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Don't Crash Your Credit During A Test Drive

Illustration for article titled Dont Crash Your Credit During A Test Drive

Planning on shopping for a new car in the near future? Be careful what you give the salesperson before you decide to buy anything. Many dealers will pull a credit report on you - even if you haven’t authorized it - and it WILL harm your credit.


I get calls about this all the time but I don’t handle these cases. But as you might imagine, I have friends that do. So I asked my friend Adam Alexander to give me an example of a recent case he’s handled with these facts - and the outcome.


His client went into one of the larger dealers in the Midwest and said he was thinking about trading in his late model car on something brand new. Could he look around and maybe test drive a few vehicles? After making small talk and kicking a few tires, he found a car he’d like to drive.

The shopper handed over his license and went for a test drive. He decided it wasn’t for him and he left the dealer. A couple years go by and he starts getting notifications from a credit protection plan he has signed up for. Turns out that the dealer had pulled a “hard inquiry” on him when he was at the dealer. And later, so they could send him offers saying he was “Pre-Approved,” they ran his credit several more times after. All this even though he had not filled out a credit application and had NEVER authorized them to run his credit. He didn’t even give them his social security number the day of the test drive.

When he figured out what was going on, he contacted the dealer and they said they weren’t sure how this could have happened but they would investigate. Before beginning the investigation, the dealer told him he probably applied for credit but forgot about it. He hadn’t. The client believes they pulled his information from the file on a previous purchase he had made years earlier. What made it worse was that his credit had been run five (5) times here.

The client contacted Adam, who handles cases like these. They happen all the time - often enough to keep attorneys busy. Adam filed suit against the dealer to get them to take the client’s information out of their system and to force them to contact the credit agencies and let the agencies know that there was no credit application filed by the client.


As you can imagine, dealers hate that. They hate being forced to admit they did something wrong. Even if they broke federal law: the Fair Credit Reporting Act strictly prohibits anyone from obtaining information on a consumer from a consumer reporting agency under false pretenses. The case settled. The dealer went and cleaned up their mess and paid the customer some money for his troubles along with his attorney’s fees and court costs. It ended well but it was a hassle. And for every person out there who catches an “impermissible pull” like this, there are many more who have no idea this could happen.

Here is what you do to avoid this: Do not fill out a credit application unless you are certain you are going to buy something. Tell the salesperson they cannot run your credit unless you have decided to buy something. Do not sign anything or even write anything down for them unless you are going to buy.


Yes, give them your license for a test drive but that’s it. And, as Adam advises, check all the credit reporting agencies periodically to make sure no one has gone and run your credit anyway. You’re entitled to a free report each year so you may as well take advantage of it.

Follow me on Twitter: @stevelehto

Hear my podcast on iTunes: Lehto’s Law

Steve Lehto has been practicing law for 23 years, almost exclusively in consumer protection and Michigan lemon law. He wrote The Lemon Law Bible and Chrysler’s Turbine Car: The Rise and Fall of Detroit’s Coolest Creation.


This website may supply general information about the law but it is for informational purposes only. This does not create an attorney-client relationship and is not meant to constitute legal advice, so the good news is we’re not billing you by the hour for reading this. The bad news is that you shouldn’t act upon any of the information without consulting a qualified professional attorney who will, probably, bill you by the hour.

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On the flip side, I like getting people in who tell me, “I want to know exactly how much per month the car is with $xxx down before I give you my credit information.”

Well, I can give you a ballpark...

“No. I want an exact payment. THEN I’ll let you run my credit”


These people, FWIW, usually have “pretty good credit,” like a 534FICO.