Car 1 News

They Can Make or Break a Car Deal

Smart car shoppers do their homework before setting foot in a dealership. They research makes and models, read the expert reviews on Edmunds, and know what vehicle they want before talking to a salesperson.

And of course almost everyone realizes that a car dealer or lending institution will want to evaluate a potential buyer’s credit report before agreeing to a loan or lease. But sometimes even the most savvy consumers don’t really understand the specifics of what goes into that report, even though it may determine whether they drive away with the car of their dreams.

Since credit reports and credit scores are so closely intertwined, there’s often confusion about what each is and how each is used.

A credit report is a record of your current and past interactions with lenders and others with whom you’ve had financial dealings. The parties can include banks, finance companies, mortgage holders, landlords, utility companies and wireless phone providers.

The report contains such details as dates when accounts were opened and closed, loan amounts, current balances and payment history, including late payments and defaults, as well as requests for the credit report from potential lenders. It also contains information from public records, such as debt collections, bankruptcies, court judgments and tax liens.

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The most widely recognized credit score, the FICO score, is produced by the Fair Isaac Corp. There are other scores available, but FICO scores are used in 90 percent of the lending decisions in the U.S., so it’s important to know how they’re compiled.

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