Re: Auto loan advice from an Underwrite
10-21-2012 08:29 PM
With your experience (if you can describe it in general terms), can you talk a little about the auto-enhanced score? The "first-time-buyer" penalty is well known both here on this fourm and elsewhere: anecdotally we know that someone with just credit cards is going to be slapped with this on their auto-enhanced scorhdere; however, as you suggest with a Prosper loan (personal loan, installment tradeline) being helpful as we've thought in the past, would you rate the other two installment loan types (auto ones being obviously counted) for their relative weight in the auto-enhanced score?
- Mortgage loan
- Student loan
There are several different auto enchanced scores out there, Each model weights each item different. Most large lenders will use your report and load that into a custom score model or "scorecard" The scorecard is how the lender looks at your risk using a set of weights and measures that the lender comes up with.
For exampe, a first time buyer with 3 revolving lines and a student loan with a 787 Auto enhanced score. A scorecard may assess this adversly because of the lack of auto credit and maybe there are 4 or 5 inquires. So in this case the model says the customer will perform the same as a customer with a 630 credit score. In this case if an approval is issued it is given terms that a 630 customer would expect.
In another example, we have a 585 credit score customer with poor revolving pay history, a 2 year old bankruptcy (with no lates since) who re affirmed the mortgage through the BK. Has 3 paid perfect autos before the BK. A scorecard may look favorably on this because of the positive auto credit and the reaffermation of the mortgage. In this case the model says this customer will perform the same as the average 680 credit score, so this customer is issued an approval and is given the terms that a 680 customer would expect.
When I say auto loan, any installment loan (non student) is looked at the same. One of the notes that could be made supporting and approval is "no auto credit noted, however customer paid $150 personal loan payment well for 2 years"