How to protect your credit when buying a new car


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Shopping for a new car? Don’t forget to shop for a loan as well.

Although the majority of people have to finance new and used vehicle purchases, it’s often assumed that the financing will happen at the dealership. But it doesn’t have to be done there. In fact, you might get a better deal by not financing with a dealership.

Instead of going to a dealership for financing, you could go to your local bank or credit union or even search online. It’s just as important to explore all your options for a five-year loan as it is to do the same when searching for your next car. After all, the better deal you get, the less you’ll pay in interest over time.

There’s just one thing that might get in the way … your credit scores. Isn’t it wrong to apply for multiple loans at the same time? Won’t your scores suffer as a result? 

Not necessarily. Here’s how to protect your credit while buying a car and ensure that you get the best deal on a loan that you can.

A Simple Way to Protect Your Credit While Buying a Car

It’s a little-known fact that the two major credit score companies, FICO and VantageScore, understand the wisdom of shopping around for credit. They don’t want to penalize you for being a savvy consumer, and that’s why they won’t — as long as they know that’s what’s happening.

In order to signal that you’re rate shopping, all you have to do is apply for all the auto loans you think might be good for you within a small window of time. For FICO, that window is 45 days. For VantageScore, it’s 14. 

To keep to that small timeline, here’s a potential way to approach car shopping:

  1. Check your credit score on Upturn Credit to get an idea of what kind of loan you might be approved for.
  2. Use a car loan calculator like this one from to see how much you can potentially afford.
  3. Use that same site or even your dealership’s website to browse around for cars in your price range that have the style and features you’re looking for. Then pick your top few.
  4. Once you’ve narrowed down the list of cars you might want and the price you want to pay, go ahead and apply for preapprovals until you find the best terms for you — and keep these applications within two weeks if you can (or 45 days maximum).
  5. After you’ve secured pre-approval, be sure to test drive the cars that top your list, even if you ultimately buy a car online. A good deal is one thing, but you have to be sure this car will work for you for years to come.

Never Let Worries About Your Credit Scores Cost You Money

It’s easy to understand fears about damaging your credit scores. After all, the higher your score, the more likelihood you have of being approved for loans, and the better the interest rates you’ll get. 

That said, hard inquiries on a credit score don’t impact the score that much — and avoiding shopping for the best interest-rate loan could cost you far more in the end. 

As in all things financial, it’s important to strike a balance between your money and your credit. Protect your credit scores but not at the expense of getting a better loan. And if you get a loan you can afford, your credit scores will fare that much better since you’ll have no problem making all your payments on time (something that factors quite a bit more into the score than hard inquiries). 

Worried you won’t be able to get a new car because of your credit? Read this to find out how to buy a car with bad credit.

This article first appeared on and was syndicated by

Featured Image Credit: djiledesign / iStock.