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A bad-credit auto loan is just a typical auto loan, but it will most likely come with a higher interest rate based on your credit score and other factors. You may also hear bad-credit car loans referred to by other names — such as second-chance or subprime car loans.
Not all lenders offer auto loans for bad credit, so look for lenders with a low or no minimum credit score, or other criteria indicating they work with borrowers who have poor or thin credit. This could be lenders with no minimum income or credit history requirements, or those willing to accept past bankruptcies.
Getting an auto loan is an exciting yet daunting process. With so many options and factors to consider, it can be confusing to know where to start. One key decision is which credit bureau your lender will use to evaluate your creditworthiness. This article provides a detailed overview of auto loans that pull your Equifax credit report and score.
Why Do Auto Lenders Use Equifax?
Equifax is one of the three major credit bureaus in the United States, alongside Experian and TransUnion. It compiles credit reports and calculates credit scores for millions of consumers. Equifax and Experian are the two most commonly used credit bureaus among auto lenders. There are a few key reasons for this:
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Industry-specific services – Equifax and Experian both offer services tailored specifically to the needs of the automotive finance industry. This includes credit reports and analytics designed for auto lending decisions.
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Established relationships – Many top auto lenders have existing data and integration relationships with Equifax in particular This makes it convenient and cost-effective for them to continue using Equifax
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Comprehensive data – Equifax has vast databases of consumer credit information This allows lenders to thoroughly evaluate applicants
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Familiar scoring models – Most auto lenders rely on FICO credit scores, which Equifax provides. This consistency is helpful for risk modeling and lending decisions.
What is an Equifax Auto Credit Report?
An Equifax auto credit report provides detailed information about your credit history specifically for auto lending purposes. It’s similar to your standard Equifax credit report but may include some additional details relevant to auto loans, such as:
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Auto-specific account history – Details on any current or past auto loans or leases. This helps lenders gauge how you’ve handled auto credit.
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Inquiries – A list of any businesses that have checked your Equifax report for auto lending purposes in recent years. Too many auto inquiries can negatively impact your score.
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Potential red flags – Information pointing to past issues with auto loans, such as repossessions or collections.
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Specialized scores – Scores tailored for auto lending, like the FICO Auto Score.
What is the Equifax Auto Credit Score?
In addition to credit reports, Equifax calculates several auto-focused credit scores. The most commonly used one is the FICO Auto Score. This refers to FICO Score versions 8 and 9, which are industry-specific scores built just for auto lending evaluations.
Key facts about the FICO Auto Score:
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Score range is 250-900 (differs from standard FICO models)
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Factors in auto-related data like loan/lease history
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Used by over 90% of top auto lenders
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Helps lenders predict applicant’s auto loan repayment risk
Having a high FICO Auto Score from Equifax signifies lower lending risk and can help you qualify for better auto loan terms.
Which Auto Lenders Use Equifax?
Many top auto lenders rely fully or partially on Equifax data. Some examples include:
- Ally Financial
- Bank of America
- Capital One
- Chase
- GM Financial
- PNC Bank
- Santander
- Toyota Financial Services
- Wells Fargo
In most cases, you won’t know for certain which credit bureau(s) a lender will use until you apply. But you can call lenders ahead of time to ask about their typical practices. Pre-qualifying for financing can also give insight into which credit data the lender accesses.
Will Multiple Equifax Auto Loan Inquiries Hurt My Credit?
When you apply for an auto loan, the lender will perform a “hard inquiry” on your Equifax report to evaluate your application. This causes a small, temporary ding to your credit score. However, for auto loan shopping, Equifax and other bureaus allow inquiries within a focused window to be “bundled” and count as only one inquiry.
For example, if you get pre-approved with one auto lender then apply at two others within 14 days, it will only count as one hard inquiry rather than three. This prevents your score from being excessively damaged. Rate shopping is seen as a normal part of the lending process.
One exception – if you apply, get approved, and take out a loan, further inquiries won’t get bundled for that loan type.
Tips for Managing Your Equifax Auto Credit
Here are some tips to keep in mind when it comes to having your Equifax credit report and FICO Auto Score pulled for an auto loan:
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Check your Equifax report – Review your credit reports from all three bureaus before applying for an auto loan. Make sure the information is accurate and work to correct any errors. Pay special attention to your Equifax report.
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Better your score – Improving your credit score with Equifax and other bureaus will help you qualify for better auto loan terms. Having at least a 660 FICO Auto Score is recommended.
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Limit hard inquiries – Each hard credit check causes a small ding, so only apply for credit when seriously considering a purchase. Limit auto loan applications to about 3-5 lenders.
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Pay bills on time – Payment history is the biggest factor in your credit scores. Consistently paying all bills on time can significantly boost your Equifax credit profile.
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Monitor your credit – Sign up for free credit monitoring to regularly check your Equifax credit report and FICO Auto Score. This helps you catch any suspicious activity.
Getting approved for an auto loan with strong terms means having good credit across the board, especially with auto-focused scores like your FICO Auto Score from Equifax. Managing your Equifax credit report and score carefully makes it more likely lenders will want to work with you.
Auto Credit Express – Used car purchase loan
Aggregators connect prospective borrowers with a network of auto lenders, usually resulting in more than one loan offer. We evaluate them using different criteria than direct lenders.
Comparing lenders that offer bad-credit auto loans
Instead of applying to a random lender, crossing your fingers and hoping you get approved, look first to see if a certain lender makes more sense for you.
For example, not all lenders allow co-signers. So if you think you may need one to qualify for a loan, apply only to lenders that accept co-signers. If you have a limited credit history, or none at all, look for lenders without a credit history requirement.
If one of your goals is to build your credit with an auto loan, ask if the lender reports payments to one or more of the three major credit bureaus — TransUnion, Experian and Equifax. That way, your record of on-time car payments will be available to future lenders.
To compare lenders and rates in a way that won’t affect your already low credit score, look for lenders that allow you to pre-qualify for a loan with a soft credit check. Pre-qualification is also a good way to determine if you will qualify for an auto loan at all.
If you do receive pre-qualified offers and want to compare them, NerdWallet’s auto loan calculator is a helpful tool. You can input the estimated rates lenders have given you, add in down payment or trade-in amount, and see your resulting monthly payment as well as total loan cost.
10 CREDIT UNIONS THAT PULL EQUIFAX FOR APPROVALS ( 2023 )
FAQ
Which loan companies use Equifax only?
Do auto lenders use Equifax?
Do car dealerships look at Equifax or TransUnion?
Which FICO auto score do most lenders use?
What credit bureaus do auto lenders use?
The three major credit bureaus are Experian, TransUnion and Equifax. The two big credit scoring models used by auto lenders are FICO® Auto Score and Vantage. We’re going to take at look at FICO® since it has long been the auto industry standard. What credit bureau does capital one use for auto loans?
Does PenFed credit union use Equifax?
PenFed Credit Union is the only loan company that uses only your Equifax credit data. In most cases, you won’t be able to determine beforehand which credit bureaus your lender will use. In some cases, lenders will pull your credit report from two or even all three major credit bureaus. Can anyone tell me where to find credit cards that use Equifax?
Do car dealerships use Equifax?
They offer services that are directed specifically at the auto industry, and each gets a portion of their revenue from the industry. Do car dealerships use Equifax or TransUnion? While Experian and Equifax are the most popular bureaus among auto lenders and car dealers, TransUnion can also be used for auto loan decisions.
Does Lexus use Equifax?
The short answer is no. Both TransUnion and Equifax are reliable credit reporting agencies that compile reports and calculate your credit scores using different scoring models. What credit bureau does Lexus use? The credit bureaus Lexus uses are Equifax and Experian. These are among the most commonly used credit bureaus for auto lenders.
Did discover pull Equifax?
I applied for a car loan with DFCU, got approved for $11500 with a 1.99 APR, and was told my an agent there I am also approved for a $10,000 credit card and a $5700 motorcycle loan, so it seems they pulled Equifax. I tried Discover and was declined. I have a 766 FICO with Equifax so it’s doubtful Discover pulled that.
Does TransUnion use Equifax or Experian?
And TransUnion is not far behind. In conclusion, auto lenders use Equifax and Experian the most, while TransUnion is less used for auto loan credit checks, at least in some parts of the US.