The FICO Auto – Enhanced Credit Score

It might be surprising to know that there is a different credit score used by auto dealerships countrywide to assess your overall auto loan creditworthiness.  This score is not your typical FICO credit score and cannot be purchased on an individual basis.  It’s called the FICO auto-enhanced credit score.

So, let’s say you’re contemplating buying a car.  You’ve done your due diligence, logged into www.annualcreditreport.com and received your free copies of your recent credit reports from all three credit bureaus.

You’ve also logged into www.myfico.com  and accessed your FICO credit scores from all three credit bureaus.

In all, everything looks in order.  You may have missed one or two car loan payments over the last few years, but overall your FICO credit score looks relatively good.  Therefore, equipped with this personal finance information, you head to the dealership to negotiate the purchase of your new car… with the hopes of taking advantage of a recent promotion of 0% financing for 60 months.

You’re now at the dealership; you’ve gone through the price haggling process and have come to a compromise about the final purchase price of the vehicle.  Now comes the next step: securing financing for the vehicle.

The finance manager runs your credit report and comes back with the bad news that you are not eligible for the 0% financing for 60 month promotion.  Instead they will try to get you a 60 month auto-loan at a whopping interest rate of 15% in addition to a mandatory 20% down payment.  At this point, you’ll definitely be wondering why this is happening when your FICO credit score wasn’t too bad.

Here’s the story.  The dealership pays for access to the FICO auto-enhanced credit score from all three credit bureaus.  The range for the auto-enhanced credit score is 300 – 900.  Not only is this score calculated in a different way, but different credit information affects it.

For instance, your FICO credit score is greatly influenced by revolving accounts such as credit cards, while your FICO auto-enhanced credit score is greatly  influenced by your auto loan and/or lease payment history.  These auto-enhanced scores take into account any late auto loan payments, auto repossessions and auto loan bankruptcies.

So, if your FICO auto-enhanced score is low you’ll either have to pay a higher interest rate for the auto loan or in the unfortunate circumstance be declined for the loan altogether.

Here are a few tips on increasing your credit score:

1.)        Pay your bills on time

2.)        Do not apply for credit frequently

3.)        Reduce your credit card balances

4.)        Have some credit (having no or limited credit history will result in a lower score)

To obtain all three credit reports for free simply go to www.AnnualCreditReport.com, or call 877-322-8228.

Plus, to learn more about the three credit report agencies, call or visit their websites using the following contact information:

1.) Experian

1-866-200-6020

www.experian.com

2.) Equifax

1-800-685-1111

www.equifax.com

3.) TransUnion

1-800-888-4213

www.transunion.com