One of the main words that pop up whenever you are about to make a significant investment is “credit.” Credit scores are used as part of major transactions all over the United States. This means if you are buying a car, your car dealer will likely check your credit history. Why do dealers check credit when selling you a car? Apollo Preowned Auto invites you to keep reading as we answer this critical question.
There are several reasons a car dealer may want to check their customers’ credit score. Many people believe a credit score check pertains only to financing. While this is not far from the truth, it not the only reason. Yes, a car dealer may want to check your credit score to let you know what financing options are available to you when purchasing your vehicle; we will expand on this topic later on.
In addition to financing, car dealers often run credit score checks to avoid fraud. Unfortunately, every year thousands of unscrupulous individuals run scams to take advantage of unsuspecting car dealers. For instance, there have been instances where an individual steals the identity of another person to make a purchase. Unfortunately, some car dealers may think everything is in order and do business with these scammers without knowing they are committing fraud. Car scams and fraud are responsible for millions of dollars in losses every year.
While there may be other situations where a dealer checks your credit history, fraud prevention and financing remain the top reasons.
Your credit score is a report third parties use to determine whether an individual represents a financial risk. In short, credit companies, lenders, creditors, and other people may want to know where you stand credit-wise to see if you have the ability to pay back debt. The higher your credit score, the better your chances of borrowing money from a lender.
There are three major credit bureaus in the United States: Experian, TransUnion, and Equifax. These companies gather information from consumers and render a yearly report based on their financial behavior. You can think of it as a snapshot of your current financial situation and your willingness to pay back your debt. In the United States, the most common scoring system is known as the FICO score. Your overall FICO score may closely resemble the three bureaus score (TransUnion, Equifax, and Experian) although both the number range and algorithms used to determine your score differ from one company to the other.
You will be assigned a score and category depending on your FICO score. These categories and their respective scores are divided as follows:
Typically, a dealer will use these numbers to determine whether you can apply for financing or get a car. Some car dealers may not sell a vehicle to an individual with poor or bad credit. However, this does not mean you cannot get a car if you are going through a challenging financial situation. Many car dealers – especially pre-owned auto dealerships – can sell cars to people with poor or no credit. Generally, these dealers offer certified used vehicles that undergo a thorough examination before they are provided to customers.
If you have poor or bad credit, there are ways you can increase your score and get a better offer on your purchase. For instance, one of the most effective ways to improve your credit is planning your budget a year in advance. Planning ahead of your purchase and paying your debt in full and on time can boost your credit score. Doing this can yield a better offer down the road. You can also save money in advance to make a significant down payment on your purchase. A bigger down payment means you can save money on interest and taxes through the life of your loan. A skilled, knowledgeable and reputable car dealership can guide you through the entire process and clarify any doubts you may have during your car purchase process.
Do not let a bad break prevent you from obtaining the car you need. At Apollo Preowned Auto, we are convinced that a vehicle is more than a luxury: it is a necessity. That is why we dedicate ourselves to providing nothing but high-quality cars at affordable prices. When you visit our dealership, you will be able to choose from a wide variety of vehicles both foreign and domestic. To learn more about all of our services and how we can help you get the car you need, call our offices today at (856) 347-5091.