Cars & Trucks Victoria Status October 26, 2020 at 02:07PM

Useful Credit Checks:

Hard Inquires and Credit Scores
Purchasing a vehicle can be very costly, which is why financing or leasing options are a popular choice among consumers. The credit application process may be overwhelming or confusing to some, specifically when it comes to credit checks.

When applying for credit, not all consumers are clear on how credit checks, or credit report inquiries, can affect credit scores. First, let’s review the two different types of inquiries:

A soft inquiry on a credit report occurs when you or a third-party reviews your credit for non-lending or informational purposes (for example when a landlord checks your credit score for a tenancy application). Soft credit checks temporarily appear on your credit report, do not appear to other lenders, and they do not affect your credit score.

A hard inquiry occurs when lenders or companies review your credit as part of the loan application process (for example, when you apply for a car loan). Hard credit checks impact your credit score and may remain on your credit report for a number of years.

When a consumer has applied to lease or finance a vehicle through a dealership, either in-person or online by applying to be ‘pre-approved’ for their credit application, they may not fully understand that they have consented to a hard inquiry being recorded on their credit report. They may also not be aware that numerous lenders could be reviewing their credit score, which will appear as multiple inquiries on their credit report. If it’s for the same purpose, multiple inquiries within a certain period of time are usually counted as one inquiry. However, all inquiries will appear on the consumer’s credit report. When offering financing or leasing options to consumers, it’s best practice to SAY-SIGN-STORE:

SAY to the consumer that the credit application requires a credit check to be performed on the consumer’s credit report, and that it will impact their credit score. Explaining how the credit check process works will give a better understanding to consumers and mitigate any future questions or concerns

Have the consumer SIGN the credit application that clearly states that a credit check will be performed. The consumer’s consent must be obtained as required by the Business Practices and Consumer Protection Act (BPCPA)- section 107. Obtaining personal information for a credit check is not the same as acquiring consent for the credit check- the consumer must know you are going to do a credit check, and then provide consent

STORE the consent form regardless if a sale was made, in case a consumer disputes consent was given.

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