If you have been denied credit in the past it helps to understand the FICO reason codes to better prepare yourself for financing a bad credit car
Know before you begin
If you have previously been turned down for credit and need one of those no credit auto loans offered by bad credit lenders, you might want to keep reading.
Many of us here at Auto Credit Express have been working in bad credit auto sales for the past two decades. We've helped hundreds of buyers get approved auto loans.
We also show them how to avoid a tote the note dealer (applicants outside our retail areas can fill out our online auto loans application to find the right dealer near them) while teaching them about the loan process (to prevent repossession).
FICO reason codes
As part of the recently enacted financial reform bill, any lender that sends you a risk-based pricing notice (whether you're approved or turned down) has to include, according to FICO, "The key factors or reason codes that adversely affected the credit score, with a requirement to disclose five 'reason codes' any time inquiries are a 'key factor' that adversely affected the score."
These reason codes will either explain why you were turned down for credit, or why you didn't qualify for the best interest rates offered by the lender.
FICO has created 40 reason codes, although not all three credit bureaus use all 40 codes. The following list includes all the reasons with the corresponding code number for Equifax listed first, TransUnion second and Experian third. If a bureau doesn't use that particular reason, an “N/A” will be shown for that bureau.
Amount owed on accounts is too high – 1,1,1
Level of delinquency on accounts – 2,2,2
Too few bank revolving accounts - 3,N/A,3
Too many bank or national revolving accounts – 4,N/A, 4
Too many accounts with balances – 5,5,5
Too many consumer finance company accounts – 6,6,6
Account payment history is too new to rate- 7,7,7
Too many recent inquiries last 12 months – 8,8,8
Too many accounts recently opened – 9,9,9
Proportion of balances to credit limits is too high on bank revolving or other revolving accounts – 10,10,10
Amount owed on revolving accounts is too high – 11,11,11
Length of time revolving accounts have been established – 12,12,12
Time since delinquency is too recent or unknown – 13,13,13
Length of time accounts have been established – 14,14,14
Lack of recent bank revolving information – 15,15,15
Lack of recent revolving account information – 16,16,16
No recent non-mortgage balance information – 17,17,17
Number of accounts with delinquency – 18,18,18
Date of last inquiry too recent – N/A, 19, N/A
Too few accounts currently paid as agreed – 19,27,19
Length of time since derogatory public record or collection is too short – 20,20,20 Amount past due on accounts – 21,21,21
Serious delinquency, derogatory public record or collection filed – 22,22,22
Number of bank or national revolving accounts with balances - 23,N/A, 23
No recent revolving balances – 24,24,24
Number of revolving accounts – 26,N/A,26
Number of established accounts – 28,28,28
No recent bankcard balances – N/A,29,29
Time since most recent account opening too short – 30,30,30
Too few accounts with recent payment information – 31,N/A,31
Lack of recent installment loan information – 32,4,32
Proportion of loan balances to loan amounts is too high – 33,3,33
Amount owed on delinquent accounts – 34,31,34
Serious delinquency and public record or collection filed – 38,38,38
Serious delinquency – 39,39,39
Derogatory public record or collection filed – 40,40,40
Finding the right dealer
Just because you've been turned down for a conventional car loan or other type of credit because of one or more of the above reasons doesn't mean you have to visit a tote the note dealer.
At Auto Credit Express we specialize in placing customers with bad credit with dealers that are experienced and work with a variety of lenders to ensure your best chance at getting approved for a second chance auto loan.
So if you are serious about getting your car credit back on track you can begin now by filling out our problem credit auto loan application.