General Motors (GM) is one of the largest automotive manufacturers in the world. Like most major companies, GM utilizes credit reports and credit scores when making important business decisions like financing. But what credit bureau does GM specifically use and why? In this comprehensive guide, we’ll examine the major credit bureaus, their relationships with the auto industry, and detail which one GM relies on.
The Three Major Credit Bureaus
There are three main credit bureaus in the United States that compile credit reports and calculate credit scores: Experian, Equifax, and TransUnion. These three credit bureaus collect data on an individual’s credit history, including loan payments, credit card balances, bankruptcies, and more. They package this information into credit reports which lenders use to evaluate creditworthiness.
Each credit bureau maintains their own separate database of credit information. This means that data reported to one bureau may not be reported to the others. As a result, credit reports from the three bureaus can vary slightly for the same individual. However, most negative credit information like late payments eventually get reported to all three.
In addition to creating credit reports, the credit bureaus also calculate credit scores. The most commonly used scoring model is FICO, with credit scores ranging from 300 to 850. FICO scores summarize the data from credit reports into a three-digit number lenders can easily factor into decisions. The higher the score, the lower the perceived risk.
While the three credit bureaus have the same purpose, they operate as separate businesses in competition with each other. Each wants lending companies like GM to rely on their credit data over the other two. But in reality, many major lenders utilize information from all three credit bureaus to make the most informed decisions.
GM’s Relationship with Credit Bureaus
As one of the largest auto manufacturers, GM must utilize credit data on millions of customers every year. They interact with the credit bureaus in two main ways:
- When providing auto loans through GM Financial, the company’s lending arm.
- When leasing vehicles through GM dealerships.
In both cases, GM must assess the creditworthiness of potential borrowers before approving financing. The credit reports and scores provided by the credit bureaus enable this risk analysis.
GM utilizes credit data directly from the bureaus through a dashboard system. Lenders like GM can subscribe to access real-time credit information from all three major bureaus through this centralized system.
The dashboard allows GM to streamline the credit check process while leveraging comprehensive data. By comparing reports from all three credit bureaus side-by-side, they get a complete financial profile of applicants.
GM Primarily Uses Experian Credit Data
Though GM can access information from Experian, Equifax, and TransUnion, they tend to favor Experian credit reports in their decision process. There are a few key reasons for this:
- Longstanding relationship – Experian has been a credit provider to GM for over 25 years. The positive history built over decades makes Experian GM’s go-to choice among the major bureaus.
- Industry significance – Within the auto industry, Experian credit reports are widely viewed as the most predictive. The comprehensive Experian data resonates as strongly influential among automotive lenders.
- FICO scores – For credit scoring, GM relies specifically on FICO 8 models from Experian. The industry reputation of FICO helps validate Experian as the primary bureau.
Experian also offers specialized automotive credit products that add further value for GM:
- AutoCheck vehicle histories – Detailed vehicle history reports from Experian provide GM with more background on trade-in vehicles.
- Affordability analysis – Custom calculators from Experian allow GM to estimate vehicle affordability for applicants.
These kinds of custom resources help strengthen the long-term Experian-GM relationship.
How Automotive Credit Reports Differ from Standard Reports
The credit reports GM accesses through Experian are specialized for auto industry lending and differ from general credit reports in a few ways:
- Emphasis on auto loans – They highlight previous auto loan details like payment history, balances, and total number of cars financed.
- Score factors – The FICO scores are calculated based on typical auto lending criteria.
- Affordability data – Custom affordability metrics estimate the vehicle price applicants can manage.
- Mileage insights – Mileage profiles help determine ownership periods and auto loan terms.
These additional details help GM gauge risk levels for their specific lending purposes. The customization allows more informed auto loan approvals and denials compared to using standard credit reports.
Verifying Credit Applications with Experian
Once an applicant completes a GM credit application, here is how Experian specifically comes into play:
- GM instantly pings Experian’s database to retrieve the applicant’s credit report.
- Key attributes like FICO score, number/type of open accounts, and payment history are analyzed.
- These details are run through GM’s specialized scoring model to approve or deny credit.
- For approved applicants, interest rates offered may vary based on credit risk.
This near instant process enabled by digital access to Experian data allows GM to swiftly assess applications. Technology improvements now facilitate rapid credit checks where GM previously had to wait days for bureau mailings.
If applicants are denied, GM Financial is legally required to disclose the Experian report they accessed so consumers understand the reasoning. This provides transparency to the process.
How Consumers Can Opt Out of Experian Credit Checks
While most consumers allow lenders like GM to access their credit data, they technically have a right to opt out. Those wishing to block Experian credit checks by GM can submit official opt-out requests in a few ways:
- File directly with Experian’s opt-out department through mail or their website.
- Submit request in writing to GM Financial specifying restriction of Experian data.
- Provide notice to all three credit bureaus to also restrict Equifax and TransUnion.
If an applicant successfully opts out, GM will not be able to perform necessary credit checks required for approval. The application would be automatically denied since the risk cannot be evaluated without Experian data.
Very few applicants block access since most want the best chance of being approved. But the right to opt out does exist.
Third Party Verification Services
In addition to direct credit bureau data, GM also utilizes third-party verification services to authenticate applicant details. These outside services play a key role:
- Verifying income through employer confirmation or paystubs.
- Validating addresses by cross-checking public records.
- Checking references provided by the applicant.
Experian provides some of these verification capabilities itself. But GM also partners with other specialized providers. This layered approach prevents fraud or misrepresentation on applications.
Between rigorous verification and comprehensive credit checks, GM conducts thorough due diligence before financing vehicles. Experian sits at the core of the process as the go-to credit bureau.
How Dealers and Lenders Check Credit
GM dealerships play an important role in the approval process as well. When a customer applies for financing at the dealership level:
- The dealer collects necessary applicant information including consent for credit checks.
- Dealership staff submit the application through GM Financial’s automated system.
- The system pings Experian instantly for a real-time credit report.
- GM Financial makes an approve/deny decision based on the Experian report details.
- The dealership staff relay the financing decision and terms to the applicant.
This demonstrates the integral nature of Experian credit data both at GM corporate and throughout their dealership network. Dealers rely on the timely insights provided by Experian via GM Financial systems.
Other automotive lenders follow a similar process of leveraging Experian reports when making financing decisions through dealers. For example, banks that provide car loans also instantly access Experian databases when dealer applications come through.
The dealer-level process highlights how comprehensively Experian credit data gets utilized across the auto industry when consumers apply for car financing.
How Consumers Can Improve Their Experian Credit Reports
Since Experian credit data plays such a key role in GM auto financing, applicants will want their report to be in the best possible shape. Here are some tips for consumers to optimize their Experian credit report and score:
- Pay all bills on time – payment history is the biggest scoring factor.
- Keep credit card balances low – try to keep utilization under 30%.
- Avoid applying for multiple new credits – too many inquiries can lower scores.
- Check reports annually – address any errors with Experian quickly.
- Consider reporting rent payments – helps those with thin credit files.
Improving their Experian reports will help consumers qualify for the best GM financing rates and increase overall auto loan approval odds. Since GM dealers also rely so heavily on Experian data, optimized credit reports can expedite the entire dealership process.
Does GM Use a Hard or Soft Credit Pull?
When GM pings an applicant’s credit report from Experian, they perform what’s known as a “hard pull” on the credit file. This differs from a “soft pull” in a few key ways:
- Hard pull – formally requested during a credit application and shows up on credit report.
- Soft pull – typically just peeks at the data and does not get recorded.
GM Financial and dealers must do official hard pulls during the application process in order to securely access full Experian credit reports. Soft pulls would not retrieve the detailed credit data required to make informed decisions.
The hard credit pulls made by GM when submitting applications can lower credit scores slightly. But this ding is typically minor (under 5 points) and temporary.
Many lenders doing hard pulls in a short span is more impactful. GM only performs a single hard pull per specific application.
Why Hard Pulls Are Necessary
Hard pulls are critical in the auto financing process for a few reasons:
- Legally allows access to full credit reports.
- Triggers communication between GM and Experian.
- Verifies consumer consent for credit check.
- Records the lender accessing the report.
Without hard credit pulls, GM would only have access to limited summary data. The detailed reports provided by Experian via hard pull give GM a comprehensive financial profile of applicants.
Full credit reports coupled with hard pull record keeping also help protect consumer privacy while giving lenders the insights needed to make informed decisions.
How Credit Checks Impact Interest Rates
The information displayed on an applicant’s Experian credit report can influence the loan terms and interest rates offered by GM Financial. Some key factors that impact rates:
- FICO credit score – the higher the better for rates.
- Length of credit history – more established is better.
- Relevant auto loan data – previous auto loans viewed favorably.
- Mix of credit types – loans, credit cards, mortgages, etc.
Those with excellent credit scores and history may qualify for 0% APR promotions from GM. Lower scores lead to higher rates. Seriously damaged credit can result in denial.
Having optimized Experian reports along with low debt and consistent payments helps consumers land the best GM financing rates. Those struggling with poor credit can work on improving their reports over time to eventually achieve lower rates.
Does GM Use VantageScore?
GM relies entirely on FICO scores, specifically the FICO 8 model, from Experian. They do not factor in VantageScore, an alternative credit scoring model from the three major bureaus.
The FICO score is still the most trusted and widely used model among lenders. It was pioneered decades ago and continues to have the strongest industry reputation. GM sticks with FICO because it has the longest track record successfully predicting applicant risk.
However, VantageScore is gaining broader use, especially among newer fintech lenders. Some key contrasts versus FICO scoring:
- VantageScore factors in rental payment history but FICO does not.
- VantageScore applicants can have insufficient credit history while FICO requires six months.
- VantageScore uses a scale between 300-850 while FICO goes from 150-850.
Though not currently a factor at GM, VantageScore may grow in popularity for automotive lending in the future as fintech disrupted the industry.
How Bankruptcies Impact GM Credit Checks
Bankruptcies severely impact approval odds for GM financing. Chapter 7 and Chapter 13 bankruptcies both create major negatives on Experian credit reports viewed by GM.
However, GM understands extenuating circumstances can lead to bankruptcies. Applicants are not automatically denied, but it creates an uphill battle.
Those with bankruptcies may still have a chance if they:
- Completed bankruptcy proceedings 6+ years ago.
- Demonstrate clean credit with no late payments since bankruptcy.
- Saved sizable down payment showing financial stability.
Meeting these qualifications proves the applicant has financially recovered. But approval is still difficult and requires thorough review of the Experian credit reports by GM Financial.
A denied applicant can work on optimizing their credit profile and reapplying later once the bankruptcy impact has lessened over time.
How Divorce Affects Joint Credit Reports
For married applicants going through divorce, joint accounts create an added credit report complication. Here’s how Experian handles credit data for divorcing couples:
- Joint accounts are temporarily associated with both spouses.
- Once an account is awarded through final decree, it only impacts the recipient.
- Any negative issues tied to ex-spouse’s accounts are removed.
Recipients of accounts cannot be penalized for ex-spouse behaviors prior to the divorce finalization. However, GM may scrutinize joint accounts more closely since responsibility becomes individualized.
Newly single applicants should verify Experian reports immediately after finalizing divorce to ensure accuracy. This gives them the cleanest credit slate when applying solo for GM financing.
Does GM Finance First-Time Buyers?
GM Financial does offer financing programs specifically geared to first-time auto buyers with limited credit history. Pre-approvals are even available to those with no FICO score yet.
Since approval relies heavily on Experian credit reports, those with thin profiles may need to meet additional requirements like:
- Proof of income through pay stubs.
- Higher down payment percentage.
- Low debt-to-income ratio.
First-time buyers can also increase chances by being flexible on vehicle makes/models and keeping pricing low. Opting for used over new can also help probability of approval.
GM wants to invest in life-long relationships with first-time buyers. Approval is attainable with some diligence. Building credit history over time then positions applicants for lower rates on future GM loans.
Conclusion
In summary, GM relies primarily on credit reports and FICO scores from Experian to evaluate financing applicants. The longstanding relationship provides GM with comprehensive credit data instantly to help facilitate quick lending decisions. Consumers looking to finance a GM vehicle through GM Financial or an authorized dealer can boost their chances by optimizing their Experian credit profile leading up to submitting their application.