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Beyond the Headline

Learning how to read the whole credit report and getting the full consumer story can help you avert potential missteps.


Consumer credit reports may rarely win a prize for their memorable prose, but they should be at the top of your reading list if you want real insight into a vehicle shopper’s credit history. To get the essential facts that matter when talking to vehicle buyers and lenders, you also need to make sure that you read more than just the headline – or in a credit report’s case, the corresponding credit score number. Like headlines, numbers may not always tell the full story.

When sales and F&I managers first glance at a consumer credit report, all those lines of text, numbers, abbreviations and acronyms may seem as foreign as an owner’s manual is to most car buyers. But, don’t fret; reading a credit report isn’t nearly as frustrating. By taking just a few minutes to learn what it all means, you might ultimately save time, money and improve your credibility.

For starters, the information you see on a report may vary depending on the credit bureau that your dealership works with, but the general layout is usually the same (the example outlined below is from an Equifax credit report). Along the top, the first thing you typically see is that one piece of information that most everyone understands – the consumer’s three-digit credit score. It’s followed by a brief narrative that provides items that impacted the particular score – great talking points when speaking with vehicle shoppers. Now that you’ve read the headline, it’s time to get the full story.

Learning how to read and interpret the entire report offers benefits that can help avert potential missteps. Viewed in a vacuum, a solid credit score may well signal “all systems go,” but important additional data in the report can ensure that you evaluate potential financial risks more effectively. For example, imagine the consequences if you moved ahead or spot-delivered a deal without seeing that crucial line of information about an individual’s recent bankruptcy filing – an action that, depending on the consumer’s prior history, may not have affected the credit score yet. Conversely, a person could have a low credit score despite having turned a corner and sustained a timely payment history, which demonstrates that he or she may be able to effectively manage an auto loan. Dismissing this potential sale based solely on that credit score means you’ve opened the door for a competitor who is able to recognize that this person is becoming financially stable.

So, what nuggets of information can you expect to find in a report, and how do you correctly interpret them? Let’s have a look at both the basics and other valuable pieces of content.

Alerts: A variety of alerts or indicators may be found on a credit file. Flags that indicate name, address or Social Security number discrepancies are returned when a difference is found between the information provided in the inquiry, compared to what is on the consumer’s file. Consumers may also place alerts or narratives on their file. Alerts include indicators of potential fraud or active military status, and may also include consumer contact information for verification. It’s important to note these alerts, as they may signal when you should proceed with caution.

Consumer Referral Message: This brief line states the name of the credit bureau that ran the report along with contact information for consumers to use in case one of the aforementioned fraud alerts needs to be temporarily lifted. It is also where customers can go to get a copy of their consumer report. Remember, dealers are not credit reporting agencies and should not be providing consumers copies of their reports.

Personal Information: This section includes the information you need to verify to ensure that you have the correct financial profile for your customer. Along with the basics, such as name, birthdate, Social Security number, addresses, and past and current employers, this section offers extra details on existing fraud alerts, as well as a summary of the individual’s recent credit history. Make sure to pay particular attention to the listed addresses. A report that calls out several places of residence should raise questions about whether the person lives where they say they do, and where they are planning to keep the vehicle. This uncertainty may cause lenders to hesitate, or add additional stipulations to deals since they need know where to send monthly account statements or, in the event of default , where to find the vehicle.

Consumer credit reportsSummary of File Items: This line in the report provides a snapshot of all of the information available in the consumer’s file before going into more detail in the following sections. Here are some things you can determine from the consumer’s file:

  • The oldest open and newest reported dates of trade
  • The presence of public records or other information
  • The number of tradelines
  • The range of high credit amounts for open trades

For an Equifax credit report, the spelled-out numbers following these abbreviations refer to the number of accounts that fall under specific rate codes, which indicate the current status of a consumer’s account:

  • ZERO: Account is too new to rate, or approved but not used
  • ONE: Consumer pays as agreed
  • TWO: Consumer pays 30-59 days past due and is not more than two payments past due
  • THREE: Consumer pays 60-89 days past due and is not more than three payments past due
  • FOUR: Consumer pays 90-119 days past due and is not more than four payments past due
  • FIVE: Consumer pays 120 or more days past due and is more than four payments past due
  • SEVEN: Account included in Chapter 13
  • EIGHT: Repossession
  • NINE: Charged off
  • OTHER: No rate reported

Public Records: Here’s where you’ll see any information about declared bankruptcies, collection items, judgments and tax liens. Details for these items include dates, case numbers, collection agency names and outstanding balances.

Inquiries: Inquiries provide insight into a customer’s request for an extension of credit. Up to two years of inquiries, which includes the requestor and the request date, may be displayed on a credit report. Be sure to pay special attention to previous inquiries. If you notice that multiple inquiries were made by other dealerships, you should consider asking your customer about it to ensure there aren’t any underlying problems present that prevented previous transactions that you can account for when obtaining financing.

Consumer credit reportsTradelines: The tradeline section of the credit report is the detailed view of a consumer’s payment history. Each line details the name of the lender reporting the information, report and open dates for the account, credit limits, term lengths or monthly repayment amounts, balances owed as of reported date and past due amount as of reported date. Each tradeline is classified with one of the rate codes detailed above in addition to a letter designating whether it is a revolving, open or an installment account.

Digesting all the valuable information in a credit report isn’t just good for you and your dealership – it’s also a great tool for ensuring transparent communications with your lending partners as well as your customers.

Reading is indeed fundamental – especially when it’s a credit report.

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