What consumers with problem credit need to know when it comes to the credit scores needed to either lease a car or finance one with a traditional auto loan
Consumers with bad credit often either don’t know the different types of credit scores, what these numbers mean or even what they are before applying for an auto loan.
At Auto Credit Express we know this is true because we’ve spent over two decades helping buyers with poor credit searching for online auto loans find those dealers that can offer them their best chances for a loan approval. Our website even contains a resources section that helps answer one of the most frequent questions we get asked: “what credit score do you need to lease a car?”
Credit reports and credit scores
Before submitting an auto loan application, consumers should order all three of their credit reports (from Equifax, Experian, and TransUnion) and at least one of their credit scores. One report per year from each bureau is free and they can be ordered at www.annualcreditreport.com. Credit scores, however, are not free and normally cost anywhere from $5.95 to $7.95 each.
This process can be simplified by paying a fee to sites such as www.FreeScore360.com where you can receive all three reports and all three credit scores at the same time.
It should also be noted that only Equifax will sell you a FICO score. According to a June 29th, 2007 article by CNN the default credit scores sold to consumers by both Experian and TransUnion are VantageScores.
All three bureaus still use a version of the most widely-used score from FICO. Equifax calls theirs a BEACON score, at Experian it’s called the Experian/Fair Isaac Risk Model while at TransUnion it’s known as an EMPIRICA score.
But confusing matters is the fact that the three major bureaus now also offer a different score all three jointly developed, that competes with FICO, called VantageScore.
Adding to the confusion is that in a perfect world all three of your VantageScores or FICO scores would be the same. But the fact is they aren’t.
The reasons behind the differences
Unless a credit file is fairly new, there will usually be differences in each credit report and in the credit score from each bureau because:
1. Some creditors may report to only one or two of the bureaus.
2. It may take one bureau longer than another to update new creditor information
3. It may take one bureau longer than another to delete an old credit file
4. One, two, or even all three reports may be showing inaccurate or incomplete information
These reasons plus more can result in credit score differences. To complicate matters further for those applying for a car loan, dealers can often request an “auto enhanced” credit score that emphasizes auto loan performance. This means the score they are looking at could also be different.
Classifying credit scores
Now that we understand the basic background of credit scores it’s time to see where they fall within typical lender classifications to see what kind of auto loan an applicant might qualify for.
As an example, here is Experian’s classification system for both types of credit scores:
FICO Score: 740 plus
FICO Score: 680-739
FICO Score: 620-679
FICO Score: 550-619
FICO Score: less than 550
In this case, super prime is the best of the best, prime is excellent and near prime is fair credit.
Most applicants that qualify for a new car lease will fall into either the super prime or prime categories.
Applicants in either the subprime or deep subprime category will probably have to apply for a high-risk car loan.
As we see it
By ordering all three credit reports and at least one credit score before beginning the car shopping process, applicants will typically know beforehand which type of auto loan they’ll need to apply for.
Furthermore, if the credit score indicates that there may be problems applying for credit from a traditional lender, we want you to know that at no charge to applicants Auto Credit Express matches people that have experienced car credit difficulties with those new car dealers that can offer them their best chances for auto loan approvals.
So if you’re ready to reestablish your auto credit, you can begin now by filling out our online auto loan application.