Here’s a chicken-or-egg question: Do people check their credit because they want a loan, or do they want a loan because they check their credit?
A TransUnion study released last week said someone who “actively” monitors a credit file is more likely to take out a loan than someone who only checks credit status once in a while. And both of those categories are more likely to take out a loan than people who never check their credit. That’s for any loan, including an auto loan.
It sounds obvious: Someone who checks his or her credit is more interested in a loan than someone who doesn’t.
But there are reasons to monitor your credit even if you’re not in the market for a loan, said Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit. For instance, you could be worried about identity theft, he said.
Becker said credit monitoring seems to be like health monitoring. The average person may not check at all. Healthier-than-average people keep track so they can stay that way. Less-healthy people keep track so they can improve, he said.
So I asked him: Should dealers encourage consumers to monitor their credit? Would that inspire them to buy a car and take out a loan?
Said Becker: “I don’t have any data on that.”