In AB, what should I know about soft vs hard inquiries for car loans?

In Alberta, distinguishing between soft and hard inquiries is vital when navigating the car loan process. A soft inquiry, or soft pull, occurs when you check your own credit score or when a lender performs a pre-qualification check without a formal application. These inquiries do not impact your credit score, as they are informational and not indicative of new credit-seeking behaviour, allowing you to gauge eligibility without consequence.

A hard inquiry, or hard pull, on the other hand, happens when you formally apply for a car loan, and the lender accesses your full credit report from bureaus like Equifax or TransUnion to make a lending decision. Each hard inquiry can cause a minor, temporary dip in your credit score, typically lasting a few months, as it signals an active pursuit of new credit, which can be seen as increased risk if done frequently.

However, Canadian credit bureaus recognize the importance of rate shopping for auto loans. If you apply for multiple car loans of the same type within a specific timeframe, generally 14 to 45 days (though this window can vary slightly between bureaus), these inquiries are often grouped and treated as a single hard inquiry for scoring purposes. This "shopping window" is crucial for consumers in AB, as it encourages you to compare offers from various lenders to secure the most competitive interest rates and terms in the 2025 market without unduly penalizing your credit score for diligent comparison shopping. This matters because it empowers you to confidently seek out the best financing options, ensuring you get the most advantageous deal for your vehicle purchase.