Why Do Lenders Pull Credit Scores?
For any substantial loan or financing plan, a lender typically pulls a person’s credit score before reviewing the application. This is because lenders have an obligation to themselves and to the public to make unbiased decisions about who they do and do not trust their money with. To keep things simple, most lenders use credit scores, a three-digit number representative of a person’s full credit report. Depending on applicant volume and the institution’s size, these scores may be the only option available for treating all requests equally.
Most of the time, a credit score represents a person more favourably than a report. For example, a person’s credit report may show repayment delinquency on once account. Overall, however, this person’s score is healthy. That one troublesome account can red flag lenders despite all other positive behaviour. With a credit score, bureaus weigh these histories as a whole and convert it into a number. For this reason, insignificant negative entries often go undetected.
Many lenders do proceed to look at a report for loan-specific information. Unfortunately, the report lenders retrieve does not always match the consumer’s version. Most free or paid third-party credit services are for educational purposes only. Since lenders require industry-specific credit scores, these generic reports would be more of a burden than a help. Industry credit reports emphasize, highlight, and discard certain information, and this can make the difference between a healthy and poor score.
Consumers do not have access to such credit reports, so it’s important to maintain an all-around healthy profile. As well, credit diversity ensures applicable information in any situation. Even with little credit history, however, lenders do still require additional data. Alternative credit data helps in the evaluation process, so provide all of the necessary details on the in-house loan form. Should a lender deny your application, you may always ask for a copy of the credit score/report afterwards.
If you need help with your credit score in order to obtain an auto loan, pop into Trillium Auto Group. We work closely with our customers and guarantee auto financing approval. Through our monthly plans, customers also work towards improving their credit reports. So next time you apply for a loan, you can sit comfortably knowing Trillium Auto Group has put you on the right path.