give me a good rate, they checked with several credit companies to open an account for me. I didn’t approve that, I only approved them to do one credit check.
Now from my understanding, if you have many credit inquiries in a short time, that lowers your rating heavily.
Did this harm my credit score, and if so, how badly? And how can I fix it?
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September 11th, 2010 at 11:30 pm
Understandable question and frustration. Breathe easy this is average and normal and should not hurt your credit score. It could also help you.
Why: The credit bureaus (credit score models) have built in an allowance to count multiple inquiries in a short time as one. This was done several years ago to cover situations like yours of buying a house or car and shopping for the best loan.
Helpful: If any lender declines you, you can get a free copy of your credit bureau from the bureau the lender used. You can review it and make sure everything is correct (this is in addition to the one free per bureau one per year.)
Beware: What can hurt your score is having multiple inquiries over a period of time (weeks not days), and either opening multiple new accounts or not getting any new account.
September 11th, 2010 at 11:30 pm
No, it won’t "ruin" your credit. You only have one actual loan.
September 11th, 2010 at 11:30 pm
Several checks over a short period of time for one purchase is only counted as one inquiry. Your credit should be fine; so don’t worry.
By the way, you can check your credit report for free (once per year per credit reporting bureau) by going to the link below. You can also get your credit score by paying a small amount ($7 or so).
September 11th, 2010 at 11:30 pm
Don’t worry auto finance is what I do for a living and all inquiries made in a 14-day period are lumped together and only count as one, they all show but your score only gets dinged once.
Same is true when you apply for a mortgage.
And yes you did approve the dealer to do this, it’s in the fine print so they can get you the best rate.
September 11th, 2010 at 11:30 pm
Several inquiries in short period of time with regards to 1 purchase such as house or car are considered as 1.
You have nothing to worry about.
September 11th, 2010 at 11:30 pm
The score allows for rate shopping. They realize that for a mortgage or a car purchase, you can only end up with one loan, so you are not pyramiding credit.
September 11th, 2010 at 11:30 pm
Good to hear that you’re using the card RESPONSIBLY. Perhaps you could TEACH SOME ADULTS THE SAME TECHNIQUE THAT YOU’VE MASTERED!!!!
I just signed on with Life Loc (you’ve undoubtedly seen the commercials) and they let you check/verify your credit score for their subscription price……..And they protect your identity…..I feel that for $100/yr, it’s just as savvy as having AAA……..You’re credit is NOT affected negetively at all by credit inquiries…….
You can also call Equifax, Trans Union and Equifax and by LAW they HAVE TO PROVIDE YOU WITH A FREE CREDIT REPORT ONCE A YEAR……
Nice to hear that some folks in university are being responsible with their credit…….which CAN affect your life…..
Christopher
September 11th, 2010 at 11:30 pm
Next time see If you can get approval from a credit union or one of your jobs must have some type of credit union or financial institution or where you bank. You don’t have to have them loan shop for you. Maybe your Dads job has an institution, since he had to co-sign for you. Pay off the loan as soon as possible and next time you will be able to get in your name only with a bigger down.
September 11th, 2010 at 11:30 pm
You should be just fine.