There are a few different credit scoring models out there, but odds are, any dealership with lending partners is going to look at your FICO credit score.
FICO Score 8 vs. VantageScore
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 estimated that 90% of auto lenders use the current FICO Score 8 model when making lending decisions. 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.
Some lenders use VantageScore. Another well-known credit scoring model is called VantageScore, and it’s similar to FICO in how it considers your credit reports, 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.
Find out your credit score. There are also 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.
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 that 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.