In a Nutshell Having several different credit scores is normal. However, you might want to pay close attention to the scores your auto lender is likely to use when you’re ready to apply for a loan: your FICO® Auto Scores. Editorial Note: Intuit Credit Karma receives compensation from third-party advertisers, but that doesn’t affect.
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Getting ready to buy a car? You might be wondering what a good FICO® Auto Score is and how it affects your ability to get a loan.
Here’s the lowdown:
- FICO® Auto Scores are specifically designed to assess your creditworthiness for auto loans.
- They range from 250 to 900, with higher scores indicating a lower risk of defaulting on your loan.
- There’s no one-size-fits-all answer to what a good FICO® Auto Score is.
- Different lenders have different requirements, and these can change based on market conditions.
However, here’s a general guideline:
- Scores above 700 are generally considered good.
- Scores below 600 may make it difficult to qualify for a loan, or you may face higher interest rates.
Here’s how FICO® Auto Scores differ from other FICO® scores:
- They place more weight on auto-loan-specific risk behavior.
- This means factors like your payment history on previous auto loans and the number of recent auto loan inquiries you’ve made will have a bigger impact on your score.
Want to access your FICO® Auto Scores?
- You can do so through FICO for a monthly fee.
- However, keep in mind that there are multiple versions of the FICO® Auto Score model, so seeing one version may not guarantee you’ll see the same version your lender pulls.
Don’t want to pay?
- You can monitor your TransUnion® auto insurance score for free on Credit Karma.
- This isn’t the same as your FICO® Auto Score, but it can still give you valuable insights into your creditworthiness.
Here’s how to improve your FICO® Auto Score:
- Make all your bill payments on time, including your auto loan payments.
- Keep your credit utilization low (ideally below 30%).
- Avoid applying for new credit unnecessarily.
Remember:
- Improving your credit takes time and effort.
- Start reviewing your credit reports and scores several months before you plan to apply for a loan.
- This will give you enough time to make improvements and file disputes if necessary.
By following these tips, you can increase your chances of getting a good interest rate on your auto loan and drive away in your dream car!
Additional Resources:
- Credit Karma: https://www.creditkarma.com/auto/i/fico-auto-scores
- Car and Driver: https://www.caranddriver.com/auto-loans/a42168119/fico-auto-score/
Frequently Asked Questions:
Q: What is the difference between a FICO® Auto Score and a credit score?
A specific kind of credit score used to determine your eligibility for auto loans is called a FICO® Auto Score. Your eligibility for credit cards, mortgages, and other loans can be determined using your credit score, among other things.
Q: How can I check my FICO® Auto Score?
A monthly fee is required to access your FICO® Auto Score through FICO. Additionally, Credit Karma offers a free TransUnion® auto insurance score monitoring service.
Q: How long does it take to improve my FICO® Auto Score?
A: It can take several months or even years to improve your FICO® Auto Score. However, even small improvements can make a big difference.
Q: What is the best way to improve my FICO® Auto Score?
A: The best way to improve your FICO® Auto Score is to make all your bill payments on time, keep your credit utilization low, and avoid applying for new credit unnecessarily.
Q: What should I do if I have a low FICO® Auto Score?
A: If you have a low FICO® Auto Score, you may still be able to get an auto loan, but you may face higher interest rates. You can try to improve your score by following the tips above. You can also consider getting a cosigner on your loan.
FICO® credit scores are meant to help lenders determine how risky you are as a borrower. But some scores are better tailored at calculating how risky you are for specific credit products, like the auto loans.
Your “base” scores, or the more conventional credit scores you may be more familiar with, are the first thing FICO computes in order to determine your FICO® Auto Scores (your base FICO® scores range from 300 to 850) Then FICO adjusts the calculation based on industry-specific risk behavior to create tailored auto scores. These scores help creditors predict the likelihood that you’ll make auto loan payments as agreed. The result is your FICO® Auto Scores, which range from 250 to 900 points.
What is a good FICO® Auto Score?
When it comes to base FICO® scores, many lenders consider a 700 or higher (on a scale of 300–850) to be a good credit score, even though different lenders use different standards. But how high do FICO® Auto Scores need to be to qualify you for an auto loan?.
About the difference between high and low scores, Jim Houston, senior director of J. D. Power, says it’s not written in stone.
“It varies by lender,” he says. “So there is no absolute low.”
Each lender has different requirements for credit scores, and these can vary depending on a number of factors, such as the state of the market.
Companies that calculate your credit scores can use their own unique method of calculation, called a scoring model. FICO, the company many lenders use when they pull your scores, has a number of different scoring models. Certain of its scoring models are unique to the kind of product you’re applying for, such as a car loan or credit card. These are industry-specific FICO® scores.