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Check credit before auto loan

By Tara Baukus Mello · Bankrate.com
Saturday, August 30, 2014
Posted: 8 am ET

© K. Miri Photography/Shutterstock.comThe news that auto finance company First Investors distorted consumer credit records for years is a good reminder for all American consumers to check their credit reports regularly and particularly before they apply for any kind of loan, including a car loan.

The company, which works directly with consumers as well as indirectly through dealers, specializes in offering car loans to consumers with bad credit, including those with a bankruptcy on their record. The federal Consumer Finance Protection Bureau, or CFPB, found that First Investors knowingly used a flawed computer system that reported:

  • Wrong payments.
  • Incorrect overdue amounts.
  • Distorted delinquency dates.
  • Inflated number of delinquencies.
  • Mischaracterization of the way a vehicle was surrendered (voluntarily or involuntarily).

While the CFPB fined First Investors $2.75 million as a result of their bad practices that affected potentially tens of thousands of its customers, many of those customers already have suffered the consequences of these practices by being quoted higher car loan interest rates than they should have been or perhaps even been denied a loan.

All of the mistakes First Investors reported could have been caught if the borrowers carefully checked their credit reports against their personal records. Late payments or those payments less than the minimum represent about one-third of the overall credit score, so inaccuracies can really hurt.

Read the full story about First Investors at CFPB: Lender distorted credit reports.

Tara Baukus Mello writes the cars blog as well as the weekly Driving for Dollars column, providing both practical financial advice for consumers as well as insight into the latest developments in the automotive world. Follow her on Facebook here or on Twitter @SheDrives.

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