cancel
Showing results for 
Search instead for 
Did you mean: 

Approvals/Denials/APR's based on scores or what is actually on your report?

Valued Member

Approvals/Denials/APR's based on scores or what is actually on your report?

Hi all, thank you for the wealth of knowledge that this community provides. 

 

My question(s) surrounds scores and how they factor into the loan approval process. When shopping for loans, do lenders pre-approve/pre-qualify and/or base APR off of scores alone or does it go to a manual underwriting process? For example, if someone has scores in the 690-700 range but has a recent derog, specifically a paid and settled charge-off, how do lenders handle that? 

 

DH has a thick file with scores ranging from 680-708 depending on what score algorithm is used. He recently settled a charge-off that shows paid and it is the ONLY derog in his file. I know it's a biggie so I'm hesitant to start shopping if it's going to significantly impact APR. It absolultely kills me because he had a file that lenders would drool over before this. It keeps me up at night. 

10 REPLIES
Regular Contributor

Re: Approvals/Denials/APR's based on scores or what is actually on your report?

Try Capital auto navigator and Springboard auto.com, both soft pulls to see where he stands.
Message 2 of 11
Super Contributor

Re: Approvals/Denials/APR's based on scores or what is actually on your report?

Or check a local CU.

12/08/2017 FICO: EQ 843 TU 849 EX 844
Message 3 of 11
Valued Member

Re: Approvals/Denials/APR's based on scores or what is actually on your report?

I'm going to do the Cap One auto nav, thank you. Is there any downfall to doing this? I'm pretty sure we wouldn't use Cap One for a loan. We have a local CU that has great rates but we don't have a relationship with them yet so I'm hesitant to go to them before knowing what kind of situation we are looking at in general. 

So Cap One is a SP, as I understand. If I do the auto nav and it comes back less than great, how long until I can start over again with a fresh set of scores? Lets just say, something bumps up my scores a few points within the next month...can I go back and pre-qualify (for the sake of rates information) like I'm starting from scratch or is like a re-con situation?

Message 4 of 11
Regular Contributor

Re: Approvals/Denials/APR's based on scores or what is actually on your report?


zimm10 wrote:

I'm going to do the Cap One auto nav, thank you. Is there any downfall to doing this? I'm pretty sure we wouldn't use Cap One for a loan. We have a local CU that has great rates but we don't have a relationship with them yet so I'm hesitant to go to them before knowing what kind of situation we are looking at in general. 

So Cap One is a SP, as I understand. If I do the auto nav and it comes back less than great, how long until I can start over again with a fresh set of scores? Lets just say, something bumps up my scores a few points within the next month...can I go back and pre-qualify (for the sake of rates information) like I'm starting from scratch or is like a re-con situation?


Do the soft pull to see where you stand; probably have to call cap one directly about your other question. Their pre-approvals are good for 30 days; so after it expires you can try again.

Message 5 of 11
Established Contributor

Re: Approvals/Denials/APR's based on scores or what is actually on your report?


FMC wrote:
Try Capital auto navigator and Springboard auto.com, both soft pulls to see where he stands.

@FMC - Thank you!

 

OP thanks for asking the question. Helped me, too.



Gardening Through 03/31/18 - 12/10/17 F8 Scores EQ 743 TU 738 EX 737
Message 6 of 11
Contributor

Re: Approvals/Denials/APR's based on scores or what is actually on your report?

In regard's to your original question,

 

Every lender is different:

Some lender's base APR's soley off of credit scores, however a good credit score doesn't necessarily result in an approval.

For instance a local credit union to me uses a tiering system based off of scores alone to determine interest rates, in the following tier's: 580-619, 620-659, 660-699, 700-739, and 740+. Now this doesn't necessarily mean if your TU Auto 08 score is 745 that you will be approved because your file maybe too thin, your DTI is out of whack, you have escalating debt, high utilization, etc. A good score doesn't always result in an approval.

 

Other lender's use an algorithm to determine your tier based on your internal scoring. Such as Well's Fargo Dealer Services, Cap One, Ally, etc. This mean's a 660 credit score with a thick file could be tiered at a tier 1, while a 710 with a thinner file or maybe they're overextended on credit, may tier as a tier 3. These lender's use a tiering system not just based on score but your actual credit profile, and underwriter's determine interest rates based off of the structure, credit profile, and the tier the computer assigned. A tier 1 on one customer may grant a 3.5% interest rate, while a tier 1 on a different customer could result in a 7.5% interest rate for many reason's including LTV, mileage on vehicle, year of vehicle, amount financed, etc.

 

I have found that many credit union's typically go by the first situation, in which they assign specific rates based off credit score alone. While many national, and captive lender's have internal tiering and scoring systems that are based off of credit profiles rather than score alone.

 

Hope this helps

AMEX BCE ($39,500) CITI AAdvantage ($17,000) Region's Platinum Card ($14,400) Discover IT ($13,000) Macy's ($8,500) Chase FU ($10,000) TU:768 EX: 767
Message 7 of 11
Valued Member

Re: Approvals/Denials/APR's based on scores or what is actually on your report?

Thank you so much! You answered so many questions that are plaguing me right now. 

You also re-inforced the importance of having lending options in place PRIOR to going into any F&I office.  It's scary to think that naivety is often preyed upon so often at dealerships. How would one know to trust someone who says, "Oh this is the absolute best you will qualify for" without knowing a bit of this stuff? 

Message 8 of 11
Contributor

Re: Approvals/Denials/APR's based on scores or what is actually on your report?

It's absolutely a great idea to have financing in place before going to the dealer, however always be educated and know the current incentives from captive lender's. For instance, Honda is offering/ or was offering atleast, 0.9% for 60 months. It's great to have a pre-approval but being educated on current incentives and knowing how to negotiate with the F&I Manager is important.

 

Maybe I am naive, but I tend to think many finance manager's do try to get you the best rate you qualify for as a customer, because a deal/interest rate you are not happy with could result in you obtaining financing elsewhere which cuts into their profit, or even you walking away from a deal completely.

 

As far as dealer's taking advantage of people being naive, I completely think that falls on the consumer's shoulder's for not being educated. A dealer is just like any other business in that they are there to make money, and I think people would be surprised to know how much a dealership cost's to run. No one bat's an eye when cable/satelite/internet/phone providers gouge customer's for their services and constantly raise prices. Consumer's need to be more versed in products and educate themselves to look out for their best interests when doing a business dealing.

AMEX BCE ($39,500) CITI AAdvantage ($17,000) Region's Platinum Card ($14,400) Discover IT ($13,000) Macy's ($8,500) Chase FU ($10,000) TU:768 EX: 767
Message 9 of 11
Regular Contributor

Re: Approvals/Denials/APR's based on scores or what is actually on your report?


SEMO wrote:

It's absolutely a great idea to have financing in place before going to the dealer, however always be educated and know the current incentives from captive lender's. For instance, Honda is offering/ or was offering atleast, 0.9% for 60 months. It's great to have a pre-approval but being educated on current incentives and knowing how to negotiate with the F&I Manager is important.

 

Maybe I am naive, but I tend to think many finance manager's do try to get you the best rate you qualify for as a customer, because a deal/interest rate you are not happy with could result in you obtaining financing elsewhere which cuts into their profit, or even you walking away from a deal completely.

 

As far as dealer's taking advantage of people being naive, I completely think that falls on the consumer's shoulder's for not being educated. A dealer is just like any other business in that they are there to make money, and I think people would be surprised to know how much a dealership cost's to run. No one bat's an eye when cable/satelite/internet/phone providers gouge customer's for their services and constantly raise prices. Consumer's need to be more versed in products and educate themselves to look out for their best interests when doing a business dealing.


Agree with all. Great post. But if your credit stinks they want to think they are doing you a favor amd lending a helping hand when " we got you approved" at 18% when you got a loan on you own at 14%. They automatically think bad credit is a sign of naiveity which is usually but not always true.

Message 10 of 11