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Moderator Emeritus
Tuscani
Posts: 6,182
Registered: ‎03-29-2007

Auto Credit and Scoring

[ Edited ]
What is an Auto Enhanced score and how do I leverage it?

Most people do not realize there is a difference between your normal FICO score, and the score you are graded on when you apply for auto credit. Your normal credit score is simply referred to as "Classic FICO Score (also referred to as your BEACON score)". The auto score is usually referred to as your "FICO Auto Industry Option". This score it not available for you to purchase and only dealers\finance companies are able to pull it. Here are the major differences between Auto and Classic scores:

-The major difference between FICO scores and FICO auto scores is that the auto scores rate you more on how you've managed your previous auto credit. Most car lenders primarily care about how you’ve paid your auto loans. The auto score gives them this information.

-Have you made late payments on a current or previous auto loan or lease?

-Have you ever settled an auto loan or lease for less than you owed?

-Have you had a car repossessed?

-Have you had an auto account sent to collections?

-Did you include your car loan or lease in your bankruptcy?


How some car dealers "play the spread" to get you to pay more (and increase their commissions)

It's possible that a car dealer has the ability to pull your traditional FICO scores AND your FICO auto scores. That means they'll have six scores on you. It's a guarantee that some of those scores are going to be higher than the others. So which ones will they use when trying to get you financed?

It depends.

Are you familiar with the term "spread"? It's how car dealers make money when they finance you. If they can quote you a higher interest rate than you deserve—then they stand to make a nice chunk of change from the bank that finances you.

The only way to make a killer "spread" is to make you think that you have lower scores.


How to use your FICO scores to your advantage when buying a car?

Fortunately, you don't have to fall for their dirty tricks. Now that you know all about FICO Auto Industry Option scores, you can protect yourself. Here's what I suggest...

When you first walk into the finance director's office, don't tell him what your FICO scores are. Wait until he reviews the scores himself. Then ask him what your scores are. If the scores he reviewed are higher than the ones you have, don't say anything and just go by his scores. However, if your scores are higher, then pull them out and show him. If he has a choice in the type of scores he can use, there's a possibility that he'll be able to use your highest score. And, it will let him know that he doesn't have a fool sitting in front of him. He can't take advantage of you!


How do you find out what your FICO Auto Industry Option scores are before you walk into a car dealership?

You can't. Sorry. They're not for sale—at any price. Only lenders\dealers have access to them.
I mean seriously, up until you read this, had you ever heard of the FICO Auto Industry Option score?

Exactly.

Only a very small percentage of the population even knows they have three FICO credit scores...let alone three Auto Industry Option scores.


So how can you use this information to help you get your next new car financed at the best interest rate?

First, get your three credit reports\scores from myfico.com. Remember, myfico.com is the ONLY place you can get all three of your actual FICO scores. The three major buraeus sell credit scores. There are commonly referred to as FAKO scores and are worthless to you. If you handled your previous auto credit well—your FICO Auto Industry Option scores will be higher than your traditional FICO scores. So expect more from the lender. You can also ask the lender to show you their tier levels. Tiers are basically charts lenders use that have different interest rates based on your scores. You want to see which tier your fall in.

If they won't show you...at least have them break it down verbally for you. (Personally, I like to see it with my own eyes, as I never believe a word that comes out of most car dealers' mouths.)

If you've handled your auto credit poorly...then you should simply try to find an auto lender that uses just the traditional FICO credit scores. When you find a lender that uses a traditional FICO credit score, you'll have your best chance to get the lowest interest rate.

Start by calling dealerships and ask the finance person the following:

-What credit reporting agency do your lenders use?

-Do your lenders use FICO Auto Industry Option scores (or you can say, “FICO auto enhanced scores”) or regular FICO credit scores?

-What’s the minimum score that I need to get approved through your captive lender?
-What’s the minimum score that I need to get approved at the best rate by your captive lender?
-How does a discharged bankruptcy (or other major negative item) affect your loan decision?
-When was the last time you got someone with a [mention whatever concerns you about your credit reports here] on their credit reports approved? Tell me about that deal.
-What factors other than my scores go into your decision-making process?
-Can you dictate which score or which credit reporting agency the lenders you work with use to make a loan decision


Message Edited by Tuscani on 06-01-2007 08:10 PM
Senior Contributor
smallfry
Posts: 4,831
Registered: ‎04-20-2007

Re: Auto Credit and Scoring

Great post Tuscani. IF one had included a car loan , ultimate repo, on a bankruptcy would this info still be available to the car dealer once the bankruptcy dropped off your regular credit reports? Chapter 7 is 10 year drop off so would the repo still show after that if the dealer ran all his reports? Thanks.
Moderator Emeritus
Tuscani
Posts: 6,182
Registered: ‎03-29-2007

Re: Auto Credit and Scoring



smallfry wrote:
Great post Tuscani. IF one had included a car loan , ultimate repo, on a bankruptcy would this info still be available to the car dealer once the bankruptcy dropped off your regular credit reports? Chapter 7 is 10 year drop off so would the repo still show after that if the dealer ran all his reports? Thanks.


Fantastic question! And the answer is no. Auto scores calculate against the same credit file.
Moderator Emeritus
Tuscani
Posts: 6,182
Registered: ‎03-29-2007

Re: Auto Credit and Scoring

BUMP!
Regular Contributor
Neblett
Posts: 217
Registered: ‎04-17-2007

Re: Auto Credit and Scoring

Ford has agreed to take my Repo off my credit report and replace it with a Charge-Off.
 
Even if it is taken off my consumer credit report, will the car dealers have access to that info, meaning will they see the repo even if it is taken off my report?
Regular Contributor
Drew
Posts: 207
Registered: ‎03-27-2007

Re: Auto Credit and Scoring

Good stuff.  I actually paid a hefty auto loan in 3 months, so does that help my Auto FICO?

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Moderator Emeritus
Tuscani
Posts: 6,182
Registered: ‎03-29-2007

Re: Auto Credit and Scoring



Drew wrote:
Good stuff.  I actually paid a hefty auto loan in 3 months, so does that help my Auto FICO?


I would think so. I personally would have made the payments over a longer period of time (six months at least). History is key for any TL.. but I feel Installment credit flects more against age.. and revolving against util.
Moderator Emeritus
Tuscani
Posts: 6,182
Registered: ‎03-29-2007

Re: Auto Credit and Scoring



Neblett wrote:
Ford has agreed to take my Repo off my credit report and replace it with a Charge-Off.
 
Even if it is taken off my consumer credit report, will the car dealers have access to that info, meaning will they see the repo even if it is taken off my report?



Good deal. That should help your auto score. But doesn't do much for you in terms of a manual review.
Regular Contributor
Drew
Posts: 207
Registered: ‎03-27-2007

Re: Auto Credit and Scoring



Tuscani wrote:


Drew wrote:
Good stuff.  I actually paid a hefty auto loan in 3 months, so does that help my Auto FICO?


I would think so. I personally would have made the payments over a longer period of time (six months at least). History is key for any TL.. but I feel Installment credit flects more against age.. and revolving against util.


Good point, but it just wasn't an option at the time.

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Chase Sapphire Visa Signature $15000
Discover IT $5500
GEMB Old Navy Visa $25000

Moderator Emeritus
Tuscani
Posts: 6,182
Registered: ‎03-29-2007

Re: Auto Credit and Scoring



Drew wrote:


Tuscani wrote:


Drew wrote:
Good stuff.  I actually paid a hefty auto loan in 3 months, so does that help my Auto FICO?


I would think so. I personally would have made the payments over a longer period of time (six months at least). History is key for any TL.. but I feel Installment credit flects more against age.. and revolving against util.


Good point, but it just wasn't an option at the time.



I understand. The important thing is you that have some positive auto history now!

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