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Can You Sue a Car Dealer For Excessive Hard Credit Inquiries?

I have come across this question, “Can I sue a car dealer for excessive credit inquiries?” while reviewing search terms on your blog and thought this would be a good topic for another discussion.

First of all, What is a Hard Inquiry?

There are two types of credit inquiries, hard and soft.

A hard inquiry is a credit inquiry made to obtain credit. These types of inquiries are usually made for things like a home, auto or personal loan. Credit inquiries for tenant and home screen services are also considered difficult inquiries.

A soft inquiry is a credit inquiry that is requested for informational purposes. If you request your credit through a site such as AnnualCreditReport.com, this is considered a soft inquiry and does not deduct points from your score. Additionally, lenders with whom you currently do business may conduct a soft inquiry to conduct an account review and assess your current credit worthiness. Proposals for “approved credit” are not considered hard inquiries. Credit inquiries for insurance and employment also fall into this category, as they are not intended to grant credit.

How Many Scores Can Score for a Credit Inquiry?

o Each “hard” credit inquiry (meaning the consumer has applied for some type of credit, returning the lender to check the credit report or score) that is counted does not typically deduct five points from a person’s score.

Auto Credit Inquiries

Since 2004 auto loan and home loan inquiries are treated slightly differently. Since many people like to shop around for both home and auto loans, the credit bureaus have recognized the fact that each inquiry has a negative impact on credit scores because of the many factors involved. This practice harmed the consumer’s credit score and prevented the consumer from shopping around for the best price and terms.

Therefore, Fair Isaac has changed some rules for Personal Loan and Home Loan inquiries:

o The credit scoring model recognizes that many consumers shop around for the best interest rates before purchasing a car or home and that their search may result in multiple lenders requesting their credit report. To compensate for this, multiple auto or mortgage inquiries are counted as one inquiry in any 14-day period.

o In the most recent formula used to calculate FICO scores, that 14-day period was expanded to every 45-day period. This means customers can shop around for an auto loan for up to 45 days without affecting their score. But the old 14-day rule may still apply to some lenders who don’t use the new version.

o The newest version of FICO went online at all three credit bureaus — TransUnion, Equifax and Experian — in 2004. It usually takes lenders months to adjust their processes so they can apply the revised formulas — and some lenders never adjust.

o The FICO score ignores all mortgage and auto inquiries made in the 30 days prior to scoring. If you find a loan within 30 days, the inquiry will not affect your score when you shop for a rate.

How to Avoid Most Difficult Self-Interviews

If you want to avoid multiple hits to your credit when you’re shopping for an auto loan, you’ll need to set aside a two-week period to fully focus on getting your finances in order.

o Find out what your credit score is:

In order to get a loan without being asked for multiple credit inquiries, you will need to know what your credit scores are. This will also help you determine if you are “bankable” or if you are going to have some difficulty getting financing.

You can get an estimate of your FICO Score to give you an idea of ​​your current score range, or you can get a 3-in-1 report with FICO in one easy-to-read report for just $39.95 Buy $ to find out exactly. What are your credit scores?

o Get a Pre-Approved Bank:

Now that you know what your credit score is, call around to local banks in your area and ask, “What is the minimum credit score you need to get pre-approved for an auto loan?”

If you know your credit score falls within their “acceptance guidelines,” then ask what their interest rates and terms are, such as how much payment they will require.

Once you have identified the lender with the best terms, go to that bank and apply. Some banks even have an 800 Telephone Loan Center or an online application process so you don’t have to go anywhere.

Once you’ve been approved by your lender of choice, you usually have 30 days before pre-approval expires.

If you decide to go this route, not only do you get the best interest rate around without having to do multiple credit inquiries, but you’ll also see how much you’re approved for, which will make buying a car easier in the long run. do rev.

o Get Auto Financing if you’re not “Bankable.”

If your credit scores fall below what you’ve found to be “bankable,” you’ll need to find financing elsewhere. There are many ways you can do this.

1. You can go through the online Vehicle Financing Network. These networks have access to many lenders and their guidelines. They will have to pull your credit to know what your scores are, but then they have access to many auto loan financing companies that specialize in customers with “less than perfect credit.” Once they have determined which lender you have the best chance of being approved with, they will submit your application.

2. Go car shopping and once you find the car you want, the dealer will be more than happy to submit your loan application to multiple lenders. Remember, if you decide to go this route, you have 14 days of unlimited credit draws that count as 1 withdrawal.

If you continue this month by month, you will see that every time your credit is pulled, about 5 points are deducted from your score.

Answer to the Original Question – “Can You Sue a Car Dealer for Hard Inquiries?”

Civil liability for knowing wrongdoing: “Any person who obtains a consumer report from a consumer reporting agency under false pretenses or knowingly without an authorized purpose is liable to the agency for actual damages incurred by the consumer reporting agency or $1,000, whichever is the case.” is consumer communication. greater.”

What this comes down to is….. READ WHAT YOU SIGN! If you applied for financing through a car dealership, then you must have filled out a loan application. Did the papers you signed say they would give your application to multiple lenders?

If you didn’t let them pull your credit, then you might have a case to sue for $1,000, but in my opinion, that would be more hassle than it’s worth. The easiest way to handle the situation in your favor is to discuss inquiries with the credit bureaus that report them.

If the lenders who pulled your credit can’t prove “authorized intent,” then the credit reporting agencies will remove these inquiries. If the lenders come back and state that they have a valid purpose, you have the right to ask them for documents to prove it. Again, if they can’t come up with that document, the credit reporting agencies will have to drop the inquiry.

When inquiries or multiple inquiries are removed, you should see an increase in your credit scores. It’s a little work on your part, but it’s easier than trying to file a $1000.00 lawsuit.

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