One of our forum members recently encountered this issue while trying to get a motorcycle loan.
So what are your options? Can you force the lender to pull a different report? Force the credit bureau to display a line of credit it isn’t displaying?
While you may not have much luck controlling exactly how your credit history is reported, you may still have luck obtaining the loan.
Why lenders may look at only one report, or report to only one bureau
In order to report to a credit bureau, or pull your report from a credit bureau, a lender needs to have an account set up with that particular bureau.
“And having an account with a credit bureau isn’t free,” says credit expert John Ulzheimer.
To shave costs, some lenders may therefore have accounts with just two, one or even none of the Big 3 credit reporting agencies (Equifax, Experian, TransUnion).
Thankfully, most major lenders have accounts with the full trio.
“If you do find one [not reporting to all three], it’s going to probably be the smaller lenders, like small regional banks or a small credit union,” Ulzheimer says. “They may not have the budget to report to all three.”
Why a lender’s limited view could cost you a loan
A lender may want to see a certain type of credit on your report. Our forum member’s motorcycle lender, for example, wanted to see a previous installment loan (which was not being reported the bureau the lender was checking).
Why would an auto or motorcycle lender want to see an installment loan specifically? We asked Mark Dubis of Carfolks. Based on his experience with the automotive and consumer lending industry (he’s a former vice president with Key Bank USA), other types of debt (like credit cards), are “not perceived the same way as an installment loan” and may therefore not be enough to qualify you.
While credit cards give you the option of paying only the minimum, good payment history on a loan shows your ability to make a “firm commitment” to paying down the loan on schedule, says Dubis.
“They want to see you have financial discipline and the income to make a sustained, fixed monthly payment,” Dubis says.
Can you force a loan onto a certain credit report – or force a lender to pull a certain report?
Despite any problems incomplete credit reporting/credit pulling might be causing you, you’re not likely to get a lender to report to all the bureaus if it isn’t already, nor are you likely to get a lender to pull a report it isn’t already pulling.
“The entire credit-reporting industry is voluntary,” Ulzheimer says.
If a lender doesn’t have an account with a bureau (and remember, that costs them money), they aren’t allowed to even pull that bureau’s report. So good luck trying to make them.
“Consumers have very little ability to control the operations of a lender like that,” Ulzheimer says. “The chance of you convincing a lender to pull a certain report or report something to a particular bureau is very very unlikely.”
If you go knocking on the credit bureaus’ doors and ask them to add a non-reported account, you won’t make much headway there either. Because credit bureaus make money by charging lenders to furnish data to them and get data from them, they have nothing to gain by adding an account to your report for free.
“I call it the ‘selfish-factor,’” Dubis says. “If you approach a bureau, they’re going to say, ‘Why should we bother doing that for you?’ We don’t make any money off of you.’”
You may still be able to get the loan
Hope is not lost. If an account is not reporting, or a past lender isn’t pulling the report you want them to, you can still strategize your way into a loan:
- Find a lender that pulls the report you want pulled: Pull all three credit reports yourself and see which has the most positive information.
Then contact lenders and ask which credit report they’re likely to pull for applicants in your state. Go for the ones that pull all reports, or the report that has the most complete information on you.
“You can tailor your shopping,” Ulzheimer says, “and be a bit more strategic about it versus just being haphazard.”
- Give the lender other information to consider: If your options are limited or you want a loan from a specific dealer, you may be able to get them to reconsider you by providing additional information.
In fact, there’s a little-known subsection of the Equal Credit Opportunity Act (ECOA) that could help you, Ulzheimer says. Regulation B of the ECOA, in part, requires lenders to consider any information you provide that reflects your creditworthiness. Here’s the exact verbiage:
This provision is colloquially called the “shoe box credit” rule.
“You can actually walk into a bank or credit union with a shoe box full of receipts showing you paid your phone bill on time, your rent on time, your utilities on time and force them to consider that,” Ulzheimer says. “If they tell you you’re crazy and to go away, they’ve just violated a federal statute.”
Whether forced to sort through a shoe box or not, an auto lender may be happy to include additional information in its lending decision. Using our forum member’s motorcycle-loan quandary as an example, you might bring in bank statements showing you paid off a past installment loan on schedule.
“If they turned you down strictly because of no other comparable installment credit, showing them the loan documents for the previous loan could do the trick,” Dubis says. “That lender might say, ‘You have validated proof of a loan that’s comparable to what we’re going to give you, so, sure, I’ll take that loan.’”