Can You Sue A Car Dealer For Excessive Hard Credit Inquiries?

The credit-scoring model recognizes that many consumers shop around for the best interest rates before buying a car or home and that their searching may cause multiple lenders to request their credit report. To compensate for this, multiple auto or mortgage inquiries in any 14-day period are counted as one inquiry.

· In the newest formula used to calculate FICO scores, that 14-day period has been expanded to any 45-day period. This means consumers can shop around for an auto loan for up to 45 days without affecting their scores. But the old 14-day rule might still apply at some lenders that aren't using the new version.

· The newest FICO version went online at all three credit agencies -- TransUnion, Equifax and Experian -- in 2004, Typically it takes lenders months to adjust their processes so they can accommodate revised formulas -- and some lenders never adjust.

· The FICO score ignores all mortgage and auto inquiries made in the 30 days before scoring. If you find a loan within 30 days, the inquiries won't affect your score while you're rate-shopping.

How To Avoid Multiple Hard Auto Inquiries

If you want to avoid multiple hits to your credit while you’re shopping for an auto loan, you’ll need to set aside a two week period to completely concentrate on getting your financing in place.

· Find Out What Your Credit Score Is

In order to shop for a loan without being dinged for multiple credit inquiries, you’ll need to know what your credit scores are. This will also help you to determine whether you are “bankable” or if you’re going to have some difficulty getting financing.

You can get an estimate of your FICO Score to give you an idea of the current range of your scores, or you can purchase a 3-in-1 Report with FICO in one easy to read report for just $39.95 so you’ll know exactly what your credit scores are.

· Get Preapproved At A Bank:

Now that you know what your credit scores are, call around to local banks in your area and ask, “What is the minimum credit score one needs to have to be pre-approved for an auto loan?”

If you know that your credit scores fall into their “approval guidelines”, then ask what are their interest rates and terms, such as how much down payment are they going to require.

Once you’ve determined the lender with the most favorable terms, go into that bank and apply. Some banks even have an 800 Phone Loan Center or on-line application process available so you don’t have to go anywhere.

Once you have been pre-approved by the lender of your choice, you normally have 30 days before the pre-approval expires.

If you decide to go this route, not only are you getting the best interest rate around without generating multiple credit inquiries, but you’ll also find out how much you’re approved for, which will make shopping for an auto easier in the long run.

· Getting Auto Financing If You’re Not “Bankable”

If your credit scores fall below what you’ve found to be “bankable”, you’re going to need to find financing elsewhere. There are several ways you can do this.

1. You can go through an on-line Vehicle Financing Network. These networks have access to multiple lenders and their guidelines. They will have to pull your credit in order to find out what your scores are themselves, but then they have access to many auto loan financing companies specializing in consumers with “less than perfect credit”. Once they’ve determined which lender you have the greatest chance of being approved with, they’ll forward your application along.

2. Go auto shopping and when you find the car you want, the dealership will be more than happy to submit your loan application to multiple lenders. Remember, if you decide to go this route, you have 14 days of unlimited credit pulls to count as 1 pull.

If you continue to do this month after month, you’re going to see about 5 points deducted off your score every time your credit is pulled.

The Answer To The Original Question – “Can You Sue A Car Dealer For Excessive Hard Inquiries?”

Civil liability for knowing noncompliance: “Any person who obtains a consumer report from a consumer reporting agency under false pretenses or knowingly without a permissible purpose shall be liable to the consumer reporting agency for actual damages sustained by the consumer reporting agency or $1,000, whichever is greater.”

What this boils down to is…..READ WHAT YOU SIGN! If you applied for financing with a car dealership, then you must have filled out a loan application. Did the paperwork that you signed say that they would submit your application to multiple lenders?

If you did not grant them permission to pull your credit, then you may have a case to sue for $1,000, but in my view, it’s going to be way more hassle than it’s worth. The easiest way to handle the situation to your benefit, is to dispute the inquiries with the credit bureaus that are reporting them.

If the creditors that pulled your credit cannot prove “permissible purpose”, then the credit reporting agencies will remove these inquiries. If the creditors come back stating they had permissible purpose, you have every right to ask them for the documentation to prove it. Again, if they cannot come up with that documentation, the credit reporting agencies will have to remove the inquiry.

Once the inquiry or multiple inquiries are removed, you should see an increase in your credit scores. It’s a tiny bit of work on your part, but way easier than trying to sue for $1000.00.

Bad Credit Auto Loans

Are you afraid to go shopping for a car because of the embarrassment you may face at the very real possibility of being turned down due to bad credit?

If this is you, you’re not alone. More than ever before, millions are faced with bad credit right now.

What you need right now is a little “credit score infusion”. Your score needs to be high enough so you can qualify for that auto loan you so desperately need.

I Can’t Wait Months To Increase My Credit Score!

I totally understand. In today’s world an auto is a necessity. If you’re lucky enough to still have a job right now, you gotta have a car to get to work.

If you’ve been laid off or just can’t find a job, you need a car to go look for a job.

You need to pick up your kids from daycare, you need to go to the grocery store (jeez…nothing worse than trying to lug 6 grocery bags a mile down the road…)

Whatever the issue is, you won’t get far without wheels, so here’s a few tips you can use to infuse your credit score immediately”.

What’s A Good Score For An Auto Loan?

Different lenders have different criteria in relation to what they deem to be a “good” score. Really, what it all boils down to is “What interest rate am I going to have to pay?”

You can still probably find a lender who will give you a car loan with a credit score of 580, but you’re going to pay a really high interest rate for it.

Get yourself bumped up to over 600 and better yet, over 620, and you have a few more options, but the rate you’re going to pay is still not going to be pleasant.

If you have scores in the range of 650 to 680, interest rates are going to be decent.

Get yourself over 700 and you’ve got shopping power baby!

So, Where Do I Get My Credit Score?

There are many scoring models out there, so don’t be fooled.

There can be a 50 to 100 point difference from one credit scoring agency to another, so your best bet is to stick with your FICO Score. This score is derived by Equifax and is the credit score that most lenders use, so you can be pretty confident with the score you receive.

You can get your FICO credit score for $9.95 if you sign up for their Score Watch program. This is the quickest way to get your score, and a great way to monitor how it’s going to shoot up after I teach you a few tricks later in this article.

You can access all three of your credit reports for free at www.annualcreditreport.com as well, but you will then have to pay around $7 to $10 to purchase your score from each of the three major credit reporting agencies.

You can only do this once a year for free, and in my book Surviving Your Credit Meltdown, I walk you through an 8 Step System to erase negative marks off your credit, so you might want to save the one chance you have this year, until after you read the book. (You can still apply my system if you’ve already accessed www.annualcreditreport.com once this year, but you’ll have to do it all through snail mail.)

How Do I Get My Scores Up Quickly?

You’d be surprised at how much inaccurate information is reported without you even being aware of it. If you don’t check your credit on a regular basis (once a year), then I’m sure you’ve got some mis-information being reported on you as well.

Go over every account that is showing on your credit.

If you have accounts showing late payments that were never late, dispute those baby! Even if you’re not sure if they really were late….dispute it anyway!

If you have multiple collection accounts showing for the same debt, dispute ‘em!

If you have recent inquiries that are showing up that you do not recognize, dispute ‘em!

What Is The Best Way To Dispute?

Again, you can do this all on-line through www.AnnualCreditReport.com, but you only get one shot a year to dispute everything you can on-line and there is so much more you can do than what I’m outlining right here.

If you want take the hour or so and do a really thorough job the first time, I’d recommend getting Surviving Your Credit Meltdown and going through each step to make sure you’re optimizing your report as best as you can the first time. If you purchase the System, you’ll also get a video tutorial walking you through the dispute process in Equifax, Experian & Transunion while on AnnualCreditReport.com, so you know exactly what and how to dispute and what to expect.

If you don’t have time to do it right now, there’s a host of creditor and credit bureau sample letters you can use to send in to the credit bureaus that will accomplish the same thing, and you can save your free yearly check until you have a little more time to spend on it. These letters just take a day or two longer because you have to send them via the mail.

Don’t worry about sending in any kind of proof to the credit bureau’s of anything you’re disputing. (Just eliminate that part out of the letter template.) They don’t keep it for the first-time dispute process anyway because on the first go-around, all they’re going to do is contact the creditor in dispute and ask them to validate the information.

If the creditor finds a record of what you’re disputing, it stays on, if not, then it comes off. You’d be surprised how many items just come off because of lousy record keeping or laziness on the part of the human involved.

There is much more you can do after the first go-around with the bureaus, but this is a quick and efficient way to increase your scores quickly when you’re in a hurry.

Now….let’s get that car loan!

Okay…..with minimal effort and a little luck, you’ve increased your credit score higher than it was before…..good job!

Now, you need financing…..but where to go?

If you go directly to auto dealerships, you need to know that in order to get a loan, your credit report will be pulled, and pulled, and pulled…..you get my drift right?

This will result in multiple “hard inquiries” on your credit report, and by going to the dealerships first, you will never find out why you are not being approved and the inquiries will just keep adding up. (For more info on “inquiries, click here)

**You do however have a 14 day grace period when shopping for an auto loan. Your credit can be pulled multiple times within that 14 day period and it will only count as one inquiry, so you need to be sure that you’re seriously ready to buy that car once your credit starts being pulled. If you keep having your credit pulled after that, kiss your new score good-bye…

What you really want is to be pre-approved. That way you can walk into ANY dealership with a loan that you can afford already in place and you’ll know exactly how much you can afford.

Next Step: Go Visit Your Local Bank

If your new credit score is 620 or higher, the best thing you can do for yourself is go to your local bank and apply for an auto loan there first. (I’m talking about walking into your branch and talking to a live human.)

You want to speak with someone who can pre-qualify you for a loan based on the banks guidelines.

· Maybe you don’t have enough income to qualify for that Ferrari you wanted……(yeah, probably not…) Yet, the loan officer will be able to advise you how much you can qualify for, as long as this is your only issue.

· If you’re turned down because of your score, you can ask what is the minimum score they require to get approved. This will tell you whether or not you’re going to need sub-prime financing or not.

What If I Can’t Qualify For A Bank Car Loan?

If you’re not “bankable” just yet, don’t worry…..there are still lenders out there that will give you a loan, but the rate isn’t going to be as pretty.

I’d first ask the loan officer at the bank if they have anyone they’d recommend to refer you to.

If you're ready to pocket all the extra cash you pour into your gas guzzler, Gas Saver Auto Loans can help you get a loan on a fuel-efficient vehicle. You can easily apply for a loan in seconds, even if you don't have credit, have bad credit, or have filed for bankruptcy in the past.

You can also do a search on the net for “bad credit auto loans” and you’ll get a slew of links to click on. Some of these sites will search multiple lenders for you and could save you some time.

If you like a more personal approach, you can look in your local yellow pages for “finance companies”, like Household Finance or American General. Word of caution here though, finance companies usually carry much higher rates, so be sure to shop around.

What If The Payments Aren’t Affordable?

Most people worry about whether or not they’ll be able to make the monthly payments on a loan without taking into account the loan’s term, total interest paid, and loan origination fees or pre-payment penalties.

Generally, the lowest rates on auto loans are available on short-term loans, from 12 to 36 months, which mean a large monthly payment but lower amounts of interest.

Longer-term loans often come with higher interest rates.

When you calculate the total price of your new vehicle, include the interest costs over the years.

If it seems like too much for you, try to renegotiate the interest rate, offer a larger down payment, or shorten the term of the loan.

Which Credit Inquiries Lower Your Score?

Excessive Inquiries

Excessive inquiries to your credit can drastically reduce your credit score, although certain types of inquires don’t affect it at all. You need to know which types negatively affect your credit, so you can keep them to a minimum in order to ensure optimal credit scores on a consistent basis.

The Hard Inquiry

When you fill out a credit application you authorize a bank, credit card company or lender to view your credit history. This is known as a hard inquiry and is done with “permissible purpose”.

Collection agencies may also pull a hard inquiry. Hard inquiries can take points from your credit score. Many hard inquiries are also viewed negatively by creditors and can be used as a reason to deny you credit.

The Soft Inquiry

A soft inquiry may not have been authorized by you. Your existing creditors pull your credit reports to see how you are paying your other bills and if any problems exist. They also do this as an excuse to invoke “universal default” which can raise your current interest rate. Lenders and credit card issuers also pull soft inquiries in order to screen you for pre-approved offers. Soft inquiries do not take points away from your credit score and are supposedly only viewable by you.

Pre-Approved Offers

When you receive a “pre-approved” offer in the mail, this means a bank or credit card

company has screened your credit and made a soft inquiry. However, even when you receive a pre-approved credit offer in the mail and you respond, a hard inquiry will most likely be pulled. This means a hard inquiry will be added to your credit files and points will be deducted from your credit score.

You can opt out of these types of inquiries by visiting OptOutPrescreen.com. You can opt-out of these types of offers for 5 years with an on-line submission. If you want to permanently opt-out of these types of offers, the site will provide you with a letter you can print, sign and mail in which will eliminate you from these types of offers forever.

Why Hard Credit Inquiries Are Bad

Credit grantors view too many credit inquiries as a sign of financial trouble. The creditor has no way of knowing if you were approved for all of the credit you applied for. Your credit inquiry does not indicate approval or denial. They may assume you received the credit lines that are showing as inquiries. Additionally hard credit inquiries take away points from your credit score. Too many hard inquiries could result in a denial of credit and bring down your credit score.

Mortgage and Auto Loan Inquiries

It is wise to shop around for the best interest rates when making a major purchase such as a house or automobile. But shopping around for the best rates may result in many inquiries during the shopping phase. The credit reporting agencies supposedly have a buffer to prevent your credit scores from taking a dive for too many inquiries when shopping around for interest rates.

All inquiries related to a mortgage loan or auto loan done within a 14-day period are counted as one inquiry. The issue with this is that the inquiries are supposed to indicate a mortgage or auto inquiry on your credit report, but there is no way of knowing if a lender or bank has noted that inquiry correctly. Just be informed and ask your lender before applying, especially at a car dealership. They may run your credit through many lenders in order to get you approved.

How Long Do Inquiries Remain On Your Credit Report?

All credit inquiries remain on your credit report for two years and should drop off automatically when the two years have expired.

All “hard” inquiries show up when a lender or creditor request your credit, whereas “soft” inquiries only show up when you request your own credit reports.

Most credit granters disregard credit inquiries after 6 months. While they do remain on your credit reports for 2 years, they are not heavily weighed in decisions to grant credit.

Erasing credit inquiries

The credit reporting agencies will tell you that credit inquiries are just a statement of fact and cannot be removed. This is not true. FRCA Rules state that “Any information can be disputed and must be investigated”. You need not worry about soft inquiries as they do not count against your credit score. Credit inquiries made without “permissible purpose” should be disputed.

The FCRA states you can sue for damages in the amount of $1,000 for each instance a company pulled your credit report without your permission.

Credit inquiries made without your permission may indicate fraud, in which case the credit reporting agencies may put a fraud alert in your files. A fraud alert will make it difficult for anyone, including you, to access your credit report without your permission.

Permissible purpose would be if you applied for credit, one of your current creditors may pull a hard inquiry or a collection agency holding a debt may pull your credit report.

Is Disputing Credit Inquiries Worth The Time?

If the credit inquiry is really a mystery to you and you don’t recall requesting credit then you really should initiate an investigation with the credit reporting agencies. It could be a matter of fraud and you want to handle that immediately. A fraud alert may be put in your files in order to protect you. Fraud alerts will also keep you from applying for credit easily.

Your time may be better spent disputing other types of information that would significantly raise your credit score if deleted.

For more information, visit: http://www.RepairCreditTrauma.com