If you’ve recently gone car shopping, you may have observed that the dealership pulled your credit report more than once. We’re here to explain why the car dealership made several hard inquiries on your credit report and what it means for you, so don’t panic just yet.
Feeling frustrated because a car dealership ran your credit through 4 different banks without your permission, jeopardizing your chances of getting other loans? You’re not alone. Many car buyers experience this issue and it can be a major setback.
But don’t despair! There are steps you can take to remedy the situation and potentially seek compensation, Let’s explore your options:
Understanding the Impact:
- Multiple Hard Inquiries: Each credit check by a bank generates a “hard inquiry” on your credit report, which can lower your credit score. This can make it difficult to qualify for other loans with favorable interest rates.
- Limited Control: When you allow a dealership to handle financing, you relinquish control over which lenders see your credit information. This can lead to unnecessary inquiries and potentially higher interest rates.
Taking Action:
- Contact the Dealership: Immediately reach out to the dealership and explain the situation. Express your concern about the multiple credit checks and their impact on your credit score.
- Dispute Unnecessary Inquiries: You have the right to dispute inaccurate or unauthorized inquiries on your credit report. Contact the credit bureaus (Experian, Equifax, and TransUnion) and provide evidence that the inquiries were made without your consent.
- Negotiate with Lenders: If your credit score has been affected, try negotiating with lenders for better loan terms. Explain the situation and provide documentation of the disputed inquiries.
- Consider Legal Action: In some cases, you may be able to pursue legal action against the dealership for violating the Fair Credit Reporting Act (FCRA). Consult with an attorney to explore your legal options.
Seeking Compensation:
- Damages: You may be entitled to compensation for any financial losses you incurred due to the unnecessary credit checks, such as higher interest rates on other loans.
- Statutory Damages: The FCRA allows for statutory damages of up to $1,000 for each violation, even if you haven’t suffered actual damages.
Remember:
- Gather Evidence: Keep copies of all communication with the dealership, credit bureaus, and lenders. This documentation will be crucial if you decide to pursue legal action.
- Be Patient: The process of disputing inquiries and seeking compensation can take time. Stay persistent and don’t give up on your rights.
Additional Resources:
- Consumer Financial Protection Bureau (CFPB): https://www.consumerfinance.gov/topics/credit-and-debt/credit-reports-and-scores/
- Federal Trade Commission (FTC): https://consumer.ftc.gov/topics/credit-identity-theft
- National Consumer Law Center (NCLC): https://www.nclc.org/
By taking these steps, you can potentially remedy the situation caused by the dealership’s unauthorized credit checks and seek compensation for any damages you may have incurred. Remember, you have rights as a consumer, and it’s important to exercise them to protect your credit score and financial well-being.
Why dealerships run your credit multiple times
When you apply for a loan at a car dealership, the dealer will usually send it to a few different lenders in an effort to get the best interest rate. This process is commonly known as “shotgunning” and oftentimes can happen without the customer (i. e. YOU) even knowing. Thus, when a car dealership “shotguns” a loan application, it signifies that they are submitting it to several different lenders.
Good news: multiple car dealership inquiries should count as 1 inquiry
If done properly, shotgunning should have little to no effect on your credit score. Rate shopping, or any inquiries about getting an auto loan within a certain time frame, are counted as a single inquiry by the FICO Scoring system.
What to Say When Dealers Say They Need to Run Your Credit for a Quote
FAQ
How much does credit score drop after buying a car?
Why do car dealerships run your credit so many times?
How many times can my credit be pulled when buying a car?
Does running your credit for a car lower your score?
What happens if a car dealership runs a credit check?
Hard Inquiries: When a car dealership runs a credit check, it is considered a hard inquiry, which can temporarily lower your credit score. Hard inquiries indicate that you are actively seeking credit, and repeated inquiries within a short period of time can suggest financial instability and increase the perceived risk to lenders.
Does a dealership check your credit score?
A dealership checking your credit score is a soft inquiry and won’t affect your credit. Any hard credit check triggered by a loan application will appear on your credit report, shaving points from your credit score. We talk a lot about credit scores and their impact on securing a car loan.
Can a car dealer ruin your credit?
Ex-Car Salesman Reveals How Car Dealerships Can Ruin Your Credit! No, it’s up to you whether or not you want your credit checked by the dealer. However, it’s worth noting that some dealers will ask to run your credit before doing a test drive so they can estimate your car buying ability and reliability as a potential customer, JD Power reports.
Should you let a car dealership handle your financing?
If you decide to let the car dealership handle your financing, then you are allowing them to run a hard credit check that they then send to their lender, or lenders, of choice.