Even consumers with questionable credit thinking of applying for an auto loan should be familiar with the kind of information that both is and is not contained in their credit reports
For car buyers with poor credit, understanding the type of information that can be found in their credit reports, although not as critical as knowing the actual information, may help to explain why they don’t qualify for a traditional auto loan.
Here at Auto Credit Express we understand why this can be helpful because for more than twenty years we’ve been helping consumers with bad credit searching for online car loans find those dealers than can afford them their best opportunities for car loan approvals.
Credit reporting agencies
Credit reports are issued by many different credit reporting agencies although car buyers only need to know about the “big three” largest credit bureaus: Equifax, TransUnion and Experian.
Credit files from these three bureaus can be roughly divided into six different areas:
Personal identification information component
This section lists your name and any reported variations of your name as well as your current and any reported former addresses. It will also show your date of birth and social security number. In many cases this section will also list your present and possibly even your previous employers.
Credit inquiry component
This section contains a list of those entities that have requested your credit report and on what date or dates this information was generated. The consumer version of the credit report –the one most people see – is going to contain every inquiry including “soft” inquiries from entities such as credit card marketing companies (that is, sources marketing a product to you that you did not directly request). A report pulled by “users”, such as car dealers, will only list “hard” inquires (reports pulled by credit providers as a result of a direct consumer request).
Collection accounts component
This section is for third party collections as opposed to the internal departments that deal with collections at banks or credit card companies.
Accounts show up here when creditors either sell or consign a delinquent debt to an outside agency for collection.
Trade lines component
This is usually the largest section of any credit file where all “applied for” credit accounts are going to be listed.
Public records component
In older credit reports the Public Records section also contained third party collections despite the fact these accounts are hardly considered to be “public” (in newer consumer versions these collections are a separate item). Typically, the public record section is reserved for home liens and foreclosures as well as for judgments and bankruptcies.
Consumer statement section
Consumers have the right to add a short statement to their credit reports. In most instances these statements are used to allow the consumer to clarify any negative information appearing in the report. In most states this statement is limited to no more than 100 words – meaning it should be kept brief and to the point.
The information not listed in credit reports
Public utility payments
Typically, gas, electric, cable, landline or cellular telephone service accounts will not be found in credit reports – provided they’re being paid on time.
Typically these accounts will only appear in credit reports if they’ve been sent to collection and they’re being reported by a collection agency (see the “Collection accounts” section, above).
While mortgage lenders report account activity to the credit reporting agencies, in most cases rental payments will not appear in your credit file typically because landlords wish to avoid paying the fees required to report this information to the bureaus. Rental accounts will usually only appear if you default on your lease and it’s turned over to a collection agency (again refer to the aforementioned “Collection accounts” section).
While insurance premiums are usually paid on a monthly basis, like landlords, the insurance companies usually don’t report these installment payments to the credit reporting agencies.
The next step
Once you understand what is and is not contained in your credit file and you’ve also take a closer look at that information, you’ll probably be able to determine on your own if your credit is less than perfect.
If you’re looking for a car, the next step is to arrange financing. Unfortunately, most of these institutions only lend indirectly through franchised new car dealers. Since not all dealers cater to buyers with poor credit scores there’s a good chance you might get turned down for an auto loan.
But there are ways you can make this search easier.
Auto Credit Express matches people with auto credit difficulties to those new car dealers that can offer them their best chances for approved car loans.
So if you find yourself in this situation and you’re ready to reestablish your car credit, you can begin now by filling out our online car loan application.