Car-Buying Could Hurt Your Credit Score

NEW ORLEANS -- Glenn and Wendy Barras are interested in buying a new family van, but they are taking time to make a final decision. The Barrases have been to several different dealerships during the past six months and have test driven a number of vans. What they don't realize is that each test drive probably includes a credit check.

"Normally, we can get credit information in about three minutes," dealership owner Troy Duhon said.

Before letting a potential customer take a test drive, most dealerships will ask to make a copy of their driver's license or have them fill out a credit application. While the customer is out for a spin, the dealership checks the person's credit history.

"We probably do 50 to 100 a day," Duhon said. "The first reason we do it is to make sure you can obtain financing to buy the car. The second reason is to see if you qualify for any incentives you came in on."

If you're like the Barrases and have been test driving for six months, all those credit checks can hurt. The score is known as a Beacon score or Fair Isaac score.

"That's what creditors look at when deciding on financing," Consumer Credit Counseling spokesman Tom Collens said.

The score ranges from 300 to 850, with an average score of 700. Below-average scores can sometimes be the result of too many credit inquiries over a 12-month period. It could be from car shopping, house shopping, or even applying for credit cards.

"Making large purchases in a short period of time will help avoid bad marks on your credit," Collens said. "With regard to mortgages and with regard to automobile shopping, as long as those inquiries fall within a 30-day range, they are not counted as multiple inquiries."

Collens suggests that if you are test-driving and not yet ready to buy, ask the dealership not to run a credit check. Also keep in mind that a dealership is supposed to ask permission to check your credit.

"If a dealership makes a mistake and runs a credit check on you and they didn't have access or authority to do it, you can get that removed," Duhon said. "I'll contact the credit bureau myself to remove a credit inquiry."

But, to play it safe, the advice is to get a copy of your credit report after any major purchase and dispute any mistakes.

"It doesn't seem fair for that to affect your credit because you're just looking. That's something that should be disclosed," Glenn Barras said.

Because it's not always disclosed, the Barrases plan to contact all three credit bureaus once they purchased their new van.

Credit Bureaus -- Equifax (800) 685-1111; Experian (888) 397-3742; Trans Union(800) 888-4231.