Car Dealer Credit Report Software and Red Flag Compliance

Credit reports show our risk levels and set our loan rates. They are what we are worth to the banks. Even at the very most basic level they contain a lot of info about a person's financial activities such as bank accounts, mobile phone contracts, loans, mortgages, rents, late payments, defaults, repos, bankruptcy, etc. Most of these loans are called credit lines. Credit report shows if you paid your credit lines on time.

It is hard to classify credit histories but the 3 credit bureaus (Experian, Equifax and Transunion) have developed models and come up with standard scoring systems. Like many lenders, they each have multiple scoring systems. There are a lot of differences among the scoring systems. In general they change between 400 and 830. It is unlikely for someone show much variation between these systems. If you are above 700, you are what's called a prime customer: low risk, preferred client for banks. Below 600, you would most likely be sub-prime. The exact numbers change in time with economy and models. Still, if one bureau thinks you are prime, others will most probably not say sub-prime.

In car dealer world, most customers require a loan to make a purchase. As amazing as it sounds, there are still some dealers out there that do not check the credit report for their customers. Here are some reasons why you should do so:

Buy Here Pay Here (BHPH): If you do in-house financing, it is just crazy not to look at the credit report for a customer. You are giving a loan to a person. Even if you think you know, you should always do a credit check. In the worst case, you'll be out a few bucks. For all you know, your customer may take off with your car never to be found again.

Obtaining financing for your customer: Let's say you have a couple of customers in your store. They found a vehicle they like and they want your help to get a loan. If you have agreements with banks or other lenders, that's great. You may even get some extra profit by selling the loan at a higher rate. Even if you do not have any banks setup, you still should check the credit reports to see which banks they should be applying. Some banks work with only prime customers and some in sub-prime. You would not want to waste their time.

Red Flag Compliance and OFAC: Even if the customer is buying the vehicle with cash, you should check the credit. As part of the patriotic act, dealers should file SARs (Suspicious Activity Report) for cash purchases above $10,000 and any other cases where they think the customer may be wanted by law. Credit report would give you that info. Part of the red flag compliance is you should check the terrorist lists and OFAC list to see if your customer is in them. CredCo provides this info in an easy to read format as part of their executive summary.

CredCo CoreLogic

We provide credit reports through CredCo, who is clearly the market leader in this area. They have a number of products that help you with your decisions. They can tell you the if your buyer is who he/she says he/she is, merge credit reports from multiple bureaus, show any alerts in red flag section and even provide the credit score disclosures for some states. In some states like California and Minnesota, it is required to make sure that customer knows you are pulling the credit report and they can accept it with the disclosure sheet. If you have a CredCo account, you can start using it with our DMS at signup. If you do not already have an account, you can go to our CredCo signup page to register.

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