A big part of why consumers have bad credit or think that they have bad credit is because of what is reported by the Credit Bureaus. The perception of most Credit Bureaus is that they are this big bad black hole and that when something goes into thier credit report the information can never come out; or at least for ten years. The thing is that Credit Bureaus are definitely big, but they are only big companies. They just collect a ton of information about consumers from lending institutions, banks, credit unions and collections agencies. Credit Bureaus put all of the information together; put all the information into a math problem, assign a score and spit the information back out in the form of a credit report to all of the same lending institutions, banks, credit unions and collection agencies that gave the information. The source that most auto dealers get your credit from is not from the Credit Bureaus but through a Credit Reporting Agency (CRA).
Wikipedia defines a Credit Bureau as the following: A Credit Bureau is a company that provides credit information on individual borrowers. This helps lenders assess credit worthiness, the ability to pay back a loan, and can affect the interest rate applied to loans. Interest rates are not the same for everyone, but instead are based on risk-based pricing, a form of price discrimination based on the different expected costs of different borrowers, as set out in their credit rating.
So now that we are clear on what Credit Bureaus are. How can Credit Bureaus affect your chances of getting an auto loan? The biggest problem is that with Credit Bureaus is that they are big and they are automated for the most part. When your credit is run they send out a ton of information from several different sources and when that information comes out it is reported inaccurately a lot of the time. Once that information is reviewed by the dealer, bank, credit union or etc. they will believe the information to be true. With inaccurate information reporting on your credit your fico score can be calculated incorrectly and give you a low fico score. With a low fico score you may be declined to give a higher interest rate.
So what is inaccurate information? Well it’s when your credit report contains a collection that is not yours, a bankruptcy that reports as open that closed or an auto reports when you paid it off. Credit Bureaus in most cases don’t actively look for information about and actively try to find out if things to correct on your credit they rely on the information provided to them from the lending institutions and etc.
The only person that will or should actively look for information about fixing your credit or making sure that your credit is reported accurately is you. So you need to make sure that you run your credit at least once a year and dispute any inaccurate information about your credit with the credit bureaus. It is not that hard to dispute information on your credit and it can make a huge difference in your fico score and the interest rate that you get when you apply for a loan whether it is for an auto loan or a home loan.
But if you don’t have time to wait for the things to clear off of your credit you can still get approved for auto loans with bad credit, but you need to make sure you are going thru a special finance department for you loan. Most Special Finance Departments are considered special because they deal with bad credit on a daily basis. They also are more likely to understand why you might have bad credit and who will approve your auto loan with bad credit. If you need information or help fixing your credit or disputing inaccurate information in you credit you can go directly to the Credit Bureaus. The three major Credit Bureaus are Experian, Equifax, and Transunion.