does applying for an auto loan hurt your credit

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  • How does an auto loan affect your credit score?

  • How an auto loan can help your credit score Tips for shopping for a new auto loan How applying for a new auto loan will impact your credit score When you visit a dealer and decide to purchase a car, fill out the loan paperwork and give the dealer permission to run a credit check, that generates a hard inquiry on your credit report.

  • Can you shop around for a car loan without affecting credit?

  • It鈥檚 possible to shop around for a car loan without it having a huge affect on your credit score. But it all depends on the credit scoring model and whether it groups your multiple credit inquiries into one. You can learn more about how credit scores work in our guide, or visit our guide to car loans to compare options.

  • Does pre-approval for a car loan affect your credit score?

  • Preapproval for car loans and mortgages typically involves a hard credit inquiry, which will lower your credit score a bit. Prequalification for car loans and mortgages usually use a soft credit pull, which doesn’t affect your score. Preapproved credit card offers do not affect your credit score.

  • Why does paying off a car loan early hurt my credit?

  • This is because lenders like to see that you have a mix of different types of credit accounts. Car loans count as installment accounts, while credit cards are known as revolving accounts. So if you don鈥檛 have other installment accounts and pay off your car loan early, your credit score could take a hit.

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