MADELEINE BRAND, host:
Personal finance now with our guru Michelle Singletary. Michelle writes the syndicated column The Color of Money for The Washington Post, and she spoke earlier with my colleague Alex Chadwick.
ALEX CHADWICK, host:
Hello again, Michelle.
MICHELLE SINGLETARY reporting:
Hello.
CHADWICK: So the idea for today's segment came from a question sent in by one of our listeners. Here's what he wrote. `I've heard that every time you test-drive a car, the dealership runs a credit check. And since the big three credit-reporting companies penalized you--that is, they lower your credit rating--for more than three credit checks within a certain time period, the test-drives can cost you money.' Michelle, our listener really wanted to know is this an urban myth, or is this true?
SINGLETARY: It is not true that they run a check on you every time. Some dealerships may require that, but not all of them. And you do want to be careful about allowing them to run a credit check on you. You want them to do that when you're searching for a loan, when you are looking for a loan to buy that car or that house. So there is a period of time where you are allowed to do that and it will not hurt your credit score. You can have as many inquiries in a 14-day period as you shop around for credit rates. If you get a loan for that car or a house within a month, that does not count against your credit score.
So basically what I'm saying is that that is a myth that you get all these credit checks and it's going to hurt your credit score. The credit score allows for companies to do a check while you're shopping for a rate, so it won't adversely affect it. And if it does, it's a very small amount to your credit score.
CHADWICK: So are you saying I can go out and test-drive, say, 10 cars in the space of a month, and these car dealers, some of them might check my credit ratings, but it's not going to hurt?
SINGLETARY: Yes. In a sense, yes. I mean, you don't want to let all 10 of them check your credit rate if you're really just looking for the car and you're not ready to purchase. That is not a good thing. But certainly, as you're shopping for a car, be very judicious in letting people check your credit. They don't all need to do that unless you're about to--ready to buy and they want to check to see if you qualify for it. So you do have a period in which you can get your--you can shop for a car and have them check your credit score and it not put a ding into your score.
CHADWICK: Is there some way to deal with automobile dealers to say, `Look, I might buy this car, but then I might not'? So how can you discourage them from checking your credit?
SINGLETARY: Do not give them authorization. In fact, be very explicit, that `I do not want you to check my credit score. I simply want to test-drive this car.' And many of them will just require you to leave a driver's license, or to leave a copy of your driver's license, I should say, as you drive the car. So you do want to be careful about that. You don't want to let anybody check your credit score. But if you're ready to buy and you're shopping around, say, to a couple dealerships, and they need to pull it to see what kind of rate, that's OK, and it won't ding your credit score.
CHADWICK: OK, we've heard you tell us before that we should get a copy of our own credit reports. Is that something that could damage our credit scores?
SINGLETARY: No. In fact, you can check your credit score and credit report as often as you want, and it will never affect your credit score or your credit rating.
CHADWICK: Michelle Singletary writes the syndicated column The Color of Money, and she is DAY TO DAY's personal finance contributor.
Michelle, thank you.
SINGLETARY: You're welcome.
(Credits)
BRAND: And DAY TO DAY is a production NPR News and slate.com. I'm Madeleine Brand. Transcript provided by NPR, Copyright NPR.
