We just purchased a new car and actually had a rather plesant experience up until yesterday when we received a notice from a bank (not the one we have our loan with) regarding our loan application. I called the dealer about it and basically they submitted our loan application to three banks when we had only authorized them to submit to our credit union. Unfortunately, this was only done verbally. At this point, we're upset that they applied for credit on our behalf with the additional lenders. Also, we're upset that this will have a negative effect on our credit scores. Three questions: (1) how bad is this for our credit scores? (2) is there any way have the extra inquiries removed from our credit reports? (3) is this worth following up on with the dealer and/or other agencies (can we be compensated for their lowering our credit scores)?
From Credit Inquiries: How Credit Checks Affect Your FICO Score - myFICO What to know about "rate shopping." Looking for a mortgage or an auto loan may cause multiple lenders to request your credit report, even though youre only looking for one loan. To compensate for this, the score ignores all mortgage and auto inquiries made in the 30 days prior to scoring. So if you find a loan within 30 days, the inquiries won't affect your score while you're rate shopping. In addition, the score looks on your credit report for auto or mortgage inquiries older than 30 days. If it finds some, it counts all those inquiries that fall in a typical shopping period as just one inquiry when determining your score. For FICO scores calculated from older versions of the scoring formula, this shopping period is any 14 day span. For FICO scores calculated from the newest versions of the scoring formula, this shopping period is any 45 day span. Each lender chooses which version of the FICO scoring formula it wants the credit reporting agency to use to calculate your FICO score.
Next time, go to your credit union first and apply for a loan. Get a preapproval letter from them stating how much they will finance. Take that to the dealer, don't let them apply with anyone, even your credit union--they them you have approved financing and you do NOT authorize them to apply with anyone. Do it yourself.
