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Bad Credit Auto Loans

Checking Your Credit

As we all know, your credit score is important. While everyone should be doing what they can to keep their score as high as possible, it is more common than you might think for people to have a poor credit score. If you are in the market for your next vehicle, and hoping to get an auto loan, one of the very first steps is to get a good understanding of where you stand credit-wise. Did you know everyone can get a copy of their full credit report for free, once per year? If you go to and go through a handful of steps to confirm your identity, you are entitled to this. You will also find a variety of credit score sites, some are free and some charge a small fee. There are three major credit reporting agencies - Experian, TransUnion, and Equifax. The scores generated based on data from these agencies can vary. So it is a good idea, if you are really concerned about your score, to check all three.

Understanding Your Score

So once you have chosen a site to view your credit score on, it's important to know what you are looking at. There are five basic aspects that influence your credit score: how long you have had credit accounts, your payment history, the amount of credit you carry, how long ago it's been since you opened a new credit line, and the types of credit you have. One of the most important factors is to show you are consistently paying bills on time, over a long period of time. Also important is your credit balance or amount owed vs the amount of credit you have. Once you look at your report and understand the score factors, you might be able to come up with a plan to improve your score.

Hard and Soft Credit Inquiries

You've probably heard about hard and soft credit inquiries. The soft ones are the "good ones" because they don't affect your credit score when they occur. The hard ones are the bad ones because they do affect your score -and in a negative way.

But what is this credit inquiry stuff all about? What is the real difference between hard and soft inquiries and why do the hard ones affect your credit? Curious minds want to know. Well, let's start with the basics.

What is a soft inquiry?

Soft inquiries (also known as "soft pulls") typically occur when a person or company checks your credit as part of a background check. This may occur, for example, when a credit card issuer checks your credit without your permission to see if you qualify for certain promotions.

Common soft inquiries would include things like: Checking your credit scores on-line with agencies like CreditKarma, Employment verification (i.e. background checks), "Pre-qualified" credit card offers or insurance quotes.

Unlike hard inquiries, soft inquiries won't affect your credit scores. (In fact, they may or may not be even be recorded in your credit reports, depending on the credit agency.) Soft inquiries are only visible to you when you view your credit reports.

A common question is: What will checking my own credit score be considered? Fortunately, checking your own score, such as through Credit Karma, VantageScore or other on-line credit score companies, will result in a soft inquiry. It won't affect your score at all.

What is a hard inquiry?

Hard inquiries (also known as "hard pulls") usually occur when a financial institution, such as a lender or credit card issuer, checks your credit scores when making a lending decision. They commonly take place when you apply for a mortgage, personal loan or credit card, and in almost all cases, you have to authorize them.

Common hard inquiries would include things like: Mortgage applications, Student loan applications, Auto loan applications, Credit card applications, Personal loan applications and Apartment rental applications

A hard inquiry means that you are looking for someone to loan you money so it increases a potential lenders risk a small amount. Because of this, the credit agencies deduct a few points from your credit score. We know it doesn't sound fair but that's just the way that that financial services companies work.

At least, in most cases, a single hard inquiry is unlikely to play a big role in whether you're approved for a new credit card or loan. And the damage to your credit scores usually decrease or disappear in two years.

What you want to avoid is multiple hard pulls in a short period of time. Multiple hard inquiries in a short period could lead lenders and credit card issuers to consider you a higher-risk customer. The way they see it, it suggests you may be short on cash or getting ready to rack up a lot of debt.


Your credit scores play a substantial role in your financial health. To help you keep track of hard inquiries that may influence your credit scores, check your credit reports occasionally. As we mentioned, while one hard inquiry may knock a few points off your scores, multiple ones in a short amount of time may cause more damage.

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