Auto dealerships are not allowed to run your credit without your knowledge or permission, but there is a gray area where dealers can get away with checking out your ability to make a purchase before you even find a car you want to buy. This gray area largely concerns soft versus hard credit inquires.
A hard inquiry typically only occurs when a consumer applies for credit or a loan, and the associated inquiry requires the consumer's knowledge and consent. A soft inquiry, on the other hand, may be performed for any number of other reasons and, in many cases, can occur without the consumer ever knowing. Soft inquiries (or ‘checks' or ‘runs') are commonly performed for the purpose of pre-approving a consumer for an extension of credit, as demonstrated when a consumer receives a pre-approved credit card offer in the mail. Auto dealers—particularly those offering on-site financing—like to use the same kind of soft credit run to assess whether they are likely to offer financing to a particular buyer or if the buyer will have to obtain financing elsewhere in order to purchase a vehicle from that dealer. Dealers also use soft inquiries in a somewhat less scrupulous manner to assess a shopper's buying power early in the shopping process.
From a practical perspective, a dealer cannot run your credit if they do not have your personal information, particularly if they do not have your social security number. If you take a car for a test drive, for example, a dealer will likely first make a copy of your driver's license and might even ask you to complete a form for their records, which they might present as necessary information just in case there is an accident or in case they need to reach someone on your behalf. The dealer does not need your social security number for that purpose, so even if they ask for additional information or for you to sign some sort of liability waiver, it is fair to push back if the dealer insists that you hand over your SSN before agreeing to have your credit run or deciding to make a purchase. Moreover, always be careful about signing a document to test drive a vehicle. Read the document to make sure you are not providing consent for the auto dealer to run your credit unless you are actually consenting to the credit inquiry.
When obtaining financing from a dealer for a new or used car, the dealer must give you a Notice to Vehicle Credit Applicant showing the credit score that was used by the dealer, the name and contact information of the credit-reporting agencies and their range of all possible credit scores. If you receive such a notice from a dealer but do not recall giving your permission for a hard credit run or otherwise have reason to believe your credit was run without your permission, you should not hesitate to ask for a copy of the application or other documentation you provided regarding your credit.
In the event a dealer acts outside their authority in a manner that impacts your credit or in a way that you believe to be unlawful and against public interest, speak with a consumer law auto fraud attorney as soon as possible to discuss your rights and options. Even though, generally, a credit inquiry does not drastically reduce your credit score, it does lower your score.