Yes, car dealerships can lie about your credit score This is a common practice, and it can have a significant impact on your ability to get a loan and the interest rate you pay
Here’s how it works:
- The dealer runs your credit score. They can do this through a credit bureau or a third-party company.
- The dealer tells you that your credit score is lower than it actually is. This is often done to make you think that you need to finance the car through the dealership, rather than through a bank or credit union.
- The dealer charges you a higher interest rate. This is because they know that you are less likely to be able to get a loan elsewhere.
Why do car dealerships lie about credit scores?
There are a few reasons why car dealerships might lie about credit scores:
- To make more money. Dealerships make money by selling cars and financing loans. If they can get you to finance a loan through them, they will make more money.
- To close the deal. Dealerships are often under pressure to sell cars. If they can get you to finance a loan through them, they are more likely to close the deal.
- To take advantage of you. Some dealerships prey on people who don’t know much about credit or financing. They know that these people are more likely to believe them when they say that their credit score is lower than it actually is.
What can you do to protect yourself?
There are a few things you can do to protect yourself from being lied to about your credit score:
- Get your credit score before you go to the dealership. You can get your credit score for free from a number of websites, such as Credit Karma and Annual Credit Report.
- Shop around for a loan. Don’t just take the first loan that the dealership offers you. Get quotes from other banks and credit unions to see if you can get a better rate.
- Be prepared to walk away. If you don’t feel comfortable with the deal, don’t be afraid to walk away. There are other dealerships out there that will be happy to work with you.
Here are some additional tips:
- Ask the dealer for a copy of your credit report. They are required to give you a copy if you ask for it.
- Read the loan agreement carefully. Make sure you understand all of the terms and conditions before you sign.
- Don’t be afraid to ask questions. If you don’t understand something, ask the dealer to explain it to you.
Remember, you are in control of your finances. Don’t let a car dealership take advantage of you.
Here are some additional resources that you may find helpful:
- The Federal Trade Commission (FTC): https://www.consumer.ftc.gov/articles/0124-car-buying
- The Consumer Financial Protection Bureau (CFPB): https://www.consumerfinance.gov/topics/auto-loans/
- The National Consumer Law Center (NCLC): https://www.nclc.org/
How the Scam Works
This is one of the most common tricks that car dealers pull on unsuspecting shoppers. The Lie-nance manager tell you that your credit score was much lower than it really is. As a result, you end up paying a lot more interest on your auto loan than you should have. Keep in mind that not all finance managers are “Lie-nance managers. You see, interest rates on auto loans are determined by your credit score; the higher your score, the more favorable the interest rate you will be charged. Consequently, the dealer can charge a higher annual percentage rate (APR) on the car loan if they can obtain a lower credit score from your credit history.
Naturally some salespeople are greedier than others. They don’t want to just watch you walk out the door while you pay 3% annual percentage rate when there are profits to be made. Keep in mind that these individuals are sharks awaiting your prey, having spent decades perfecting their craft against ignorant automobile buyers.
Although it usually targets those with poor credit, this scam also affects those with excellent credit. It works because most people do not know their own credit score. Regretfully, a lot of people blindly accept the official printouts provided by the auto dealer without ever verifying whether they are accurate. You probably regularly monitor your own cholesterol levels, but when was the last time you looked up your own credit score? Keep in mind that, unlike your cholesterol, you need to create your credit score number and know it in addition to obtaining your credit report.
One buyer emailed us here on CarBuyingTips. com to state that all three of the major credit bureaus reported his credit score to be 780, which is quite good. Four finance personnel left the car dealership where he was sitting after examining his application for a car loan, their expressions displaying a great deal of “concerned looks.” They also had a formal-looking document with the words “credit score” and the number 580 highlighted in red. Boy the pen sure is mightier than the sword. They informed our friend that they could only get him financed at 10. 9% APR, not the special 0% interest rate that the manufacturer was advertising.
Then, our intended victim revealed that, in contrast to the dealer’s fake credit score, he actually had a much higher score of 780 thanks to his own credit score, which he had just obtained that day. As you can see, our friend was aware that he had flawless credit, had never missed a payment, and would have a high score. He then questioned why the dealer’s outcome differed so much from his Equifax credit report, which appeared again.
Three astonished salesmen scattered, realizing they were busted, not knowing this car buyer would be aware of his own credit score. The last, sorry, guy misled the buyer by claiming that “credit agencies show consumers’ credit scores higher than those of businesses.” ” Our friend then left that dealership and bought his car elsewhere with the low 0% advertised APR. This vindicated the buyer and proved the finance people were lying.
How to Avoid the Scam Low Credit Score Scam
Nobody should ever know more about your credit history than you do. If they try to con you, you should obtain your credit score from TransUnion or Experian on your own. com and put a stop to the scam. For this reason, we emphasize that you should always have all of your financing arranged before you ever set foot inside a car dealership. Financing for your car should be a forethought, never an afterthought in the business office. President Ronald Reagan had a famous quote “trust but verify. ” We have our own similar quote here “dont trust, but verify. “.
Use your pre-approved online auto loan draft if they try to con you, or simply walk out of this dealership and do business somewhere else. Just because they throw some printed number at you does not mean its correct. Check out our Car Loan Tips chapter.
What Credit Score Do Car Dealers Use?
FAQ
Can a dealership manipulate your credit score?
Why is my credit score different at the car dealership?
Do car dealerships use credit score or FICO score?
When a dealership runs your credit What do they see?
Did a car dealer lie to you about your credit score?
So the thing here is that the dealer didn’t technically lie to you about your credit score. They just said that they can only get you approved for a loan at 8 percent. That is not to say that you couldn’t get a much lower loan elsewhere.
Do car dealers pull a different credit score?
Car dealers and auto lenders typically pull a different credit score from the one you’ve checked online. Find out which credit score car dealers use.
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.
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.