The auto score is usually referred to as your “Auto Industry Option”. This score it not available for you to purchase and only dealersfinance companies are able to pull it. Here are the major differences between Auto and Classic scores:
-The major difference between FICO scores and FICO auto scores is that the auto scores rate you more on how you’ve managed your previous auto credit. Most car lenders primarily care about how you’ve paid your auto loans. The auto score gives them this information.
- Have you made late payments on a current or previous auto loan or lease?
- Have you ever settled an auto loan or lease for less than you owed?
- Have you had a car repossessed?
- Have you had an auto account sent to collections?
- Did you include your car loan or lease in your bankruptcy?
How some car dealers “play the spread” to get you to pay more (and increase their commissions)
It’s possible that a car dealer has the ability to pull your traditional FICO scores AND your FICO auto scores. That means they’ll have six scores on you. It’s a guarantee that some of those scores are going to be higher than the others. So which ones will they use when trying to get you financed?
Are you familiar with the term “spread”? It’s how car dealers make money when they finance you. If they can quote you a higher interest rate than you deserve—then they stand to make a nice chunk of change from the bank that finances you.
The only way to make a killer “spread” is to make you think that you have lower scores.
How to use your FICO scores to your advantage when buying a car?
Fortunately, you don’t have to fall for their dirty tricks. Now that you know all about FICO Auto Industry Option scores, you can protect yourself. Here’s what I suggest…
When you first walk into the finance director’s office, don’t tell him what your FICO scores are. Wait until he reviews the scores himself. Then ask him what your scores are. If the scores he reviewed are higher than the ones you have, don’t say anything and just go by his scores. However, if your scores are higher, then pull them out and show him. If he has a choice in the type of scores he can use, there’s a possibility that he’ll be able to use your highest score. And, it will let him know that he doesn’t have a fool sitting in front of him. He can’t take advantage of you!
So how can you use this information to help your client who has a goal to obtain a loan?
First, get your three credit reportsscores. If you handled your previous auto credit well—your FICO Auto Industry Option scores will be higher than your traditional FICO scores. So expect more from the lender. You can also ask the lender to show you their tier levels. Tiers are basically charts lenders use that have different interest rates based on your scores. You want to see which tier your fall in.
If they handled their auto credit poorly…then you should simply try to find an auto lender that uses just the traditional FICO credit scores if it is better. When you find a lender that uses a traditional FICO credit score, you’ll have your best chance to get the lowest interest rate.