Credit Reports for Car Dealers: BHPH, OFAC and more

credit reports for car dealers

You see this all the time. When companies compete they present this table of features with check marks in them. Websites: check, reconditioning: check, financing: check, etc. They try to prove to you that they are the best in their segment. What is not captured in those charts is HOW they implement a feature. Just because two products have similar features does not mean they are the same. That is like comparing Magnavox and Sony blue ray players. They both have the same function. But Sony is clearly superior to Magnavox. The same goes true for every aspect of dealer software including credit scores.

If you own a car dealer credit reports help you find out what kind of a loan you can get for your customers. Credit reports give you a clear view of what you can expect when you send the loan app to banks. For BHPH (buy here pay here) dealers, it is more serious. They need more info. If the buyer does not pay, they need to do repo and follow up. It is a pain and they want to avoid it at all costs. In this article we provide what the credit reports and similar services entail and how they can help avoid bad loans.

In its most basic form, credit reports can be taken directly from one or more of the 3 main credit bureaus and provided as is. In case you did not know these are Experian, Transunion and Equifax. Mostly it is just plain text. They can be hard to read. It is much better if your software shows them in a format that is easier to read. What you want check are the trade lines, alerts and of course the credit score. Trade lines are the loans that the customer has taken so far. It show the payment history and whether there are any late or missed payments. Alerts require attention. It can be about identity theft, fraud, or 5th reason code which means the customer has peeked at his credit score too much and his score declined because of that. There are various credit scores but in general they revolve in the same neighborhood. It is unlikely that one will be 800 when the others are around 650. A detail about Minnesota and California: customers are required to be notified when you order a credit report - which is known as credit services disclosure. Read more about it at Credco Credit Disclosures.

Also related is OFAC (Office of Foreign Assets Control). This is a government branch that tries to eliminate money laundering and terrorist funding. They provide a list of people that you should not be doing business with. All dealers are required to establish anti money laundering policies and protocols and report cash transactions over $10,000. By law, you need to report suspicious activities as well. If you end up selling cars to somebody in OFAC list you may find your self in trouble. Read more about it here. So, your dealer software should tell you with the credit report whether your customer is in this list or not. For BHPH dealers this is even more vital. They are also lenders.

BHPH dealers need to go beyond the standard credit reports. They need to know everything. Demographics, references, fraud checks, alternative sources of income, etc. They need to make sure that the customer is who he says he is. There are different solutions for this. If your dealer software provides you this info with the credit report, it is certainly desirable.

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