Everyone likes to save money, and in some cases refinancing your car loan can save you thousands of dollars. But, some people hesitate to consider auto refinancing because they think it will affect their credit score. Applying for new credit of any kind may lower your credit score, but usually not by very much. Most credit scores are not affected at all by car refinancing inquiries. Let’s look into the details.

All About Credit Inquiries

When you go to a bank or any other lending institution looking for a loan, you give them permission to access your credit score. This is called an “inquiry.” Your credit report will list any inquiries that were made about you. In some cases, businesses that you don’t even know may appear on your credit report. These unsolicited credit inquires have no effect on your credit rating.

However, inquires that you have made yourself can affect your credit rating, and this depends partially on your personal credit history. If you have many inquires in the past, then each subsequent inquiry may have a greater impact on your credit score. The full range for credit scores in the USA is 300-850. And, in general, each credit inquiry lowers your credit score only by 5 points or less.

Rate Shopping

When shopping for auto, mortgage or student loans, it pays to inquire with multiple lenders to get the best rate. The 2004 Fair Credit Reporting Act (FCRA) was passed to allow consumers to make multiple rate inquiries without a penalty to their credit score.

When you go rate shopping to refinance your car loan, you can make as many inquiries as you like within a 30 day period. All of these inquires will be treated as one single inquiry as far as your credit score goes. Auto refinance lead finder services, like CARCHEX, are ideal in this situation since they can make inquiries to nearly one hundred different lenders all with little to no impact on your credit score.

Things To Watch Out For

There are some cases in which a car refinancing inquiry could hurt your credit score. If you are simultaneously applying for another type of credit, like a new credit card, it may be best to wait before looking into auto refinancing. Also, make sure you make all auto refinance inquiries occur within the 30 day period protected under the Fair Credit Reporting Act. Any inquiries made outside of this time period will be listed as separate inquiries on your credit report and could impact your overall credit score.

While you are going through the auto refinancing process, it is a good idea not to initiate any new credit inquiries until the new car loan is processed.  Finally, once you get refinanced, make sure you make your payments on time and in full. This is actually one of the best ways to improve your credit rating.


Refinancing your car or truck loan can be a way to shrink your monthly payments or reduce the term of loan. In most cases, credit inquires associated with refinancing will have little to no impact on your credit score.

About The Author


Joe Campanella is the EVP of Business Development for CARCHEX and oversees partner relationships. Joe possesses 12+ years of experience building sales/customer service teams and securing strategic partnerships. He is a sports enthusiast who enjoys mountain biking, surfing and snowboarding in his spare time.

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