Auto Credit and Scoring

[Anonymous]

I recently traded in a car for a new one... I was in an equity position, and believe that I got a good deal. HOWEVER - My last loan shows six lates all 30 days over the course of 3.2 years. I called Diamler when I received my release of lien in the mail and asked them if they would remove the late payments since I paid in full 19 months early - representative said he couldn't do it.

My Diamler loan was 8.0% APR and my new Volvo Financial loan is 6.9%... I thought this was a good rate and readily accepted the terms.

My question is - do the 30 day late payments influence the Auto Enhance FICO as much as the Classic FICO? Could I have received a better rate if there were no lates on my Diamler loan? It just doesn't seem like I got screwed here.

Take Care.

Rob

Message Edited by FICO_Focused on 05-17-2007 08:58 AM

[Anonymous]

Tuscani,

Thanks for the substantially informative post. I sure could have used this info. when I was car shopping for the first time last August

The salesman at one dealership wanted to put me with one of his schmuck companies at 18-19%! for a 4 year old car. I politely told him I didn't have stupid stamped across my forehead (although I had a less than desirable score at the time.  I ended up with a car of the same make, model and year, loaded, with 26,000 fewer miles for less and at 14%....still no prize winning rate but I had to have it and I hope to refinance eventually.

Any opinions on a timeframe to pay on the original loan at 14% before looking to re-fi? My regular FICO currently is somewhere between 664-690.

[Tuscani]

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McGrawgal wrote:

Tuscani,

Thanks for the substantially informative post. I sure could have used this info. when I was car shopping for the first time last August

The salesman at one dealership wanted to put me with one of his schmuck companies at 18-19%! for a 4 year old car. I politely told him I didn't have stupid stamped across my forehead (although I had a less than desirable score at the time.  I ended up with a car of the same make, model and year, loaded, with 26,000 fewer miles for less and at 14%....still no prize winning rate but I had to have it and I hope to refinance eventually.

Any opinions on a timeframe to pay on the original loan at 14% before looking to re-fi? My regular FICO currently is somewhere between 664-690.

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With those scores you should refi now!

[smallfry]

Probably cut the rate in half I would think. Close anyway.

[Anonymous]

Thanks Tuscani and smallfry for the input.

I will look into it right away.

I sincerely appreciate the replies.

Tuscani, I'm looking for your thread on TC...I have some questions.

[MidnightVoice]

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Tuscani wrote:

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 OptionSM 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

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Excellent information.  Many thanks, I will use it next year

[Anonymous]

Super nice thread. Thank you. :-)

[MercyMe]

Yes, Tuscani.  I did read this, and was trying to explain this to her, this morning.  I also did some checking up on Credit Unions and found out that she may be able to finance through Bright Stars, which was linking to the Broward County Teacher's Credit Union.  Their rates start at 5.49 percent.  As I understand it, as well, some of the dealerships have special pricing for undergraduates.  I just need to know if I might have to cosign for her, as this will affect my own purchase of a car, which I haven't done since that 1980 something, Chevy Monte Carlo with its smoked glass T-Tops and white leather.  )  Boy did I love that car!

[Anonymous]

The Fico score on WAMU is auto enhanced, is that correct?

[Anonymous]

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@Anonymous wrote:

The Fico score on WAMU is auto enhanced, is that correct?

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No, it is PFICO - a bankcard-enhanced FICO score ...