Did my salesman damage my credit? What can I do?
This shows the impact of the inquiries. It's from Credit Karma, and reflects my inquiries over the past two years. In my case, I refinanced 2 properties and the hit is after this fact, so my score at 766 is lower than when approved. You can go to Credit Karma and see how your score was impacted. If in fact the first inquiry did this, you have cause for action. In court, you get more attention by having sufficient specific data to support your claim, including your exact damages. "At one point in my life I sold cars and from what I saw, three things stick out.  Unless the other dealership was in the same network, eg ABC Ford of City A, and ABC Ford of City B, they never had possession of that truck. So, no REAL application for a loan could be sent in to a bank, just a letter of intent, if one was sent at all. With a letter of intent, a soft pull is done, most likely by the dealership, where they then attached that score to the LOI that the bank has an automated program send back an automatic decline, an officer review reply, or a tentative approval (eg tier 0,1,2...8). The tentative approval is just that, Tentative. Sometime after a lender has a loan officer look at the full application, something prompts them to change their offer. They have internal guidelines, but lets say an app is right at the line for 2-3 of the things they look at, they chose to lower the credit tier or decline the app. The dealership then goes back and looks at what other offers they had. Let's say they had a Chase offer at 3.25% and a CapOne for 5.25% they would say you're approved at 3.5%, they make their money on the .25%. But after Chase looks into the app and sees that, let's say you have been on the job for actually 11 months and not 1 year, and you said you made $50,000, but your 1040 shows $48,200, and you have moved 6 times in the last 5 years. They comeback and say no he is not a tier 2 but a tier 3 @ 5.5%. They switch to CapOne and say your rate has in fact gone up to 5.5%. Ultimately you never had a loan to start with - only a letter of intent. The other thing could be that the dealership finance manager looked at your credit score and guessed they would offer 3.5%, when they sent in the LOI it came back higher than he thought. Or he was BSing you, so if you price shopped while they looked for a truck you wouldn't get far. They didn't find that Truck, or it was not what they thought it would be. If a dealership sees a truck in inventory at another dealer they call and ask if it's available, if they have it, and it's not being used as a demo for a sales manager, they agree to send them something else for the trade, a car, or truck or whatever. A transfer driver of some sort hops in that trade, drives the 30 minutes - 6 hours away and comes back so you can sign the Real Application, TODAY! while you're excited about your new truck and willing to do whatever you need to do to get it. Because they said it would take 2-5 days to ""Ship"" it tells me it wasn't available. Time Kills Deals, and dealerships know this: they want to sign you TODAY! Some dealerships want ""honest"" money or a deposit to go get the truck, but reality is that that is a trick to test you to make sure you are going to follow through after they spend the gas and add mileage to a car. But if it takes 2 days+, The truck isn't out there, or the dealer doesn't have a vehicle the other dealership wants back, or no other dealership likes dealing with them. The only way it would take that long is if you were looking for something very rare, an odd color in an unusual configuration.  Like a top end model in a low selling color, or configuration you had to have that wouldn't sell well - like you wanted all the options on a car except a cigarette lighter, you get the idea. 99.99% of the time a good enough truck is available. Deposits are BS. They don't setup any kind of real contract, notice most of the time they want a check. Because holding on to a check is about as binding as making you wear a chicken suit to get a rebate. All it is, is a test to see if you will go through with signing the deal. As an example of why you don't let time pass on a car deal is shown in this. One time we had a couple want us to find a Cadillac Escalade Hybrid in red with every available option. Total cost was about $85-90k. Only two new Red Escalade hybrids were for sale in the country at the time, one was in New York, and the other was in San Fransisco, and our dealership is in Texas, and neither was wanting to trade with us, so we ended up having to buy the SUV from one of the other dealerships inventory. That is a very rare thing to do by the way. We took a 25% down payment, around $20,000, in a check. We flew a driver to wherever the SUV was and then drove it back to Texas about 4 days later. The couple came back and hated the color, they would not take the SUV. The General Manager was pissed, he spent around $1000 just to bring the thing to Texas, not to mention he had to buy the thing. The couple walked and there was nothing the sales manager, GM, or salesman could do. We had not been able to deliver the car, and ultimately the dealership ate the loss, but it shows that deposits are useless. You can't sell something you don't own, and dealerships know it.  Long story short, you can't claim a damage you never experienced. Not having something happen that you wanted to have happen is not a damage because you can't show a real economic loss. One other thing, When you sign the paperwork that you thought was an application, it was an authorization for them to pull your credit and the fine print at the bottom is boiler plate defense against getting sued for everything imaginable. Ours took up about half of one page and all of the back of the second page. I know dealing with car dealerships is hard, working at them is just as hard, and I'm sorry that you had to deal with it, however the simplest and smoothest car deals are the ones where you pay full price." You can sue them for damages. It would be hard to convince the court that the drop in the credit score was because of that loan, but not unthinkable. Especially if you sue through the small-claims court, where the burden of proof is slightly less formal, you have a chance to win and have them pay the difference in rates that it cost you. Hindsight is 20/20, but I offer some suggestions for how this might have gone down. If you had told the bank what was going on they might have extended the terms of your loan until the truck was ready. Alternatively you might have taken the loan (was it secured on the truck?) and put the money in a savings account until the truck showed up, while asking the dealer to pay the interest on it until the truck showed up. Or you might asked the dealer to supply you with a rental truck until yours showed up. I'm not saying I would have thought of these under the circumstances, but worth trying.
Visa, Mastercard have very strong consumer protection. I have been wondering about this question for a while but never got around to asking it here: What happens if a retailer knowingly defrauds me? My guess is the first party to ask for help is Visa, Mastercard: a retailer knowingly defrauding you is unlikely to refund you any money. However, slip-ups do happen. If this is a retailer of good repute, they will not only refund you the money but send you a gift card too! Please do followup this post with what helped you in the end, but my guess is, your first (and last) line of defense would be Visa, Mastercard. Anything that would go through the bank would take such a lot of time and effort, that you would be better off writing it off. The problem is that the reason you find out may be that you are at the car dealer, picked out a car, and getting ready to sign the loan papers with your supposedly good credit, and you are denied for late payment on loans you didn't know you have.  Or debt collectors  start hounding you.  Or you credit card interest rates go up.  Or you are charged more for your insurance because you are seen as a bad credit risk.  Or you can't rent an apartment.  The list is almost endless. It can takes many months and hours spent on the phone to fix these things. "It sounds like you're basing your understanding of your options regarding financing (and even if you need a car) on what the car salesman told you.  It's important to remember that a car salesman will do anything and say anything to get you to buy a car. Saying something as simple as, ""You have a low credit score, but we can still help you."" can encourage someone who does not realize that the car salesman is not a financial advisor to make the purchase. In conclusion," "Whether or not PayPal itself reports to the credit bureaus, the collector **will**.  That said, you can demand the collector ""validate"" the debt, which if you were scammed could make for an interesting scenario - PayPal *doesn't* normally play the role of a creditor, so the very fact that you ""owe"" them money is an unusual situation in and of itself.  I'm not entirely sure how they would go about validating that debt - They haven't provided you any goods or services, you don't have any form of loan outstanding with them... The legitimacy of the ""debt"" consists **entirely** of them siding with the other party in a he-said-she-said dispute.  I'd be interested to hear what the collector replies with when you demand validation of the debt!" I dont think the author really understands why or how credit bureaus work, why they exist, and therefore where the blame exists for incorrect data. No credit bureau wants incorrect data, for obvious reasons, but it happens. That's one reason why they let you get access to your credit score, to check it the data is correct and make the 'product' (data about you) better. The source of the data is always to blame for something being incorrect though.  That's banks, utilities companies, etc.  A credit bureau can't check any more than they do already. But they can improve how they deal with mistakes or badly matched data. Not sure about how that works in the US, but here in EU there are strict rules about how mistakes are corrected, and how long it takes.  As for storing it in block chain.. That wouldn't really solve OPs problem with credit bureaus. Someone still needs to collect and match data, and that's arguably harder than securing the data in the first place. People can and do intentionally hurt other people's credit scores all the time. This is why there are so many services to get your credit report checked, because it is very possibly that somebody did use your social security number to get a mortgage on a house or a car or open credit cards you didn't even know about, or even collections efforts you didn't know about. It is possible that organizations hard pulled your account multiple times and paid for it. The deterrents are inadequate and ultimately leave you with the messed up credit worthiness, regardless if civil or criminal charges were levied. "Banks have a financial, and regulational duty called ""Know your customer"", established to avoid a number of historical problems occurring again, such as money laundering, terrorism financing, fraud, etc. Thanks to the scale, and scope of the problem (millions of customers, billions of transactions a day), the way they're handling this usually involves fuzzy logics matching, looking for irregular patterns, problem escalation, and other warning signs. When exceeding some pre-set limit, these signal clues are then filtered, and passed on for human inspection. Needless to say, these algorithms are not perfect, although, thanks to financial pressure, they are improving. In order to understand why your trading account has been suspended, it's useful to look at the incentives: false positives -suspending your trade, and assuming you guilty until proven otherwise- could cost them merely your LTV (lifetime value of customer -how much your business brings in as profit); while false negatives -not catching you while engaging in activities listed above- might cost them multi-month investigations, penalties, and court.  Ultimately, this isn't against you. I've been with the bank for 15 years and the money in the accounts has been very slowly accumulated via direct-deposit paychecks over that time. From this I gather the most likely explanation, is that you've hit somekind of account threshold, that the average credit-happy customers usually do not exceed, which triggered a routine checkup. How do you deal with it? Practice puppetry! There is only one way to survive angry customers emotionally: you have to realize that they’re not angry at you; they’re angry at your business, and you just happen to be a convenient representative of that business. And since they’re treating you like a puppet, an iconic stand-in for the real business, you need to treat yourself as a puppet, too. Pretend you’re a puppeteer. The customer is yelling at the puppet. They’re not yelling at you. They’re angry with the puppet. Your job is to figure out, “gosh, what can I make the puppet say that will make this person a happy customer?”  In an investigation case, go with boredom: The puppet doesn't care, have no feelings, and is eternally patient. Figure out what are the most likely words that will have the matter ""mentally resolved"" from the investigator's point of view, tell them what they have to hear, and you'll have case closed in no time. Hope this helps." If you know that you have a reasonable credit history, and you know that your FICO score is in the 690-neighborhood, and the dealer tells you that you have no credit history, then you also know one of two things: Either way, you should walk away from the deal.  If the dealer is willing to lie to you about your credit score, the dealer is also willing to give you a bad deal in other respects. Consider buying a cheaper used car that has been checked out by a mechanic of your choice.  If possible, pay cash; if not, borrow as small an amount as possible from a credit union, bank, or even a very low-interest rate credit card.  (Credit cards force you to pay off the loan quickly, and do not tie up your car title.  I still have not managed to get my credit union loan off of my car title, ten years after I paid it off.) "This is completely disgusting, utterly unethical, deeply objectionable, and yes, it is almost certainly illegal. The Federal Trade Commission has indeed filed suit, halted ads, etc in a number of cases - but these likely only represent a tiny percentage of all cases. This doesn't make what the car dealer's do ok, but don't expect the SWAT team to bust some heads any time soon - which is kind of sad, but let's deal with the details. Let's see what the Federal Trade Commission has to say in their article, Are Car Ads Taking You for a Ride? Deceptive Car Ads Here are some claims that may be deceptive — and   why: Vehicles are available at a specific low price or for a specific   discount What may be missing: The low price is after a downpayment, often   thousands of dollars, plus other fees, like taxes, licensing and   document fees, on approved credit. Other pitches: The discount is only   for a pricey, fully-loaded model; or the reduced price or discount   offered might depend on qualifications like the buyer being a recent   college graduate or having an account at a particular bank. “Only $99/Month” What may be missing: The advertised payments are temporary “teaser”   payments. Payments for the rest of the loan term are much higher. A   variation on this pitch: You will owe a balloon payment — usually   thousands of dollars — at the end of the term. So both of these are what the FTC explicitly says are deceptive practices. Has the FTC taken action in cases similar to this? Yes, they have: “If auto dealers make advertising claims in headlines, they can’t take   them away in fine print,” said Jessica Rich, Director of the FTC’s   Bureau of Consumer Protection. “These actions show there is a   financial cost for violating FTC orders.” In the case referenced above, the owners of a 20+ dealership chain was hit with about $250,000 in fines. If you think that's a tiny portion of the unethical gains they made from those ads in the time they were running, I'd say you were absolutely correct and that's little more than a ""cost of doing business"" for unscrupulous companies. But that's the state of the US nation at this time, and so we are left with ""caveat emptor"" as a guiding principle. What can you do about it? Competitors are technically allowed to file suit for deceptive business practices, so if you know any honest dealers in the area you can tip them off about it (try saying that out loud with a serious face).  But even better, you can contact the FTC and file a formal complaint online. I wouldn't expect the world to change for your complaint, but even if it just generates a letter it may be enough to let a company know someone is watching - and if they are a big business, they might actually get into a little bit of trouble." "A day or so later I get an email from the mattress company where the rep informs me that they will need to issue me a paper check for the full amount and that I would have to contact Affirm to stop charging me. To which I rapidly answered ""Please confirm that with Affirm prior to mailing anything out. On my end the loan was cancelled."" To which the rep replied ""confirmed. It has been cancelled."" I think your communication could have been more explicit mentioning that not only was the loan cancelled, you got your initial payments. You have not paid for the mattress. The refund if any should go to Affirm. The Rep has only confirmed that loan has been cancelled. at what point, if any, am i free to use this money? I was planning to just let it sit there until the shoe drops and just returning. But for how long is too long? Sooner or later the error would get realized and you would have to pay this back." "It all comes down to how the loan itself is structured and reported - the exact details of how they run the loan paperwork, and how/if they report the activity on the loan to one of the credit bureaus (and which one they report to).  It can go generally one of three ways: A) The loan company reports the status to a credit reporting agency on behalf of both the initiating borrower and the cosigner. In this scenario, both individuals get a new account on their credit report. Initially this will generally drop related credit scores somewhat (it's a ""hard pull"", new account with zero history, and increased debt), but over time this can have a positive effect on both people's credit rating. This is the typical scenario one might logically expect to be the norm, and it effects both parties credit just as if they were a sole signor for the loan. And as always, if the loan is not paid properly it will negatively effect both people's credit, and the owner of the loan can choose to come after either or both parties in whatever order they want. B) The loan company just runs the loan with one person, and only reports to a credit agency on one of you (probably the co-signor), leaving the other as just a backup. If you aren't paying close attention they may even arrange it where the initial party wanting to take the loan isn't even on most of the paperwork. This let the person trying to run the loan get something accepted that might not have been otherwise, or save some time, or was just an error. In this case it will have no effect on Person A's credit. We've had a number of question like this, and this isn't really a rare occurrence. Never assume people selling you things are necessarily accurate or honest - always verify. C) The loan company just doesn't report the loan at all to a credit agency, or does so incorrectly. They are under no obligation to report to credit agencies, it's strictly up to them. If you don't pay then they can report it as something ""in collections"". This isn't the typical way of doing business for most places, but some businesses still operate this way, including some places that advertise how doing business with them (paying them grossly inflated interest rates) will ""help build your credit"". Most advertising fraud goes unpunished. Note: Under all of the above scenarios, the loan can only effect the credit rating attached to the bureau it is reported to. If the loan is reported to Equifax, it will not help you with a TransUnion or Experian rating at all. Some loans report to multiple credit bureaus, but many don't bother, and credit bureaus don't automatically copy each other. It's important to remember that there isn't so much a thing as a singular ""consumer credit rating"", as there are ""consumer credit ratings"" - 3 of them, for most purposes, and they can vary widely depending on your reported histories. Also, if it is only a short-term loan of 3-6 months then it is unlikely to have a powerful impact on anyone's credit rating. Credit scores are formulas calibrated to care about long-term behavior, where 3 years of perfect credit history is still considered a short period of time and you will be deemed to have a significant risk of default without more data. So don't expect to qualify for a prime-rate mortgage because of a car loan that was paid off in a few months; it might be enough to give you a score if you don't have one, but don't expect much more. As always, please remember that taking out a loan just to improve credit is almost always a terrible idea. Unless you have a very specific reason with a carefully researched and well-vetted plan that means that it's very important you build credit in this specific way, you should generally focus on establishing credit in ways that don't actually cost you any money at all. Look for no fee credit cards that you pay in full each month, even if you have to start with credit-building secured card plans, and switch to cash-value no-fee rewards cards for a 1-3% if you operate your financial life in a way that this doesn't end up manipulating your purchasing decisions to cost you money. Words to the wise: ""Don't let the credit score tail wag the personal financial dog!""" Note that this kind of entry on your credit record may also affect your ability to get a job. Basically, you're going on record as not honoring your commitments... and unless you have a darned good reason for having gotten into that situation and being completely unable to get back out, it's going to reflect on your general trustworthiness. "Yea but they might feel swindled and that you pulled a fast one on them, and not be as willing to give you good deals in the future.   Like, as a totally non mathematical example, they have a car for $50k. They lower the price to 40k with a financing that will bring total payment to 60k. Their break even on that car is let's say 45k. The financier cuts them a commission on expected profits, of maybe 7k? They made an expected 2k on the car. But if you pay it all off asap, they may lose that commission, be 5k in the hole on the sale, and pretty upset. Even more upset if they finance in house.   So when you go back to buy another car they'll say ""fuck this guy, we need to recoup past lost profits, don't go below 4K above break even.""   I'm not really 100% on how financing workings when it comes to cars but from my background in sales this is the bar I would set for a customer that made me take a loss by doing business with them if they tried to come back in the future.  This doesn't take into account how car dealerships don't own their inventory, finance all of their cars and actually ARE willing to take a loss on a car just to get it off the lot some times." "You promised to pay the loan if he didn't.  That was a commitment, and I recommend ""owning"" your choice and following it through to its conclusion, even if you never do that again.  TLDR: You made a mistake: own it, keep your word, and embrace the lesson.  Why?  Because you keep your promises.  (Nevermind that this is a rare time where your answer will be directly recorded, in your credit report.) This isn't moralism. I see this as a ""defining moment"" in a long game: 10 years down the road I'd like you to be wise, confident and unafraid in financial matters, with a healthy (if distant) relationship with our somewhat corrupt financial system.  I know austerity stinks, but having a strong financial life will bring you a lot more money in the long run. Many are leaping to the conclusions that this is an ""EX-friend"" who did this deliberately.  Don't assume this. For instance, it's quite possible your friend sold the (car?) at a dealer, who failed to pay off this note, or did and the lender botched the paperwork.  And when the collector called, he told them that, thinking the collector would fix it, which they don't do. The point is, you don't know: your friend may be an innocent party here.  Creditors generally don't report late payments to the credit bureaus until they're 30 days late.  But as a co-signer, you're in a bad spot: you're liable for the payments, but they don't send you a bill.  So when you hear about it, it's already nearly 30 days late.  You don't get any extra grace period as a co-signer. So you need to make a payment right away to keep that from going 30 late, or if it's already 30 late, to keep it from going any later.   If it is later determined that it was not necessary for you to make those payments, the lender should give them back to you.  A less reputable lender may resist, and you may have to threaten small claims court, which is a great expense to them. Cheaper to pay you.  They say France is the nation of love. They say America is the nation of commerce.  So it's not surprising that here, people are quick to burn a lasting friendship over a temporary financial issue.  Just saying, that isn't necessarily the right answer.  I don't know about you, but my friends all have warts.  Nobody's perfect.  Financial issues are just another kind of wart.  And financial life in America is hard, because we let commerce run amok.  And because our obsession with it makes it a ""loaded"" issue and thus hard to talk about.  Perhaps your friend is in trouble but the actual villain is a predatory lender.  Point is, the friendship may be more important than this temporary adversity.  The right answer may be to come together and figure out how to make it work.  Yes, it's also possible he's a human leech who hops from person to person, charming them into cosigning for him. But to assume that right out of the gate is a bit silly.  The first question I'd ask is ""where's the car?"" (If it's a car). Many lenders, especially those who loan to poor credit risks, put trackers in the car.  They can tell you where it is, or at least, where it was last seen when the tracker stopped working.  If that is a car dealer's lot, for instance, that would be very informative.   Simply reaching out to the lender may get things moving, if there's just a paperwork issue behind this.  Many people deal with life troubles by fleeing: they dread picking up the phone, they fearfully throw summons in the trash.  This is a terrifying and miserable way to deal with such a situation.  They learn nothing, and it's pure suffering.   I prefer and recommend the opposite: turn into it, deal with it head-on, get ahead of it.   Ask questions, google things, read, become an expert on the thing. Be the one calling the lender, not the other way round.  This way it becomes a technical learning experience that's interesting and fun for you, and the lender is dreading your calls instead of the other way 'round.  I've been sued.  It sucked.  But I took it on boldly, and and actually led the fight and strategy (albeit with counsel).  And turned it around so he wound up paying my legal bills.  HA!  With that precious experience, I know exactly what to do... I don't fear being sued, or if absolutely necessary, suing.   You might as well get the best financial education.  You're paying the tuition!" Here is an IRS citation to support my comment above - Exceptions. The 10% tax will not apply if distributions before age 59   ½ are made in any of the following circumstances: Made to a beneficiary (or to the estate of the participant) on or   after the death of the participant, Made because the participant has a qualifying disability, Made as part of a series of substantially equal periodic payments   beginning after separation from service and made at least annually for   the life or life expectancy of the participant or the joint lives or   life expectancies of the participant and his or her designated   beneficiary. (The payments under this exception, except in the case of   death or disability, must continue for at least 5 years or until the   employee reaches age 59½, whichever is the longer period.), Made to a participant after separation from service if the separation   occurred during or after the calendar year in which the participant   reached age 55, Made to an alternate payee under a qualified domestic relations order   (QDRO), Made to a participant for medical care up to the amount allowable as a   medical expense deduction (determined without regard to whether the   participant itemizes deductions), Timely made to reduce excess contributions, Timely made to reduce excess employee or matching employer   contributions, Timely made to reduce excess elective deferrals, or Made because of an IRS levy on the plan. Made on account of certain disasters for which IRS relief has been   granted.