When your credit is run by an auto dealer for the purpose of obtaining financing for the prospective buyer, it is rarely run for the purpose of determining whether to finance the purchase by the dealer itself. The standard practice is to take a prospective buyer's single credit application and shop it around to various financial institutions to find the best financing terms for the consumer and the dealer.
If, in fact, a buyer attempts to obtain financing from a ‘buy here, pay here' type of dealer—i.e., where the dealer finances the vehicle purchase itself—the dealer should not run the buyer's credit with outside institutions. Conceivably, doing so in cases where the buyer expects or has reason to believe that financing will be handled by the dealer would be without the buyer's knowledge. For dealers that do not provide their own financing, notice to the buyer must be made and permission from the buyer must be dully obtained before the dealer can run a hard credit check either on its own or through outside finance institutions.
If you discover that a dealer ran your credit through multiple finance companies without your permission, there are a few things to consider:
- If there are multiple suspicious hard credit checks on your credit report and you suspect they were connected to an auto purchase, it is worth double checking if there is any doubt. If any of the recent credit checks was run outside the main window when the bulk of the credit checks were run, it should be checked to ensure there was not an incident of identity theft.
- If you are surprised to discover multiple credit checks around the time you financed a vehicle, it is worth double checking the finance document fine print, front and back. Car shopping is a notoriously stressful event full of bouts of waiting and negotiating, all followed by a lot of tedious paperwork. There is an excellent chance a first-time car buyer will get to the end of the process, including securing financing and driving their new car off the lot, without understanding quite a bit of the process that just took place. The buyer most likely was told their credit would be shopped around, and they most likely signed or initialed next to a written notice, affirming their awareness and consent to the multiple credit runs.
- If, however, there is nothing in writing and you do not recall anything about the dealer shopping your credit around, the dealer might well have violated the law. As such, you can and should confirm the dealer's actions and report the dealer to the DMV. Reporting the dealer for its unlawful business practices does not necessarily confer any direct benefit on the reporter, but it can create or contribute to the buyer's records on the matter and it can potentially bolster an administrative action penalizing the dealer and forcing it to correct its bad practices.
If multiple credit checks were performed without your knowledge, you can, of course, discuss potential recovery options with an attorney. Before considering whether to pursue legal action, however, you should check to see whether there is any actual damage. When credit is shopped around by, say, an auto dealer, the multiple runs are generally treated as a single credit check for the purpose of calculating your credit score. Assuming you intended to finance your new vehicle and expected or reasonably should have known your credit would be run at least once, there is likely no “cost” in terms of credit score calculation and, thus, no actionable damage.
For a better idea of your specific recovery options, consult with a consumer auto fraud attorney as soon as you suspect a problem.