Auto Loan Fraud on the Rise
Auto loan fraud and credit washing scams are increasing, with fraudsters manipulating credit scores to access loans, even among low-risk borrowers.
According to a study by TransUnion, a credit reporting bureau, fraudsters are using a tactic called credit washing to exploit auto lenders.
Credit washing allows borrowers to temporarily boost their credit scores by disputing accurate negative information on their reports.
- Delinquencies or defaults are disputed, giving the appearance of low-risk credit.
- This enables the borrower to secure an auto loan they have no intention of repaying.
Credit washing works by triggering data suppression, where credit bureaus temporarily remove disputed information while investigating claims.
Fraudsters target accounts where suppressing a single negative record provides the largest boost to their credit score.
Author's summary: Auto loan fraud is growing among low-risk borrowers due to credit washing scams.
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