Super interesting data

[SRT4kid93]

So for the longest time I have been wondering how much dealers/issuers pay to run your credit. 

I know for me, it costs $16 to run 1 bureau through my fico, and over $48 for all 3. 

I know dealers would get charged a lot less simply because of all the business they give fico. And I have finally learned how much dealers pay. 

through someone I know, I have found out that he was charged $1.50 every single time he runs someone's credit. And he does hundreds of apps every week.

unsure if  all dealers are charged the same (unsure if credit cards are charged more or less) but I would assume they are all charged at least $1.50 per credit app. 

so we finally know how much FICO makes 

[JoeRockhead]

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@SRT4kid93 wrote:

So for the longest time I have been wondering how much dealers/issuers pay to run your credit. 

I know for me, it costs $16 to run 1 bureau through my fico, and over $48 for all 3. 

I know dealers would get charged a lot less simply because of all the business they give fico. And I have finally learned how much dealers pay. 

through someone I know, I have found out that he was charged $1.50 every single time he runs someone's credit. And he does hundreds of apps every week.

unsure if  all dealers are charged the same (unsure if credit cards are charged more or less) but I would assume they are all charged at least $1.50 per credit app. 

so we finally know how much FICO makes 

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There's a whole lot of missing information and context here to be sure about anything... No?

We have a secondhand anecdote that one dealer supposedly pays $1.50 to "run credit."  We don't know what that $1.50 actually covers, who bills it, whether it's for one bureau (not FICO directly) or something bundled, whether a third-party reseller is involved, whether there are other fees, or most importantly... how much of that $1.50, if any, actually goes to FICO.

This certainly points in a direction, and it's an interesting data point.  But I think it's a bit of a stretch to plant a flag in the "we finally know how much FICO makes" ... Hill. 

[SRT4kid93]

You are correct, they did not confirm which bureau or model it was. I assumed fico 8 experian, (could be fico 8 auto) as that's the most common one. But I don't know for sure. 

we also don't know if larger companies like Amex pay less than smaller companies like a dealership (I assume they probably pay less due to the amount of volume they give)

He did say it's just a single score pull. 1 report/score. But again, not sure which model. 

either way I found it very interesting, as this gives us a starting point for what dealers/used car lots probably pay. 

again credit card companies may be a different animal. Chase for example gets about 50 million apps a year just for credit cards alone. I doubt even the biggest carmax dealers do that many credit apps. 

[BrutalBodyShots]

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@daniel603maclise wrote:

Hi, The gap between consumer pricing and dealer pricing is pretty eye-opening. At hundreds of applications a week, even a small per-pull fee adds up quickly. It would be interesting to see whether the same pricing applies across different lenders, bureaus, and credit-card issuers.

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Hey @daniel603maclise! Can you expand on your comment a bit? I'm not sure if you work in the business or what, but if you have any numbers/data you can share it would be cool to hear. Thank you.

[FicoMike0]

That is an interesting data point. That's for one score from one.bureau?

Do you know who he paid? I would expect the credit bureau sells the score, then kicks back to FICO.

[SRT4kid93]

It was TU. I don't know what model (most likely FICO 8 or FICO 8 auto)

but yea it was 1 score pull. Like I said I would assume a company like Amex or chase would pay substantially less due to the fact they do about 50 million apps a year. But most dealerships probably pay somewhere around that mark. 

[dfwxjer]

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@SRT4kid93 wrote:

So for the longest time I have been wondering how much dealers/issuers pay to run your credit. 

I know for me, it costs $16 to run 1 bureau through my fico, and over $48 for all 3. 

I know dealers would get charged a lot less simply because of all the business they give fico. And I have finally learned how much dealers pay. 

through someone I know, I have found out that he was charged $1.50 every single time he runs someone's credit. And he does hundreds of apps every week.

unsure if  all dealers are charged the same (unsure if credit cards are charged more or less) but I would assume they are all charged at least $1.50 per credit app. 

so we finally know how much FICO makes 

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Is your friend underwriting their own loans with in-house financing? Every dealer I know just shotguns out the application to the lender network they use. 

Major lenders have corporate agreements with the bureaus. I doubt you'll find their proprietary pricing but you are correct that $1.50 is in the ballpark. 

However that's not the only revenue stream for the bureaus. They also sell your data! 

[SRT4kid93]

No he has a list of lenders he uses, and I'm sure he gets kick backs for sending them business. 

although for people with really low credit, sometimes the lender will charge the dealer a "dealer fee"

the highest I've heard of is $2000, which is the lenders way of saying "we don't want this customers business, and you sending us this person is a huge risk , so if you want to get this person a loan, you gotta eat some of the risk"

of course this eats directly into the dealers profit, so in a situation like that, some dealers might just tell the customer "I couldn't get an approval". Because they don't want to pay the dealer fee. 

[Realist]

Removed.   Apologies.

[dfwxjer]

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@SRT4kid93 wrote:

No he has a list of lenders he uses, and I'm sure he gets kick backs for sending them business. 

although for people with really low credit, sometimes the lender will charge the dealer a "dealer fee"

the highest I've heard of is $2000, which is the lenders way of saying "we don't want this customers business, and you sending us this person is a huge risk , so if you want to get this person a loan, you gotta eat some of the risk"

of course this eats directly into the dealers profit, so in a situation like that, some dealers might just tell the customer "I couldn't get an approval". Because they don't want to pay the dealer fee. 

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Yeah, it's common for deep subprime lenders like West Lake, Santander, etc to charge the dealership a fee for buying the loan. They want to ensure the dealers have skin in the game when selling cars to people with low scores. 

I guess your friend's dealership is pulling a credit report so they know which lenders to route the applications to?