It is a normal thing for banks and moneylenders to request a credit check on customers before approving their loan applications. Almost all of them also report your credit behavior to the credit bureaus for documentation. These bureaus serve as the primary actors in the loan and credit lending business. Let’s learn ‘What Credit Bureau does Carvana use?’.
For a reputable car dealership like Carvana, your credit rating does not have much sway in their decision-making system. Rather, they consider your overall credit history, not to reject your financing application, but to better advise and steer you towards deals that match your credit history.
Carvana uses credit bureaus like Experian and Equifax for soft pulls on your credit history. This is more or less like saying the company does not do credit checks. What Carvana, however, does is report your account activity to the credit bureaus for proper documentation.
Does Carvana Use Credit Bureaus?
Yes, Carvana employs credit bureaus for supplementary credit checks after your financing application. There have been many cases of Carvana giving auto-loans to people with bad credit ratings and a poor credit history. Carvana does not deny using credit bureaus for credit checks, but it does are merely soft pulls. The results of this credit check do not in any way affect the final decision on your loan application process. Therefore, you may have a poor credit rating and still qualify for a car loan.
The credit bureaus that Carvana uses are Experian and Equifax.
Carvana credit checks do not affect your credit rating because of the nature of the inquiry (soft pull) and because they are used for the pre-qualification stage. Carvana, however, warns that the company will complete a formal credit check after the loan application has been approved. But the result of the inquiry won’t affect your financing terms and conditions.
Is it hard to get approved for Carvana?
On the contrary, Carvana has one of the easiest lending policies. They do not base their loan decisions on credit scores or the results of credit checks. It also does not matter how bad or good your credit history is.
Some of the factors that Carvana considers when evaluating a loan application are:
- Current loan deals,
- Loan-to-income ratio,
- Bankruptcy, and
- A host of other factors that may make regular payment of monthly dues a chore.
It is important to note that Carvana offers no opportunity for renegotiation of terms, even when their credit check comes back with bad news. Compared to other moneylenders and credit institutions, Carvana accepts about 80% of its applications.
Can a car loan improve my Credit Rating?
Yes, it can. Any type of loan or credit can improve or destroy your credit rating. Whether a loan positively or negatively affects your credit score depends on your payment history. Taking a car loan presents an opportunity for you to show credit institutions and credit bureaus that you can be trusted.
Not everyone knows that their account activities and payment behaviors are usually reported to credit bureaus. Carvana, for instance, reports timely payments and defaults to credit bureaus. These reports go a long way in calculating your credit rating.
However, if you notice a strange hard pull on your credit report, this may be a mistake or the work of scammers using your account for nefarious activities. You should take steps to close down the account and also challenge the pull with credit bureaus.
Conclusion
Carvana is one of the few moneylenders that does not use or rely on your credit rating to make decisions on your loan application. The company considers other factors when evaluating your credit application.
Some of those factors include debt-to-income ratio, how much you make per month, whether you are nearing bankruptcy, are in bankruptcy or have previously declared bankruptcy.
Carvana car loans are also a smart move for anyone trying to repair their credit rating. This is because the company only does a soft pull on your credit history, therefore not doing any damage to your credit rating.
The loans also present a unique opportunity to improve your credit rating by paying your installments at the right time.
FAQ
1. What credit bureau does Cavana use?
Ans: Carvana uses Experian and Equifax for their credit checks. They will also report your account activities to these credit bureaus.
2. What are the criteria for getting a car loan from Carvana?
Ans: Before your loan application can be approved, Carvana requires that you earn at least $833 per month, have a favorable debt-to-income ratio, and that you are not in any danger of declaring bankruptcy soon.
3. Does Carvana do credit checks?
Ans: Yes, Carvana does soft pulls on your credit history. However, this is after your loan application has been approved and you are scheduled for pickup. Therefore, the credit check has no bearing on the loan approval or rejection decision.
