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Shopping experience results in significant drop in credit score for Calgary consumer
Published Tuesday, September 26, 2017 9:34PM MDT
A Calgary man hoping to purchase a new vehicle was in for a bit of a shock when he found out his credit score had slipped significantly after the dealership shopped around for financing.
Blair Geddes went shopping at Calgary Hyundai in the summer for a new vehicle and settled on a new Sonata.
He was told by the dealership’s finance person that his credit score was solid and getting a loan would be a snap.
“They said not a problem with your credit score, you have amazing credit, we’ll get you this car no problem,” he said.
A few days later, Geddes was told that Hyundai couldn’t get him a loan so he went to a different dealer and that’s when he found out his credit score had dropped 132 points.
His score dropped from 761 to 629 because his credit report was pulled 11 times by lenders that Hyundai had contacted and now it’s affecting his ability to get a line of credit.
“It’s affected everything like you need a 700 score to even get a house loan and I couldn’t even do that now because of the 11 hits they did in that one day,” he said.
Nadia Graham is a credit expert and says it is typical for car dealer’s finance departments to solicit two to five lenders and consumers might see that number of hard hits show up on their credit report.
She says too many inquiries in a short amount of time can cause the score to drop and that to the credit bureau, it can look like the person applying for financing is desperately seeking credit they can’t get.
“It doesn’t know that those are all looking for one vehicle. It could be 11 different credit cards you’ve applied for,” she said.
In a statement to CTV News, Calgary Hyundai says it was always acting with Geddes’ permission and in his best interest to find him the loan that would let him buy the car he wanted and that it never intended to damage his credit.
Graham says to prevent this from happening; consumers need to tell auto dealers how to handle their loan application.
“If the dealership is going to pull your bureau anyway, which is what happened in this case, ask the dealership to send that credit bureau out with the application for financing. If the dealership does not have membership in the credit bureau and they cannot pull a person’s credit bureau, instruct them to send it to two and then get back to you,” said Graham.
AMVIC, the province's auto regulator, says there are no regulations governing how many lenders a dealership's finance department should contact when soliciting loans for customers.
(With files from Lea Williams-Doherty)