DBA American Credit Systems, 2018. The Punt Group, LLC

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Explaining to a customer why multiple inquiries doesn't hurt their credit score

“Dear American Credit Systems -  I am the finance manager of a franchise auto dealership. We use Experian, Equifax, and Trans Union to pull credit reports for car loans. I am having a hard time explaining to prospective customers that multiple inquiries by various car dealerships don’t hurt that person’s credit score. How do you suggest I explain this to my customers in a concise fashion?”

 

- Auto Dealership Finance Manager

 

 

 

I would suggest telling the prospect this: It is in the consumer’s interest to shop more than one bank as that is that is how the customer is going to get the best deal. Also, it is in their best interest for the car dealer to use all three bureaus (Experian, Equifax, and Trans Union) when applying for their loan as sometimes one bureau’s score may be higher than the other. Further, it’s actually the most financially responsible thing to do. Therefore, as a policy matter, the credit bureaus are not going to penalize a shopper for being fiscally responsible. As a result, the credit bureaus give what is loosely called a “shopping window.” During the shopping window, the bureaus count all the inquiries as one request. The shopping window can be slightly different from one bureau to the next, but generally speaking it is around 14 days.

 

This window permits the car purchaser a reasonable amount of time to obtain pre-approval from their bank, or alternatively, for an automobile deal to submit their application for a loan to the various banks they have relationships with. Because the car dealer will submit their credit application to more than one bank, the purchase, depending on their FICO score and other factors, may be approved for more than one loan. Then they can make the best decision based on all of their offers.

I hope this was helpful!

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