Car buyers with credit problems often can improve their chances for approved auto loans simply by correcting the credit reporting errors found in their credit reports
What we know
Credit challenged consumers often don’t realize that a credit denial for a car loan can result from incorrect information in their credit reports.
At Auto Credit Express we know this has occurred because we’ve spent over two decades helping car buyers with credit issues find new car dealers that can give them their best chances for auto loan approvals. But in some cases it turns out that some consumers with bad credit get turned down for a loan simply because of mistakes contained in their credit reports.
But it seems that there is still not enough information concerning just how many credit reports contain incorrect entries.
Credit reporting errors
At least two studies that we’re aware of have been conducted with the intention of measuring the number and possible overall percentage of credit reports that contain reporting errors.
In 2003, U.S. PIRG (Public Interest Research Group) conducted a survey that covered 200 adults in 30 states. The people involved in the survey reviewed their own credit reports. Upon its completion PIRG came to the conclusion that 25 percent of the reports contained errors “serious enough to result in the denial of credit.”
The group 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• 54 percent of the credit reports contained misspelled, outdated, inaccurate or otherwise incorrect personal demographic identifying information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
It should be pointed out that while a number of credit repair companies mention this specific report in sales pitches to prospective clients, its relatively miniscule sample size (only 30 states and just 200 surveys) hardly make it a reliable measurement of the credit reporting industry.
A second study, this one 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 and promises to give us a much better picture of the issue.
Proof the problem exists
But even without any additional information, there is still some proof that a large number of credit reporting errors exists here in the U.S.
Lexington Law, a well-known credit report repair firm, states that in 2010 alone it helped remove over 1,200,000 errors from the combined credit reports of its clients. According to Lexington 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.”
FICO score improvements
In other words, in 84 percent of the cases in which their clients disputed what they thought was a credit report error, they were proven to be right and the incorrect information was subsequently removed from their credit files by the credit bureaus, themselves.
In most instances, removing negative items from credit files should result in better credit scores since, according to FICO, 35 percent of their credit score is weighted based upon previous credit history.
High risk car loans
Although they’re taken into consideration, higher risk lenders typically look past credit scores and base their credit decisions on an applicant’s credit habits. This is done by looking at the information contained in their credit reports.
But if that information is incorrect, when combined with low credit scores it could result in a credit denial for a car loan.
This means that all car buyers – but especially consumers with credit problems – should always check their credit reports for errors well before applying for a loan.
The Bottom Line
If, after correcting your credit reports, you find that your credit scores still fall below 640, we want you to know that Auto Credit Express we match applicants that have experienced car credit issues with new car dealers that can offer them their best opportunities for approved auto loans.
So if you’re ready to take the next step, you can begin the process by filling out our online auto loans application.