We might have started a little bit of a brouhaha on Twitter last week. That’s okay…we’re here to set the record straight.
It started here: the post called Understanding Your Credit Score. We talked about a number of things, including whether an auto dealer inquiry would impact your credit score. And, specifically, something we said about this image.
Our comment went like this:
For instance, Darnell tells us that he did, indeed, look for a car earlier this year. Well, the auto dealers must have reached out to every lender known to man, because he gets a “D” in the “Recent Inquiries” category.”
Hold on, Dave…hold…on.
We were a little taken aback by one commenter on Twitter – but then we heard from a friend from our days in PR in the Employee Benefits industry, the intrepid Carroll Lachnit, who works at Edmunds.com. (We loved the site even before she started working there…)
She sent us a link to an article from the site – Seven Things to Know About Car Loan Credit Reports – and it’s right in our wheelhouse. Might be in yours, too.
The Auto Dealer Inquiry and Your Credit Score
There are a couple things to consider – foremost among them is the fact that there are three different credit reporting companies, and each use different methodologies.
That’s right – not all credit scores are created equal. PLUS, the DATA in each credit report can be different, since not every lender or grantor of credit reports into all three.
If you’ve looked each of the three credit reports you personally have, you’ll notice this fact.
But, flash forwarding to item 5 in the article from Edmunds, here’s a rather salient point:
According to the Experian Web site: “10% of your credit score is based on inquiries or ‘credit checks.’ Every time you apply for credit, a ‘hard inquiry’ is placed on your credit report. Having too many hard inquiries could indicate to lenders that you’re trying to overspend.”
Darnell’s Trans Union score and the grades in the above graphic don’t tell you what percentage weight is given to “Recent Inquiries” – but it does show 11 of those inquiries AND a “D.”
Takeaway: There’s no Blanket Statement
Every situation is different, and Darnell’s is different from yours and mine. Thus, the advice that we dispensed for Darnell MAY NOT BE WORTHWHILE FOR YOU.
Once again: consult your own financial advisor and/or legal advisor and/or tax advisor before doing anything with the information on this site. Just as we wouldn’t want you to read one blog post about the latest diet craze and then start doing that diet without checking with your doctor…the same advice goes here. And for everything on this site.
What we are trying to do with this site: Get you to focus on ways to save, invest, earn and spend WISELY. The hope is that by spotlighting Darnell – and other examples we’re finding as we go on this financial journey together – we’ll show you some things you can learn from.
And really, the big takeaway from the post on Darnell from Friday? If he knocks out his $955 credit card balance, his score could potentially increase by 25 points. Hmmm.