How is an Auto Score Different from a FICO Credit Score?

How is an Auto Score Different from a FICO Credit Score? : When shopping for a new or used vehicle, your primary goal is to obtain approval for a fair loan. You’ll want to have a decent interest rate and a monthly payment that won’t cause you stress. To achieve your goal, you’ll need to understand two factors that play a role in an auto lender’s decision: your FICO score and your Auto score. Here’s a little information about both of them and how they differ.

FICO Score Basics

The FICO score is a score that measures your overall credit management. There are five pieces to the pie that make up your FICO score, and they include:

  • Payment history 35%
  • Amount owed 30%
  • Length of credit history 15%
  • Credit mix 10%
  • New credit 10%

The FICO scale ranges from 300 points to a max of 850 points. The higher your FICO score is, the more likely it is that you’ll receive a loan approval and the lowest possible interest rate. Your situation will be much more challenging if your FICO score is on the low end of less than about 600 points. You might get approval to finance a vehicle. However, you may have to deal with undesirable terms until you can build your history enough to qualify for auto loan refinancing. Alternatively, you could apply for signature loans with no credit check. Such lenders may use other criteria to qualify you for an automobile loan. You may be able to obtain a fair deal by going that route for your next auto loan.

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How Your Auto Score Differs From Your FICO Score

Your auto score or “auto FICO score” is a different kind of score that uses your FICO score as its base. However, the auto score scale differs from the FICO scale, and it takes a deeper look into your credit history. Auto scores range from a low of 250 points to a high of 900 points.

Your FICO score takes an immediate snapshot of your credit at the moment the lender runs it. The auto score might go back as much as almost three years to determine how your behavior has been over time. The auto score looks at things like:

  • Whether your balances have increased or decreased
  • Whether your utilization has gone up or down
  • If you’ve been making only minimum payments
  • Medical bills vs. regular bills in collections

Your auto lender will use all this information to decide on whether to approve your auto financing. Your overall credit outlook will determine the interest rates the lender offers you, as well.

Tips for Improving Your Scores

FICO Credit Score
FICO Credit Score

The best way to shop for a car is to do it by creating a strategy. Wait as long as you can if it’s not necessary to purchase one right away. You can improve your FICO and auto scores if you give yourself six months to a year to improve your profile before you buy.

One of the best goal setting tips we can give you is to plan how much debt you want to pay off before you apply. Review your income and bills and determine how much you can put toward your debts consistently. Pay off any debts that you have in collections. That will show potential lenders that you care about fixing blemishes in your history.

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Make all of your monthly payments on time and try to double up on the payments. If you can’t double up, you should at least add the interest portion of your payment to the regular payment. That will help you to pay your debt off faster. Keep your utilization below 30 percent, as well. Additionally, you should keep your inquiries very low. Do not apply for credit unless you must do so. Follow those rules before you apply for an auto loan and order your credit report beforehand. You might be able to boost your score even more if you find errors.

Contact Us if You Need Help

We’re here to help you if you need advice, guidance, or a connection to a reputable auto lender. We are not a lender, but we have relationships with a vast network of lenders, advisors, and other finance professionals. Contact us to find out more.

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