Everything you ever wanted to know about the "Your Credit Score Doesn't Qualify Scam" but didn't know who to ask.
This deceptive practice normally happens during the finance process of buying a new or used car and shows up while in the finance department of a dealership.
This scam happens very quickly and can end up costing you hundreds, if not thousands of dollars. The best way to prevent this trick of the trade is to familiarize yourself with the way it works upfront, know what's on your credit report and have a pre-approved car loan in place before visiting a dealership.
This section will teach you how to recognize when a dealer is trying to pull this deceptive manipulation on you and how to avoid this tricky little scam altogether.
When can a Dealer Legally Pull Your Credit?
Car dealers CANNOT legally pull your credit history without having signed permission from you.
Most dealerships attempt to get permission from you 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.
Some car dealer's may cleverly disguise permission forms allowing them 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 customers had to fill out to enter was actually a tiny credit application. You would be amazed at how many people would voluntarily write down their social security number and drop it in the box.
A car dealer may or may not attempt to pull your credit history before showing you a vehicle. By knowing your credit history up front allows them to know what kind of customer they're dealing with, good credit, bad credit or no credit at all.
Getting this type of information on you up-front allows the dealer to tailor and fine-tune their sales process. Meanwhile leading you in the best direction to maximize their profits while at the same time selling you a car.
The Credit Score Doesn't Qualify Scam Explained
The Credit Score Doesn't Qualify Scam is the second most commonly used dealer scam used in car dealerships today. It is very easy to do and can be done very easily by car dealer's and staff on unsuspecting customers.
Car dealers are constantly running ads on radio, television and print to get customers into their dealerships. These ads show very low interest rates like "0%" 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 a customer their credit history and score do not qualify for the program or interest rate their interested in. If you still want to buy the car you will have to pay a higher rate or apply for a different finance program.
Visit my section on how to get your credit report & score online to protect yourself from this scam and other car dealer scams like it, a car dealer should never know more about your credit history than you do.
How the Credit Score Doesn't Qualify Scam Works
There are several variations of this very common car dealer scam. The following is one of the variations that I've witnessed used on several customers in the past. I would never allow something like this to happen in one of my dealerships. I'm exposing it here, to make you aware of what to look for, so it will never happen to you. Not all Finance Manager's are crooked but you never know whom you will be dealing with.
You have your credit pulled by a dealer in hopes of qualifying for a special 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 that has 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 being able to get you that special program or special rate, but he may be able to get close to it. Explaining he is not suppose 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 he possibly can.
The Credit Score Scam is used a lot more than you think, it's used on people with good credit and bad credit alike. The score doesn't have to be a huge negative; it just has to fall below the dealer's finance program guidelines to qualify. Just a few points below on your beacon score will prevent you from receiving any special programs, showing you someone else's score is what makes this a scam.
When a car dealer pulls a customer's credit and they do not buy a vehicle. They must still keep the credit bureau on file for a certain amount of time. They will staple the credit application to the credit file and store it somewhere safe. There is usually just a box in the back with thousands of credit bureaus in it. It isn't hard to find a credit file that has a credit score just under the credit score of the customer their trying to scam.
There are many variations of this scam but I think you get the point. They may just come out and 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 own credit score and know what's on your credit report before you visit a dealership you're asking for trouble. People fall victim to this highly effective scam on a consistent basis. 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 get and review your credit report and credit 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 if need be but keep them private and out of the hands of the dealer..
You should already have pre-arranged financing as a back-up before going to a car dealership. It's a free service to get car loan quotes online and very easy to do. Contact companies such as myAutoloan and Auto Credit Express to research the latest, most current interest rates and to receive free online car loan quotes. Having your credit reports, credit 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.
If You're a Victim of the Credit Score Scam
If a Finance Manager tries to pull this scam on you while you're 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 report there is a problem with his integrity. Pull out your personal credit reports with scores and show 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, no telling what other tricks they have up their sleeve.
If you catch a car dealer or its staff trying to pull this dealer scam on you. You should contact your local BBB and the appropriate State's Attorney General's Office so others will be warned about the car dealerships unethical 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, credit union, or apply with an online loan company such as myAutoloan and Auto Credit Express to refinance your car at the lowest available interest rates.
If you choose to use an online company like myAutoloan you will find they have very low interest rates for people with good credit. You can get up to four free no-obligation answers competing for your business to compare in a matter of minutes.
Familiarize yourself with more car buying scams and how dealers can scam you out of your money.
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