Fico Score 8 Auto Loan

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When assessing your application for an auto loan, lenders are free to use any credit score they choose. Various lenders may use various scores, and even one lender may check multiple credit scores. As a result, when you apply for an auto loan, you probably won’t know the exact credit score the lender will check.

What Is the Difference in Credit Scores?

Despite the fact that the underlying principles of consumer credit scoring models are similar, each credit scoring model has its own set of specific criteria that it uses to examine one of your credit reports and produce a credit score.

Sometimes there are small, but potentially important, differences. For instance, one credit scoring model might disregard paid collections accounts, whereas another might still view a paid collection account as a negative item.

The two market leaders in credit scoring are FICO® and VantageScore, and their base scoring models have some similarities as well.

To calculate your score, each model only considers the data in one of your credit reports from Experian, Equifax, or TransUnion. It’s best to have a higher score because it shows you are less likely to forget to make a loan payment.

The scoring range for the most recent base models is also 300 to 850. FICO®, on the other hand, also offers sector-specific scores, such as those for auto lenders, that range from 250 to 900.

What Credit Scores Do Car Lenders Use?

The following credit scores are popular choices, though you may not be able to predict which one an auto lender will use:

FICO® Score☉ 8 and 9. These are the latest generic FICO® scoring models. Auto lenders may use a base FICO® Score when evaluating auto loan applications, despite the fact that FICO® didn’t develop these models specifically for auto lenders. Instead, they are widely used credit scores.

FICO® Auto Scores. The industry-specific FICO® Auto Score, developed especially for auto lenders, comes in a variety of versions. The FICO® Auto Scores are based on a generic FICO® Score, which is then changed to improve the score’s ability to forecast a person’s likelihood of making timely auto loan payments. Your FICO® Auto Scores may be heavily influenced by your history with auto loans.

VantageScore® 3. 0 and 4. 0. The three major credit bureaus (Experian, TransUnion, and Equifax) founded VantageScore, a credit scoring company, and these are the two most recent iterations of their credit scoring model. More than 70% of decisions regarding new auto loans and leases between July 2016 and June 2017 were made using a VantageScore credit score, according to a 2017 report from VantageScore Solutions and the financial consulting firm Oliver Wyman.

There are numerous minute variations between how VantageScore and FICO® use the data in your credit report and between the various scoring models from the same business. But each of these scores is based on an identical examination of one of your credit reports. As a result, actions that can boost one score (like making payments on time) may also boost other scores.

How Do I Check My Auto Score?

By purchasing your credit reports and scores and signing up for a credit monitoring service, you can check your FICO® Auto Score. There are numerous methods, though, to check your other credit scores for free.

Knowing these other scores can give you a general idea of where you stand before you apply for an auto loan, even though each score you receive will depend on the scoring model and the underlying credit report.

You can look for a free credit score in a number of places, such as:

Banks and credit unions

Credit card issuers

Private student loan lenders

Online financial product comparison sites

Credit and financial counseling organizations

Experian gives you free access to a FICO® Score 8 based on your Experian credit report

AnnualCreditReport.com offers one free report from each of the credit bureaus each year

Improve Your Credit Score Before Buying a Car

Here are some tips for enhancing your credit if you check your credit scores and decide it might be best to do so before applying for an auto loan:

Pay down credit card balances. Your credit utilization rate is the percentage of your revolving account (credit card) limits that youre currently using, and its an important credit scoring factor. To figure out your utilization rate, divide your total credit card balances by your total credit limits. The lower your utilization rate, the better. If you currently have a high utilization rate (over 30%), paying down credit card balances could be a quick way to increase your credit scores.

Consolidate credit card debt. If you cant afford to pay down your credit card balances, you could apply for a debt consolidation loan and use the money to pay off your credit cards. Installment loans, such as personal loans, wont impact your utilization rate. As a result, transferring the debt from credit cards to a personal loan could improve your scores—as long as you dont then charge up those cards again.

Keep your credit cards open. Closing your credit cards, even a card you never use, will lower your available credit and increase your utilization rate. There are exceptions, though. For instance, some people may want to close their credit cards if they have trouble avoiding overspending or the card has an annual fee that doesnt seem worth paying.

Continue paying bills on time. Even one late payment could hurt your credit scores, and you want to make sure your recent credit history is as clean as possible before applying for a new loan.

Hold off on other loan applications. Applying for a new loan and taking on additional debt could hurt your credit scores. Unless you have a pressing need, such as consolidating debt, it may be best to pause new credit card or loan applications until after you buy a car.

Review your credit reports for errors. Double-check your three credit reports for errors that may be hurting your scores and file a dispute if you find one. The credit bureau must investigate your claim and either validate, update or delete the information.

These steps may raise all of your credit scores, making it simpler to be approved for an auto loan with a good interest rate.

Don’t Overthink Your Credit Scores

Although your credit scores can be significant, it makes more sense to concentrate on general healthy credit habits rather than a specific score for the following three reasons:

Many consumer credit scoring models use similar criteria to determine your score.

You dont know which scoring model an auto lender will use.

If you apply for financing through a dealership, the finance office may submit your application to multiple lenders that could use different scores.

Increasing all of your credit scores through responsible credit behavior can help, and you won’t have to worry about the lender’s preferred score.

Learn what it takes to achieve a good credit score. Review your Experian FICO® Score today for free to see what is boosting and detracting from it.

No credit card required

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FAQ

Is FICO score 8 used for auto loans?

FICO Auto Score 8 or FICO Auto Score 9 are typically used by auto lenders. It’s the most recent and used by all three bureaus. Your FICO score will be different from your FICO Auto Score because the FICO Auto Score ranges from 250 to 900.

What is a good FICO auto 8 score?

While different lenders have their own criteria for evaluating credit scores, many lenders consider a base FICO® score of 700 or higher (on a scale of 300-850) to be a good credit score.

Do car dealerships use FICO score 8 or 2?

Auto lenders and car dealerships most frequently use the FICO credit scoring model, which is also the oldest and very first credit scoring model. 90% of auto lenders reportedly base their lending decisions on the current FICO Score 8 model.

Is FICO auto score 8 the same as FICO 8?

Lenders use FICO 8 Auto, as expected, to determine creditworthiness for auto loans, and FICO 8 Bankcard, as expected, to determine creditworthiness for brand-new credit card accounts. These customized FICO 8 scoring models are similar to the standard FICO 8, but they place more emphasis on a specific area of your credit history.