What Does a Car Dealership See When They Run Your Credit?
Gain clarity on the specific financial details and specialized scores car dealerships access when reviewing your credit for an auto loan.
When you apply for an auto loan, car dealerships conduct a credit check. This process assesses your financial reliability and determines financing terms. The credit check provides an overview of your financial behavior, influencing loan approval, interest rates, and loan amounts.
Information Dealers See on Your Credit Report
A credit report details your financial history, offering lenders insight into your creditworthiness. It includes personal identifying information like your name, addresses, date of birth, and Social Security number, which helps confirm your identity.
Your payment history shows how consistently you pay bills on time for accounts like credit cards, mortgages, and other loans. Lenders analyze this for patterns of timely payments or instances of late payments, defaults, or collections, which signal potential risk. A strong history of on-time payments demonstrates financial responsibility.
Credit utilization reveals your total outstanding debt and the proportion of available credit used. A high credit utilization ratio might suggest overextension, which can be a red flag for lenders. Maintaining low balances relative to your credit limits is viewed favorably.
The length of your credit history indicates how long your credit accounts have been open and their average age. A longer history with established accounts provides more data for lenders to assess your financial behavior, correlating with lower risk. It also details the types of credit you have managed, such as a mix of revolving accounts and installment loans. A diverse and well-managed credit mix shows your ability to handle various forms of credit responsibly.
New credit activity, including recently opened accounts and recent credit inquiries, is visible on your report. Numerous new accounts or inquiries in a short period might suggest increased risk, indicating a sudden need for credit or an attempt to take on significant new debt. Public records and collections, such as bankruptcies, foreclosures, tax liens, or civil judgments, provide information on past financial distress. The report also shows if you are an authorized user on another person’s account or if you have joint accounts, reflecting shared financial responsibility.
Credit Scores Used by Auto Lenders
Car dealerships rely on industry-specific credit scores instead of general FICO Scores or VantageScores. These specialized scores predict the likelihood of an individual repaying an auto loan. FICO Auto Scores are widely used, with various versions available from major credit bureaus. These scores typically range from 250 to 900, differing from the standard FICO score range of 300 to 850.
FICO Auto Scores use the same credit report data but apply different weightings, emphasizing auto loan repayment history. Payment history and amounts owed are significant, but their contribution is adjusted to reflect auto lending risk. A higher FICO Auto Score signals lower risk to lenders, leading to more favorable loan terms and lower interest rates.
VantageScore models are also utilized by some auto lenders. While these scores are general-purpose, they provide insights into a borrower’s creditworthiness. Both FICO Auto Scores and VantageScores serve as a snapshot of credit risk, helping lenders make informed decisions about your loan application.
How Credit Inquiries Work
When a dealership “runs your credit,” it results in a hard inquiry on your credit report. This differs from a soft inquiry, which occurs when you check your own credit or a company pre-qualifies you without a full application. Hard inquiries are recorded and can temporarily decrease your credit score by a few points.
Hard inquiries remain on your credit report for up to two years, though their impact lessens after 12 months. Lenders see these inquiries, providing a record of recent credit applications. Multiple hard inquiries in a short timeframe can indicate higher risk.
To allow consumers to shop for the best loan terms, credit scoring models incorporate a “rate shopping” period for auto loans. During this grace period, multiple inquiries for the same loan type within a specific timeframe are treated as a single inquiry. This window can be 14 to 45 days, depending on the scoring model. This mechanism allows you to compare offers from several lenders without significantly penalizing your credit score for each inquiry.