Consumer Car Buying Advice Blog

How mistakes on your credit reports can lower your credit scores and affect your ability to qualify for bad credit auto loans

What we can tell you

People who are credit-challenged often don’t know that a credit denial for poor credit car loans is the result of credit report errors.

We have seen this happen more than a few times during the 20 years we’ve been involved in bad credit car sales here at Auto Credit Express. It’s one reason we created our web site. Using it, bad credit applicants can read about topics such as repossession and tote the note dealers as well as the current one, how credit report errors affect credit scores and the ability to get approved for bad credit auto loans.

Credit report studies

At least two studies have tried to come up with a way to measure the volume of errors on credit reports.

In 2003, U.S. PIRG (Public Interest Research Group) conducted a survey that covered 200 adults in 30 states who reviewed their own credit reports for errors. It found that 25 percent of those credit reports contained errors “serious enough to result in the denial of credit.” It also found that:

• 79 percent of the credit reports contained mistakes of some kind
• 54 percent of the credit reports contained misspelled, outdated, inaccurate or otherwise incorrect personal demographic identifying information
• 30 percent of the credit reports contained accounts that had been closed by the consumer but incorrectly remained listed as open

Unfortunately, while many credit repair companies mention this report, it should be noted that  it covered only 30 states and was based on just 200 surveys.

A second study, conducted by the FTC and based on a much larger group of credit reports, was started in 2004 and is scheduled to be completed by 2014.

Credit report errors

But even with this lack of information, there is still evidence of a large number of credit report errors.

Lexington Law, a well-known credit repair company, reports that just in 2010, it helped remove over 1,200,000 credit report errors from the combined credit bureaus of clients. As a result of these actions, their clients “start seeing improved credit scores within 3 months. Moreover, 84% of their disputed items were removed from their credit reports by month 12, which further improved their credit scores.”

Credit scores

What this means is that 84 percent of the time these people disputed what they thought was a credit report error, the entry proved to be inaccurate.

It’s also safe to say that removing these negative items will usually result in better credit scores for these individuals since, according to FICO, 35 percent of a credit score is weighted based on previous credit history.

The Bottom Line

Even though lenders that offer bad credit auto loans don’t base their credit decisions on just credit scores, they also look at credit reports. This means that the combination of low credit scores (as a result of inaccurate information) plus credit reports that contain this incorrect negative information could result in a credit turndown.

This means that all consumers, but especially people with bad auto credit, should check their credit score for errors before applying for a terrible credit auto loan.

If you are one of these individuals, we want you to know that once you’ve improved your credit reports here at Auto Credit Express we can help you find a dealer for your best chance at getting approved for no credit auto loans.

So if you’re serious about getting your car credit back on track, you can begin right now by filling out our online car loans bad credit application.

Tags: Credit Repair, credit score

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