With Approved Credit (WAC)

With approved credit is a type of advertising qualifier which indicates a particular financing offer is contingent on the buyer having adequate credit. Measurement of credit is through the credit rating, the income, and employment factors. This statement often appears in the small print in car ads touting a lease or loan plan with a specific down payment and monthly payment. As the fine print explains, the offer is only available for buyers with a good credit rating.

With approved credit is a legal qualifier which protects a merchant from accusations of bait-and-switch policies. Bait-and-switch is the practice of offering one product or service to attract customers which is not available. Bait-and-switch tactics are considered fraudulent and a violation of consumer laws. Since loan and lease offers are generally contingent on the buyer’s credit rating, many potential buyers will likely not qualify for the advertised terms. By making the offer contingent on approved credit, the merchant cannot be accused of fraud, assuming the advertised offer is genuinely available for credit-worthy buyers.

The term with approved credit is also a practice used in promotional materials for home loans, credit cards, and store credit. To determine if a customer meets the merchant’s standards to qualify for the advertised loan or lease rate, the merchant will run a credit check on the potential buyer. Other factors investigated include the annual income and work status. Customers with the best credit ratings will get the most beneficial financing options.

One problem for consumers is that there is no single standard for determining what constitutes approved credit. Merchants are free to establish any level of credit-worthiness they desire, although most will balance risk mitigation with a desire to make the sale. However, to avoid charges of discrimination, the merchant must be consistent in basing decisions on financial factors.

Even though the term with approved credit is somewhat vague, buyers are protected by specific consumer law. Americans have a right under the Equal Credit Opportunity Act (ECOA) to know why their credit application was not approved. The answer to a customer's question cannot be vague and must be more than stating the applicant did not meet the standards but must specify a reason. Examples of reasons to deny include, low credit ratings, income not meeting defined criteria, and no length of work history. Factors that cannot be considered include race, gender, and age. Also, the receipt of public assistance should be part of regular income for recipients.