In a NutshellHaving several different credit scores is normal. But when you’re getting ready to apply for an auto loan, you may want to pay special attention to the scores your auto lender will likely use: your FICO® Auto Scores.
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.
To determine FICO® Auto Scores, FICO first calculates your “base” scores, which are the traditional credit scores you might be more familiar with (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?
- FICO® Auto Scores vs. other FICO® scores
- How to access your FICO® Auto Scores
- What if I don’t want to pay for my FICO® Auto Scores?
- Improving your credit
What is a good FICO® Auto Score?
While different lenders use different standards for rating credit scores, 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. But how high do FICO® Auto Scores need to be to qualify you for an auto loan?
When it comes to high scores versus low scores, Jim Houston, senior director of the automotive finance practice at J.D. Power, says it’s not written in stone.
“It varies by lender,” he says. “So there is no absolute low.”
Every lender has its own score requirements, which can change based on a variety of factors, including market conditions.
Why do I have more than one credit score?
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. Some of its scoring models are specific to the type of product you’re applying for, like a credit card or an auto loan. These are industry-specific FICO® scores.
FICO® Auto Scores vs. other FICO® scores
The most significant difference between your FICO® Auto Scores and base scores (like your FICO® Score 8 or FICO® Score 9) is in how your credit history is weighted. Base FICO® scores take into account your overall credit information as laid out in your credit reports, including your credit card debt, payment history, student loans, etc.
The FICO® Auto Score model also takes these elements into consideration, but assigns more weight to auto-loan-specific risk behavior.
How to access your FICO® Auto Scores
While some credit scores can be monitored for free, you may have to hand over some cash if you want access to your FICO® Auto Scores. When you pay $39.95 a month through FICO, you can monitor a handful of your credit reports and scores, including your FICO® Auto Scores.
Before you pay for credit monitoring though, note that there are several versions of the FICO® Auto Score model. Monitoring just one doesn’t guarantee you’ll see the same version your lender pulls. Consider calling your prospective lender’s financing department to see which version they use, and check to see which scores you’ll get through the monitoring service, before paying for your scores.
What if I don’t want to pay for my FICO® Auto Scores?
You can monitor your TransUnion auto insurance score for free on Credit Karma, along with your free credit reports and VantageScore 3.0 scores from TransUnion and Equifax. Just remember that your auto insurance scores are not the same as your credit scores, and a lender may not use your auto insurance scores.
Even if you can’t see your exact FICO® Auto Scores, reviewing your credit reports means having access to your auto loan history and can help you determine what you can do to improve your credit.
Improving your credit
Generally speaking, when you make repairs or add positive history to your credit reports, your base FICO® scores and your FICO® Auto Scores may improve. Here are some of the best ways to improve your credit.
- Stay current on bill payments
- Use only a portion of your available credit (ideally less than 30%)
- Avoid unnecessary applications for new credit
For more-focused improvements to your FICO® Auto Scores, consider looking at your credit reports for specifics about your auto loan history.
If you’ve missed auto loan payments in the past, unfortunately there’s not much you can do other than wait for that information to fall off your reports (which can take seven years). But if you have unpaid auto collections, paying them off may help you improve your scores and appear more favorable to lenders.
You can also look for errors in your credit reports. If your credit reports incorrectly show something negative, like an auto loan payment you made that was reported as missed, you can dispute the error.
If you’re like many people in the market for a new car, you may need some time to get your credit in order. Consider looking at your credit reports and scores at least a few months before applying so that you have adequate time to make improvements or file disputes.
And even if you don’t want to pay to access your FICO® Auto Scores, remember that practicing healthy credit habits can help improve your credit health.