Your FICO score is a representation of your credit worthiness. FICO offers specific products and solutions for car dealers and auto loans. Their product is called Auto Score 8. As you can see here from FICO's promotional materials, Auto Score 8 is meant to help dealers, “Improve accuracy and speed of decision making.
Generally, a good credit score to buy a car falls within the range of 660 to 720 or higher. However, it's important to note that each lender has different criteria, and some may consider lower credit scores as well.
The basic FICO and auto loan FICO scores use different credit scoring models. The base FICO score ranges from 300 to 850, but FICO auto scores range from 250 to 900. The FICO auto score that lenders look at is measured using the 9 XT version of auto score measurement.
FICO also has industry-specific scores. These versions are similar to the base scores but designed more specifically for certain types of credit reviews. For example, lenders considering credit card applications may use FICO Bankcard Score 8. And FICO Auto Score 8 may be used for auto loans.
FICO stands for Fair Isaac Corporation, and the organization is one of the most popular sources of credit scores. The base FICO score is also called FICO Score 8 or 9. It's not designed specifically for auto loans, but many lenders use it.
1 Two of the most common are the FICO Score 5 and the FICO Score 8. Both are used by lenders to determine a prospective borrower's creditworthiness. But FICO 5 is commonly used in the mortgage lending industry, while FICO 8 is mainly used by credit card issuers.
What credit score do auto lenders look at? 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.
Versions 8 and 9 of FICO scores are similar, but FICO score 9 is generally considered the more forgiving of the two for a few reasons: With FICO 9, third-party collections no longer hurt your credit score once those debts are paid off. FICO 9 treats medical collections differently than other types of debt.
There isn't one specific score that's required to buy a car because lenders have different standards. However, the vast majority of borrowers have scores of 661 or higher.
According to Car and Driver, “Most used auto loans go to borrowers with minimum credit scores of at least 675. For new auto loans, most borrowers have scores of around 730. The minimum credit score needed for a new car may be around 600, but those with excellent credit often get lower rates and lower monthly payments.”
There is no single credit score that's considered the most accurate. The truth is, there are several types of credit scores available to lenders—and many versions of each of those scores. Scores are calculated based on many of the same factors. But thinking of these scores in terms of accuracy can still be misleading.
The minimum credit score needed for most mortgages is typically around 620.
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Most borrowers need a FICO score of at least 600 to get a competitive rate on an auto loan.
Most lenders use the FICO scoring model. Many banks and lenders use FICO 8, which isn't the most recent version, but it is the most popular. However, most mortgage lenders use different versions for each credit bureau: Trans Union: FICO Score 4.
It's also worth mentioning that lenders widely use the FICO 9 credit score in the U.S., but it's not the only option available. Some lenders may use other credit scoring models, such as VantageScore, a joint venture between the three major credit bureaus (Equifax, Experian, and TransUnion).
Every lender sets its own requirements for zero-down-payment deals, if they offer them at all. Generally, the credit score needed to buy a car is at least 661 whether you make a down payment or not. You could still get a car loan if your score is lower than 661, but be prepared to pay higher interest rates.
For the majority of lending decisions most lenders use your FICO score. Calculated by the data analytics company Fair Isaac Corporation, it's based on data from credit reports about your payment history, credit mix, length of credit history and other criteria.
Good credit makes it easier to qualify for a loan. Many lenders won't provide loans to borrowers with poor credit. If you have good, very good or excellent credit, you'll get better interest rates than someone with a lower credit score. That can save you money on financing costs over the life of your car loan.
When it comes to car buying, a number of lenders use the FICO Score 8 and 9 or VantageScore 3.0. However, there is also an industry-specific score that many lenders use, known as the FICO Auto Score. Auto Scores range from 250 to 900 (compared to 300 to 850 for the base FICO score).
FICO® and VantageScore® are the two most popular credit scoring models today. FICO and VantageScore credit scores are equally reliable and accurate, based on the specific scoring model that's being used. Tools are available that allow you to check and monitor your credit score for free, with no impact to your credit.
Credit score calculated based on the FICO® Score 8 model and is provided for educational purposes. American Express and other lenders may use a different FICO® Score version than FICO® Score 8, or another type of credit score altogether, and other information to make credit decisions.