Credit Score Doesn’t Qualify Car Dealer Scam
This deceptive practice typically happens during the finance process of buying a new or used car and shows up while in the finance department of a dealership.
The credit score doesn’t qualify scam occurs quickly and can cost you hundreds if not thousands of dollars. I’ll show you how to recognize and avoid it.
When Can a Dealer Legally Pull Your Credit History?
Car dealers CAN NOT legally pull your credit history without your signed permission.
Most dealerships attempt to get your permission by having you sign a credit application or “guest questionnaire.” Only after you’ve signed can the dealership inquire and receive a copy of your credit report and score.
The best way to prevent this trick of the trade is to familiarize yourself with how it works up front, know what’s on your credit report, and have a pre-approved car loan before visiting a dealership.
Some dealers may cleverly disguise permission forms to pull your credit report and review your credit history; always be aware of what you’re signing. One of the dealerships I worked for had a drawing for a $77 car every month.
The form to enter the contest was a tiny credit application. You would be amazed at how many people voluntarily write down their social security number and drop it in the box.
A dealer may or may not attempt to pull your credit history before showing you a vehicle. Knowing your credit history upfront allows them to understand what kind of customer they’re dealing with, good credit, bad credit, or no credit.
The dealer can adjust and customize their sales process to fit you by having this information about you upfront. While simultaneously trying to sell you a car, they guide you in the best possible direction to increase their profits.
What is the Credit Score Doesn’t Qualify Scam?
The credit score doesn’t qualify scam is the second most commonly used dealer scam in car dealerships today. It is simple and can be done quickly by car dealers and staff on unsuspecting customers.
Car dealers constantly run radio, television, and print ads to get customers into their dealerships. These ads show very low-interest rates, like zero percent interest or special discounted prices, to draw traffic to the dealership. Customers come to the dealership, find a car they like, spend hours negotiating the price then expect to receive the low-interest rates they saw in the advertisements.
This is where the credit score scam comes into play. It’s as simple as telling customers their credit history and score do not qualify for the program or interest rate they’re interested in. If you still want to buy a car, you must pay a higher rate or apply for a different finance program.
How the Credit Score Doesn’t Qualify Scam Works
There are several variations of this widespread car dealer scam. The following is one of the variations I’ve witnessed used on several customers. I would never allow something like this in one of my dealerships.
I’m exposing it here to inform you what to look for, so it will never happen. Not all finance managers are crooked, but you never know whom you will deal with.
A dealer pulls your credit to qualify for a particular APR program. As you sit and wait, dreaming of driving your new car, the finance manager is doing a little plotting.
He’ll replace your credit bureau with someone else’s credit bureau with a lower score than yours. He’ll mark out the name and address with a black Sharpie and circle the score with a red Sharpie.
He will then come out to meet with you and act concerned about not getting you that particular program or special rate, but he may be able to get close to it.
Explaining he’s not supposed to show you your credit bureau, he will flash it at you, and the BIG RED CIRCLE with the score in the middle of it is all you’ll focus on.
He’ll then put it away quickly and continue to tell you how it’s not a big problem, and he’ll work hard for you to get the best APR possible.
The credit score scam is used more than you think; it’s used on people with good and bad credit. The score doesn’t have to be a considerable negative; it just has to fall below the dealer’s finance program guidelines to qualify.
A few points below on your beacon score will prevent you from receiving any special programs; showing you someone else’s score makes this a scam.
When a car dealer pulls a customer’s credit but does not buy a vehicle, they must keep the credit bureau on file for a specific time. They will staple the credit application to the credit file and store it safely.
There is usually just a box with thousands of credit bureaus in the back. It isn’t hard to find a credit file with a credit score just under the credit score of the customer they’re trying to scam.
This scam has many variations, but I think you get the point. They may tell you that your credit does not qualify for the interest rate you’re trying to get. If you haven’t done your due diligence on your credit score and know what’s on your credit report before visiting a dealership, you’re asking for trouble.
People fall victim to this highly effective scam consistently. If you’re unaware, it can cost you thousands of dollars.
How to Avoid the Credit Score Doesn’t Qualify Scam
How do you avoid this scam? Know your credit scores beforehand. Always review your credit report and scores from a reputable online company such as MyFreeScoreNow before visiting a car dealership or applying for a car loan.
Take your credit reports with you to the dealership so you can reference them, but keep them private and out of the hands of the dealer.
Before going to a car dealership, you should already have pre-arranged financing as a backup. It’s a free service to get car loan quotes online, and very easy.
Contact companies like myAutoloan and Auto Credit Express to research the latest interest rates and receive free online car loan quotes.
Having your credit reports, scores, and a pre-approved car loan beforehand will keep you safe and help you avoid any car dealer scams of this nature. I go more in-depth about this in my car loan tips section.
What if You’re a Victim of the Credit Score Scam
Suppose a finance manager tries pulling this scam on you at the car dealership. Make sure you ask to see the name on the credit report. If he will not show you the name on the credit report, there is a problem with his integrity. Pull out your credit reports with scores and deliver them to him.
If they will not accept your credit reports and scores or tell you they cannot use them, you should kindly thank them and GET UP AND LEAVE! If they are bold enough to try and pull this dealer scam on you, there is no telling what other tricks they have up their sleeve.
If you catch a car dealer trying to pull this nasty scam on you. You should contact your local BBB and the appropriate State Attorney’s Office to warn others about the car dealership’s unethical practices. When they get enough complaints about a dealer, they may investigate their business practices.
If you believe you’ve fallen victim to the “Your Credit Score Doesn’t Qualify Scam” and are paying too high of an interest rate. You can contact your bank or credit union or apply for the lowest rates with an online loan company.
About the author
My name is Carlton Wolf, and I’ve been in the car business since 1994, both retail and wholesale. I created the Auto Cheat Sheet to better educate buyers about the deceptive sales practices many dealerships use nationwide. Please understand that not all car dealers are dishonest. However, you never know who you’ll be dealing with, though. I’m willing to share my knowledge and experience with anyone who listens. Keep in mind that I’m a car guy, not a writer.
