When buying a car most people don’t know their credit score is not used to determine their car loan. Instead, a different score is used. It’s something called an Auto Industry Option Score (‘Auto Credit Score’). This auto credit score is usually calculated by FICO exclusively for use by auto lenders to determine your loan qualification, down payment and interest rate.
Almost 90% of auto lenders base their lending decision on your auto credit score. It is calculated primarily on your previous auto loan history and not your overall credit as would normally be the case for a mortgage or credit card. You would be surprised how many people can get a car loan and not a credit card.
Do you know your Auto Credit Score? Visit here to see your updated Auto Credit Score online now.
Many lenders are willing to give out auto loans to those with less desirable auto credit score. This is because studies have shown people with poor credit histories will generally keep their auto loan payments in pretty good shape all the while letting their other credit go unattended in one way or another. This is another reason why they need an auto credit score to better guide their lending decision.
Because lenders are more likely to use your auto credit score, instead of your credit score, getting an auto loan can be a great way to build or restore your credit. Make those payments on time and begin to build up a positive credit history.
Know your auto score. SmartCredit.com includes our auto score at no additional charge. It is heavily weighted on the following credit report factors, which FICO also uses in their auto score:
- An auto loan or lease sent to collections
- Any late payments on an auto loan or lease
- An auto loan or lease settled for less than owed
- A repossession by the lender
- Previous two year overall credit
Smart Credit’s auto credit score range is between 350 and 850:
|Great or Excellent||775-850|
|Good or Very Good||685-774|
|Normal or Average||615-684|
|Below Normal or Poor||515-614|
|Bad or Very Bad||350-514|
How to best prepare for an auto loan application?
Make sure your credit report is the best it should be before you apply for an auto loan. Use Smart Credit to fix errors, get good will corrections and settle out debts. It’s fast and easy with our action buttons.
Being proactive with your credit will not only improve your credit score, but will have a positive impact on your auto score as well. Especially, if you take these actions on your current or past auto loans.
Do you know your Auto Score? Visit here to see your updated Auto Score online now.
David B. Coulter – founder and C.E.O. of Smart Credit