There are a few different credit scoring models out there, including big names in the game such as FICO and VantageScore. But which credit score do car dealers use when you're trying to get financing? Odds are, any dealership with lending partners is going to look at your FICO credit score, but they may look specifically at your FICO Auto score. This differs slightly from your general FICO score.
FICO Score vs. VantageScore: What's the Difference?
There are many credit scoring models to choose from when a lender is looking at your credit. The two most heavily used are FICO and VantageScore. Here's the difference between the two credit scoring models.
The FICO Credit Score
Your FICO score is a three-digit number between 300 and 850, based on information gathered by the credit bureaus into your credit report. The FICO credit scoring model is the most commonly used credit scoring model by auto lenders and car dealerships and is also the oldest and first-ever credit scoring model. It’s likely that most auto lenders use the current FICO Score 10 model when making lending decisions since it's the latest version of the FICO system.
Until recently FICO 8 was the go-to scoring model for lenders to look at. Given its history and tried-and-true model in generating credit scores based on credit reports, it’s widely used and key in most auto lending decisions.
When it comes to what FICO score car dealers use, auto lenders most specifically may also use your FICO Auto score, which ranges from 250 to 900, and shows your history of auto loans in particular.
Another well-known credit scoring model is called VantageScore, and it’s similar to FICO in how it considers your credit reports and uses the same 300 to 850 range, but isn’t as widely used by dealerships. It’s important to remember that all three credit bureaus may have different information on them. Depending on where you get your credit score, and where the information is coming from, you may see three different credit scores at any given time, based on the information in your credit reports.
How to Check Your Credit Score
There are three different major credit bureaus: TransUnion, Equifax, and Experian. Depending on what’s on these individual reports, they could all generate a different score. VantageScore typically only uses TransUnion and Equifax. The FICO score may use TransUnion, Equifax, or Experian. If you want to see the credit score that an auto lender or car dealership is going to see, then it’s recommended to specifically find out your FICO credit score.
And if you want to see what lenders see when they pull your credit reports, request them and comb through all three to learn where you stand.
Normally, you’re allowed to view your credit reports for free once every 12 months, but the pandemic created the need for consumers to track their credit reports during the economic downturn, so now everyone has free weekly access. You can visit AnnualCreditReport.com to request yours for free.
How Credit Scores Work
Credit scores work by assigning a cumulative number to you based on how you handle credit. there are five factors that impact your credit score:
- Payment History - 35%
- Credit Utilization - 30%
- Length of Credit History - 15%
- Credit Mix - 10%
- New Credit - 10%
Each of these factors is assigned a weight and how you score in different areas impacts your credit differently. Typically FICO scores and VantageScore ranges run from 350 to 800 for general purposes. The higher your credit score, the better able you are to take on new debts and lines of credit.
People with higher credit scores tend to be more financially stable than those with lower scores since trouble paying off debts is one factor that can severely bring down your score.
How to Improve Your Credit Score
In order to improve your credit score you have to take steps to ensure all your bills on paid on time and in full. Also using around 30% or less of your available credit will help you maintain a lower credit utilization, which is a large part of your score.
Responsibly taking on and managing new credit can also help, along with having different types of credit such as credit cards, and loans. Some steps to improve your credit score include:
- Paying down your credit card balances
- Consolidating credit cards
- Keeping credit cards open
- Paying bills on time
- Don't take on too much new credit
- Check your credit reports for errors
- Become an authorized user on someone's credit card
- Boost your credit score by reporting recurring payments
Poor Credit Score and Car Loans
Your credit score is a benchmark in qualifying for vehicle financing. Auto lenders use it to gauge your creditworthiness, which is your ability to successfully repay borrowed money on time.
If you know your FICO credit score, and it’s below 670, you may need to seek out a special finance dealership for a higher chance of qualifying for a car loan. Borrowers with credit scores in that range and lower are typically considered bad credit borrowers. Most traditional auto lenders, such as banks and credit unions, often require a higher credit score to qualify.
Special finance dealerships do check your credit score, but they’re signed up with subprime lenders who are able to assist in many unique credit circumstances. If you have a history of bad credit, no credit history, or have even gone through bankruptcy, a subprime lender may be the answer to your auto loan woes.
What Credit Score Is Used to Buy a Car FAQs
- What FICO score is used by car dealers? Auto lenders use your FICO Auto Score, which is impacted more greatly if you have a history of vehicle loans on your credit reports. This specifically shows lenders how you have handled car loans in the past and helps them decide if it is worth their while to lend to you. The basic FICO and auto loan FICO scores use different credit scoring models. The base FICO score ranges from 300 to 850 normally, but FICO auto scores range from 250 to 900.
- What score do most car dealers use? Most lenders use FICO as their base scoring model when they're looking at your credit reports. FICO is the most widely used credit scoring system.
- Do car dealerships use a FICO 8 or 2 scoring model? The most current FICO credit scoring model available is FICO 10. This suite of credit scoring information is designed to give lenders the most complete look at your credit scores and history. However, FICO 8 had been the most widely used until recently.
- When Are Credit Scores Updated? Typically credit scores are updated at least once a month, but they have the potential to change anytime a creditor makes a report to the bureau, so your credit score could update multiple times a month if you have a lot of financial products in use.