What Credit Report Do Car Dealers Use

What Credit Score Is Needed To Buy A Car

If you’re thinking about buying that next car, you might be wondering how your current credit score can affect the process. The math is usually quite simple: A higher credit score means a lower Ithaca, Trumansburg, and Watkins Glen interest rate.

What kind of credit score;do you need to buy a car? Everyone’s financial situation is different, but Maguire Dealerships can provide some guidance for Syracuse and Baldwinsville motorists. Continue reading to learn more about credit scores and how they impact interest rates.

Do Car Dealerships Have Monthly Quotas

Yes, car dealerships also have monthly quotas that they are required to meet. If they manage to reach or exceed their targets, manufacturers will allocate more vehicles to their dealership. A more extensive inventory will provide their customers with more vehicle options to choose from, resulting in more sales.

Other Industry Credit Scores

TransUnion offers , which is tailored for auto lenders, financing companies, and dealers. The score ranges from 300 to 850 and helps predict the likelihood of 60-day delinquency within the first 24 months of a new auto loan.

The auto score isn’t the only industry-specific score FICO sells to businesses. The company also sells a mortgage score, a medication adherence score, insurance risk score, a bankruptcy score, and even a predictive score for how much revenue your loan might generate. Lenders may use any of these scores to help decide whether to approve your loan application.

You May Like: When Do Things Disappear From Credit Report

Whats A Typical Down Payment Amount

Your down payment is generally a percentage of the cars purchase price, and can be accepted all or in part as cash, a vehicle trade-in or an automaker rebate.

Depending on the lender, your credit health and the vehicle, you might be able to get approved for an auto loan with a low down payment or no down payment at all. But as a general rule of thumb, a 20% down payment is a good target if youre buying a new car.

A new vehicle typically depreciates quickly, and can lose around 20% of its value within the first year. A large down payment can help you avoid becoming upside down on your loan, meaning you owe the lender more money than the car is currently worth. Used cars depreciate more slowly, so a smaller down payment of 10% or more might make more sense.

Depreciation aside, there are a few other benefits to making a larger down payment.

• Taking out a smaller loan amount could make getting approved for a loan easier, especially if you have bad credit.
• Your monthly payments will be lower.
• You might get approved for a loan with a lower interest rate.
• You could wind up paying less interest overall because youre borrowing less money.

What Goes Into A Credit Score

The most widely recognized credit score, the FICO score, is produced by the Fair Isaac Corp. There are other scores available, but FICO scores are used in 90 percent of the lending decisions in the U.S., so it’s important to know how they’re compiled.

Base FICO scores range from 300 to 850, with higher numbers indicating better creditworthiness. The exact components that make up the score are proprietary, with more than 30 factors taken into account, but these are generally grouped into five major categories:

This is a big one, accounting for 35 percent of the total score. When a consumer misses payments or is consistently late, it sends up a major red flag to lenders. They want to know you’re going to pay them back for your car.

Recommended Reading: Does Applying For A Loan Hurt Your Credit Score

Do You Need Credit To Buy A Car With Cash

• Cash Improves Your Buying Options;

Are you thinking about paying for your next car with cash? Congratulations! Having the financial wherewithal to buy a car outright gives you a real advantage. It can save you money on loan interest, simplify your purchase and pave the way to a payment-free ownership experience.

Here’s an added benefit: Typically, you don’t need credit to buy a car with cash. That said, a dealership may try to run your credit score and report, even as part of a cash transaction. Read on to learn why you should probably resistand to find out whether buying a car entirely with cash is a good idea in the first place.

Your Credit Score May Vary Depending On The Scoring Model

Car buyers sometimes notice that the FICO credit score pulled by the dealership differs from the three-digit score they recieved from the credit monitoring service that they use.

Since FICO uses a proprietary formula to calculate a persons credit score, it may differ slightly from the scores determined by other credit monitoring services. The variance in score is typically very slight, and tracking your credit is still a great habit to improve our score and to make sure you catch and report any identity theft attempts.

Don’t Miss: How To Help Credit Score

Will I Be Able To Buy A Car Even If I Have Bad Credit

It will be a little more difficult, but not impossible. To get approved with a favorable interest rate, you should actively try to improve your credit score. Start by paying off as much debt as possible, and make sure youre caught up on all of your bills. If you need a car right away and dont have time to work on improving your score, theres always the option of cosigning . Once you get approved, keeping up with the monthly payments will quickly boost your credit score.

Why Are Data Analytics Important

As a car dealership, data analytics will help you to:

• Identify the best prospects at the right time
• Create a community of loyal clients
• Increase your ROI
• Promote efficiency
• Gain an edge in online marketing

If youre looking to improve your daily sales performance and exceed the monthly targets you set, well be more than happy to help. At Automated Metrics, you can try out our product for 30 days without any contracts or credit cards required. For more information and to see our demo, log on to our website now!

If you have any questions, feel free to contact us on 02890 538252 or via .

Read Also: Can You Check Your Credit Score Without Affecting It

Different Auto Lenders Use Different Credit Scores

In the world of credit, you arent the primary customer that credit bureaus and credit score creators are trying to win over. Rather its the lenders, credit card issuers, and other companies who are the industrys target market. Each lender decides which credit products it will purchase and use to evaluate new loan applications.

Lenders can choose between many different credit scores. In fact, the sheer number of credit report and score combinations makes it impossible to predict which credit score a lender will check when you apply for an auto loan.

The Possibilities:

• Three primary credit reports: Equifax, TransUnion, and Experian
• Hundreds of credit scores: FICO®, VantageScore, and numerous versions of each brand

Despite the many possibilities, when you apply for an auto loan, a lender is likely to use one version of the following: FICO Auto Scores, FICO Scores, or VantageScore credit scores.

1. FICO auto score

In many ways, FICO Auto Scores predict risk like traditional FICO scoring models. But these industry-specific scores focus more on how likely you are to repay an auto loan late.

For example, late payments on past auto loans could damage your FICO auto score more than other derogatory items.

Instead of the traditional 300-850 , FICO Auto Scores feature a scale of 250-900.

Lenders use multiple versions of the FICO Auto Score.

2. FICO score

3. VantageScore

Car Recommendations For Recent College Graduates

Because of all of the options out there, Autotrader wanted to identify some cars that fit both the lifestyle and average budget of recent college grads. This should help make the process of buying a car less complicated and intimidating.

They picked nine vehicles based on affordability, fuel economy, practicality and style. The options include both new and certified pre-owned vehicles. Here are the nine models, in no particular order, that Autotrader thinks recent college grads should consider.

*All MSRPs include destination charges.

• 2017 Chevrolet Cruze – Starting MSRP: $17,850
• 2017 Ford Focus ST – Starting MSRP: $25,650
• 2017 Honda HR-V – Starting MSRP: $20,405
• 2017 Jeep Renegade – Starting MSRP: $19,090
• 2017 Subaru Impreza – Starting MSRP: $19,215
• 2017 Toyota Prius – Starting MSRP: $24,360
• 2015-2016 CPO Acura TLX – KBB Fair Market Range: $20,427-$25,650
• 2016 CPO Hyundai Tucson – KBB Fair Market Range: $16,925-$19,900
• 2014-2016 CPO MINI Cooper – KBB Fair Market Range: $17,769-$20,128

For those dealing with tighter budgets, it isn’t a bad idea to explore some recent model used versions of these vehicles.

You May Like: What Does Bankruptcy Petition Mean On Credit Report

How Much Of Your Paycheck Should Go Towards Your Car Payment

If you dont want to worry about eating out or going to see that movie that caught your eye, and you also want to put away money to make an investment, many experts recommend only 10%.

Thats right. Only 10%.

Now, for most Americans, thats not a lot to spend on a car at all, but its a safe amount. Consider that the average income in the U.S. is only $52,000 a year, and it becomes apparent people need to be more frugal especially in this economy.

I’m Paying Cash So Why Is The Dealer Asking To Pull My Credit Report

Federal consumer protection and national security laws require that dealers verify the identity of buyers, according to Bradley Miller, associate director of legal and regulatory affairs for the National Automobile Dealers Association . The Patriot Act has requirements meant to counteract terrorists who might use car buying to launder money. Other federal regulations, known as Red Flag Rules require dealerships to protect against identity theft. Pulling a credit report is a quick way to verify that the person presenting himself as a buyer isn’t actually trying to steal someone else’s identity.

In a legal sense, a dealer only needs a “permissible purpose” to access a person’s credit, Miller says, and there are a number of such instances. Usually, it occurs when a consumer wants to take advantage of low-interest financing via the dealership. But it would also be permissible, for example, for a dealer to ask for a credit report before accepting a personal check from a customer. It may be the dealership’s only hedge against taking a bad check when sales take place on evenings or weekends. That’s when banks are closed, and it’s difficult to verify that the funds are available.

Also Check: How To Check Credit Rating

Whats The Ideal Credit Score For A Car Loan

Auto-loan lenders look for a borrower with a credit score in the mid-600s in Canada. A credit score between 630 and 650 is generally what lenders want to see.With this, there is some leeway around your credit score requirements when looking to obtain a car loan. Dependent on your lender or bank, sometimes they will be stricter and look for higher credit scores. At the same time, alternative lenders are often willing to accept lower credit scores. Some dealerships can also help borrowers find financing to meet their specific credit needs.

If your credit score is below 630, dont stress! You can still obtain a car loan. When youre shopping around, its important to keep your mind open to the idea your loan may cost a little more. It can take some time to find a lender that will work your low score. Find out more on obtaining a loan with bad credit here.;

You May Like: How To Find Car Keys

Beware Of Buy Here Pay Here Financing

If youre searching for car loans without credit checks, its likely youll come across buy here, pay here dealerships in your research. These dealerships are generally aimed toward those with bad credit or no credit history. They work by making loans in-house to customers who may not be easily approved through traditional financing options, but theyll often charge sky-high interest rates in exchange for their services. Its not uncommon for these dealerships to charge 20% APRs or higher, though the maximums vary by state. By comparison, we found credit union rates as low as 2.14%, albeit for those with significant credit.

You May Like: How To Remove Items From Credit Report After 7 Years

E The Psychology Of The Sales Tally Board

Dealers display the tally board or point out your salesperson’s totals to condition you to buy. They want you to think that they are giving good deals because they are selling so many cars.

Here’s some lies and half truths they will use to play games with you:

• “These cars are flying off the lot like hot cakes, we have no reason to lower our price. We can get top prices because everyone wants this car right now.”
• “Jeff, this deal is only good today. Tomorrow I won’t be as generous. You’re stealing all my profits. When you come back tomorrow, I can’t promise you’ll get this excellent price. 3 other buyers are looking to buy this car.”
• “You’re not going to find a cheaper price anywhere else…”
• “If you don’t purchase these options, I won’t get paid”
• “If we don’t beat the competitor’s price we’ll give you $500!” The problem is that you won’t be able to get “proper paperwork” from another dealer.
• “Sure, we have that exact car you’re looking for, come on down!” Then when you arrive the car has disappeared but they have a more expensive one.
• While you are in the office the salesman talks to another “customer” interested in the same exact car. Of course, the same is there is no other customer.

C Wrap Up The Negotiation With The Salesman Quickly

Try to complete the negotiation in a half hour. Much longer than that and it isn’t worth the salesperson’s time to give you the best deal since they will end up with as little as $50 commission. Set your “deal timer” for 30 minutes. Tell them if the deal isn’t agreed upon when it goes off you will leave.

Don’t Miss: How To Get Transunion Credit Report

Can I Buy A Car With Poor Credit History

When your credit score looks less than stellar, it can result in a high interest, bad credit car loan. It may also put you in double-trouble requiring you to go to a bad credit car dealership one of the so-called buy here, pay here outlets, or those that act as dealers and lend you the money at high interest rates.

Theres no getting around it: A bad credit score and a poor credit history can add up to trouble when shopping for a new or used car. What is a good and bad credit score? Lets take a look.

How To Tell How Long A Car Has Been On The Dealer’s Lot

Dealers are often motivated to sell the cars that are sitting on their lot the longest. They are paying costs to carry the inventory and the longer a car is on the lot, the more it costs them. How can you tell which cars are there the longest? It is as easy as locating the manufacturers sticker that is located on the drivers door or door jamb. The date of manufacture is given in a month/year format in the upper left side of the sticker. This will give you a rough idea about how long the car has been there since cars are shipped shortly after they come off the assembly line.

The date of manufacture sticker can be used in other ways as well. If the dealer has multiple identical cars on the lot and they wonât give you a better price on the oldest one, then certainly you would want to select the newest car on the lot, the one that has been sitting around shortest amount of time. If you going to pay the same amount, why wouldnât you want the newest one?

Remember, the manufactured date only gives you a rough idea, not an exact date. It only contains the month and year. The vehicle can be manufactured any day within that month. You also need to account for shipping. This may vary greatly between manufactures and where and how the vehicle was shipped .

General Motors Manufacturers Date Sticker

Ford Manufacturers Date Sticker

Also Check: What Does Filing For Bankruptcy Do To Your Credit Score

What Credit Bureau Do Car Dealers Use

The credit bureau that car dealerships use is called FICO. FICO is an abbreviation that stands for the Fair Isaac Corporation. This is also the reason they use the FICO Auto Credit Score.

Hopefully, these questions help make it easier for you to understand the impact that your credit score has the next time you buy a car. ;If you want further clarification or answers to questions like What credit report do car dealers use?, Do you need good credit to buy a car?, or How do I raise my credit score? so you can buy the car or the home of your dreams, we have plenty of great resources here on colormycredit.com. Check out the Color My Credit method at the top to get started.