I plan to buy a car in the next several months or so. I haven’t decided on new or used, but suppose I walk in with cash (or a credit card). Do they have to pull my credit report? I have heard that some will jack up your credit score by giving your information to several lenders resulting in double digit inquiries on your report.
If I do this (cash or credit, no financing) what information am I required to give them?
I have heard of people going in with money in hand and specifically telling them not to pull their credit report because they don’t need financing, but the car dealer will still pull their credit and temporarily trash their FICO because they gave their name out to all kinds of lenders. Since they are having me sign so many papers, if they don’t have to legally pull my credit, can I bring something for them to sign basically saying they are not allowed to pull my credit (so I can get the inquiries removed later)? Thanks!
ETA: Also, some of the places I have visited have said with their used cars that you have to go in and get pre-qualified in order to get the asking price. Do they have to do this? Can I just go in and refuse to give them my information and just ask for their asking price?
There are two kinds of credit report pulls, colloquially called “hard” and “soft” pulls. A “soft” pull occurs when a potential creditor pulls your report on their own accord to decide to invite you to apply for credit, for example via telemarketing or junk mail. A soft pull does not affect your credit score and it is not seen by any other creditor. When you request a copy of your own report, you will see a list of soft pulls.
A “hard pull” occurs only when a creditor makes a decision about whether to extend you credit, and it can not legally be done without your consent. When you fill out the credit card application, or sign the car-financing application, you are consenting to a hard pull
A hard pull may affect your score (if you have a lot of them in a short timespan) and it is seen by other creditors.
Your car dealership may do a soft pull to verify your identity before a test drive or somesuch. They should not do a hard pull unless you specifically apply for financing. If they do one anyway, you have my permission to beat them about the head with a large trout.
I just bought a car with cash and they didn’t run anything. I just gave them a personal cheque.
I offered to get a bank draft, but they said a personal cheque was fine, which I found sort of odd. However, I guess if the cheque didn’t clear they would just report the car stolen.
*I should add that I’m in Canada so it’s possible that things are done differently here.
When I shop for cars, I have a couple of ground rules, unless I’m interested in a car, you don’t get my phone number, last name or address. I’ve had sales people ask why they can’t just get my phone number and I tell them flat out I don’t want them to call me everyday, usually they understand.
If I’m going to test drive some cars and run some numbers, then that’s okay. In fact it’s a good thing, I’ve had sales people call back the next day with a lower price or something else I was interested in.
My favorite line when I about to go on a test drive is “Can I just get a little more info (and I’ll get some numbers for you)”
That’s your red flag. My answer to that is always no, and I usually come right out and tell them something along the lines of “No, I’m shopping around with a couple of different dealers and looking at a bunch of different cars and I don’t want my credit report getting pulled 6 or 7 times in a week” Usually, they understand, if they still have a problem just tell them that you want to negotiate the price, then you’ll worry about financing.
The “hit” on your FICO score from a single Inquiry is nil. From several it is minor and short lasting. And that minor hit will have next to zero effect on anything you might want to do- other than get a Mortgage, where it might cost you 1/4 of a % (not that that isn’t quite a bit on a big loan).
So unless you are about to get a Mortgage, then don’t worry about it. Even so, as friedo sez, they usually just do a “soft pull”.
That isn’t necessarily true. You can be denied credit for too many recent inquiries (hard inquiries) and they can stay on your report for years even if the score hit doesn’t get you denied right off the bat.
Last year we were looking for a new car. When we finally got all the details hashed out, and agreed upon ( we had walked out three times, each time they called back and “gave in” so we returned.) we started on the paperwork.
They knew we were paying cash, so whe the salesman brought over the credit app for us to fill out we figured there had been a mistake and explained we were paying cash. He said we had to sign it. We said we wouldn’t. He got the manager.
The manager told us we had to fill out the credit app as that was required by the state of Kentucky for buying any car, whether you paid cash or not. We were quite sure that was not true, they had lied about so many things up to that point. We said we wouldn’t sign a credit app as one was not needed since we had the cash. They said they wouldn’t sell us the car then.
We asked to speak to the manager’s boss. He came over and said we had to sign the papers. He said that was the only way they could put our info in their computers. More lies we were sure. We said we wouldn’t. He said they already weren’t making any money on the deal as it was. The salesman would get no commission and the dealership would not make any profit. More lies. He then said if we would just fill out the application, they would promise they wouldn’t actually run a credit check. No way we were believing that. They wanted permission to check our credit for some reason, or maybe to sell the info they got, or pass it on to other affiliates. We never knew what the reason was but we didn’t see a need to fill it out, so we didn’t.
We walked out. We had been to several other dealerships and walked out without a car and were tired of the whole thing. We decided to just go back in, fill out the credit info, but not sign the bottom. We knew they would likely forge our signatures, and we would fight that later if needed.
I hate that we just didn’t walk away, but they had worn us down. They actually had the best reputation in town, and we figured we would run into the same thing anywhere we went.
I wonder now what would have happened if we had insisted he put his promise of not running our information in writing. Or if we had filled out the credit part with bogus information. They never ran any of the info while we were there, we paid with a debit card, as soon as they checked with the bank the money was in the account, they immediately withdrew it, and the car was paid for. They could check that one account without needing any other info.
For us it was just a matter of privacy. Since we were not asking for credit, there was no reason for them to have that information. We weren’t going to be asking for any credit any time soon, so we weren’t really worried about having too many credit inquries. I just hate that they feel they are in a position to demand people give them the info. Next time we go car shopping we are going to check out our rights and try to avoid having to go through this again.
Just talked to a freind in the business. If you test drive a car, you will have to hand over your license for insurance purposes. That’s all the info they need to do a soft pull while you’re doing burnouts down the street.
Here’s some cites: http://www.myfico.com/CreditEducation/CreditInquiries.aspx
What is a credit inquiry?
A credit inquiry is an item on a credit report that shows a business with a “permissible purpose” (as defined under the federal Fair Credit Reporting Act) has previously requested a copy of the report.
Not all inquiries count toward your FICO score.
When you check your credit report, you may notice that a number of credit inquiries have been made, sometimes from businesses that you don’t know. But the only inquiries that count toward your FICO score are the ones that result from your applications for new credit.
* Inquiries that count toward your FICO score.
There is only one type of credit inquiry that counts toward your FICO score. When you apply for a mortgage, auto loan or other credit, you authorize the lender to request a copy of your credit report. These types of inquiries, prompted by your own actions, appear on your credit report and are included in your FICO score.
* Inquiries that don’t count toward your FICO score.
Your own credit report requests, *credit checks made by businesses to offer you goods or services, or inquiries made by businesses with whom you already have a credit account do not count toward your FICO score. *Credit checks by prospective employers also do not count. These types of inquiries may appear on your credit report, but they are not included in your FICO score.
There are five types of information used to calculate a FICO score at any given point in time. Each type of information counts as a percentage of a total FICO score:
Payment history = 35%
Amounts owed = 30%
Length of credit history = 15%
New credit = 10%
Types of credit in use = 10%
Inquiries are a subset of the "new credit" category shown above, which accounts for 10% of the total FICO score. Their importance depends on the overall information in your credit report. For some people, a given factor may be more important than for someone else with a different credit history. ....
A FICO score takes into account only voluntary inquiries that result from your application for credit. The information about inquiries that can be factored into your FICO score includes:
* Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account.
* Number of recent credit inquiries.
* Time since recent account opening(s), by type of account.
* Time since credit inquiry(ies).
*A FICO score does not take into account any involuntary inquiries made by businesses with whom you did not apply for credit,* inquiries from employers, or your own requests to see your credit report.
*For many people, one additional credit inquiry (voluntary and initiated by an application for credit) may not affect their FICO score at all. For others, one additional inquiry would take less than 5 points off their FICO score.*
Inquiries can have a greater impact, however, if you have few accounts or a short credit history. Large numbers of inquiries also mean greater risk: People with six inquiries or more on their credit reports are eight times more likely to declare bankruptcy than people with no inquiries on their reports.
What happens when you apply for credit.
When you apply for credit, you authorize the lender to ask for a copy of your credit report. This is how voluntary inquiries appear on your credit report. The inquiries section of your credit report contains a list of everyone who accessed your credit report within the last two years. "
Thus, like I said, Soft Inquiries don’t count at all, one Hard Inquiry likely doesn;t mean anything and a couple mean almost nothing. They only stay on your Credit Report for two years and FICO sez they only count “recent inquiries” but they keep secrect what they mean by “recent”. Experts in the field believe “recent” is somewhere between 3 and 6 months.
