Frozen credit education can smooth in-store transactions

The law requiring credit bureaus to offer consumers free credit report freezes can help prevent fraud, but customers who don't lift the freezes before entering a dealership to buy a vehicle could face longer transaction times.

Experts urge dealerships that work with these customers to have a process in place and educational resources on their websites to expedite transactions.

The law, which took effect in September, lets customers restrict access to their credit reports for free. Before the Economic Growth, Regulatory Relief, and Consumer Protection Act, the three credit bureaus -- Experian, Equifax and TransUnion -- charged varying fees for the service, said Ritch Wheeler, vice president of training at F&I product and training company American Financial & Automotive Services Inc.

Experts say the number of customers who have frozen their reports varies regionally. Some dealerships work with many such customers, but for other stores, the situation rarely comes up.

Justin Gasman, financial service director at McCaddon Cadillac-Buick-GMC in Boulder, Colo., said he deals mainly with prime and superprime customers, of which between 15 and 20 percent have frozen their reports.

Frozen reports are less likely to experience fraud activity, Gasman said, but customers may not realize that a request to lift a freeze should be made with each credit bureau. For example, Gasman said a customer may ask TransUnion to unfreeze a report, but the lender could be pulling the customer's credit from Experian.

"So then you're calling the customer to have them call another bureau. It's a pain," Gasman said.

An added complication: Not all dealers pull all three bureaus for a customer's credit report, said Wheeler, and not all lenders look at all three credit reports. To have the unfreezing process take less than an hour, Wheeler advised calling all three bureaus, even if the dealer only uses reports from one or two.

If the time crunch becomes a common problem, Wheeler said the dealership should offer help on its website.

"If [customers] submit an online credit application -- which a lot of consumers do now -- walk them through how to take the credit freeze off," he said.

Credit fraud is a major problem in the automotive finance industry, Wheeler said. Customers with frozen credit are safeguarding their information, which ultimately helps the dealership.

Credit report freezes may be a positive change for the industry, Gasman said, as long as a delay to lift the freeze doesn't drive away customers.

"If you've sold the car, they're still going to buy it later tonight or tomorrow," Gasman said. "A deal's a deal."