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Which Credit Report Do Car Dealers Use

Length Of Credit History

What Credit Score Do Car Dealers Use?

Have you been a borrower for long time? A lengthy track record of responsible credit use is good for your credit rating, which is obviously much more difficult to gain when you’re in your early twenties. This explains why oldergenerations typically have the best credit scores. The frequency with which you use your cards also plays a role, so if you have a credit card, use it a little bit to show that you can manage your debt responsibly.

Most Lending Institutions Require At Least A 600 Credit Score To Approve An Auto Loan Without A Downpayment

However, it is possible to purchase a vehicle with a score a score as low as 400. There are a lot of factors that determine your loan eligibility and what interest rate you are eligible for. These factors include:

  • Are you paying money up-front. How much is the downpayment?
  • Have you had past auto loans and did you pay them well?
  • How much of a percieved risk is the bank taking to extend you this loan?

Regular Credit Score Vs Auto Credit Score

Your regular credit score, commonly known as your base credit score, is a general credit score that takes into account any type of credit account that you have when evaluating your risk as a borrower. On the other hand, your auto credit score measures your creditworthiness as it specifically pertains to auto loans. Again, although your regular credit score assigns you a credit score on a range of 300 to 850, an auto credit score assigns you a credit score on a range of 250 to 900.

The auto credit score was specifically designed to better predict the likelihood that a person will repay his or her car loan on time. Many experts believe that your auto credit score places a lot of weight on your history of handling auto loans. So, if you have a good history of repaying auto/car loans on time, you should have a good auto credit score.

Although auto credit scoring models do not disclose the factors they look at, here is a list of things that could have a large impact on your credit score:

  • Payment history on auto loans
  • Previous late payments on auto loans
  • Previous vehicle repossession
  • Whether youre like to file bankruptcy
  • Length of credit history

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Our Tips To Help You Avoid Complications When Paying Cash

Don’t pay with cold hard cash. Just use a single cashier’s check over $10,000 if possible. This avoids the requirement for the dealer to fill out Form 8300, now there’s no reason for them to ask you to fill out a credit application or ask for your Social Security number.

If they try to force you to fill out a credit application against your will, simply leave, you don’t have to buy the car from them, you can find a less aggressive dealer who will sell you a car without forcing you to fill out a credit application.

If you do decide to fill out the credit application, then somewhere near your signature write down on the paperwork that you are not applying for financing, and they don’t have your permission to pull your credit report. If they squawk about it, then you know they were gaming you all along.

For review, remember that car dealers are subject to some strict regulations but they are only required to check your name against the government’s list of blocked people. This requirement does not involve them making you fill out a credit application, it only involves comparing your name to a bunch of bad guy’s names and that’s it.

As we have shown you above, any other reasoning they give you is just a scam and you should call them on it. What have you seen when you were shopping for a new car? Let us know.

Dealers Are Required To Bounce Your Name Off The Ofac Sdn List

While receiving a #badcredit score does not reflect on ...

This all sounds like a brand soup of complications but we’ll educate you on this real fast it’s quite easy. The Office of Foreign Assets Control is a division of the US Department of the Treasury, and they administer and enforce economic and trade sanctions against certain foreign countries and regimes, terrorists, drug traffickers, people involved with weapons of mass destruction, and other threats to United States.

The OFAC publishes on their site a frequently updated list currently over 1000 pages long of these banned people and groups called the Specially Designated Nationals and Blocked Persons List everyone calls it the “SDN.” You remember how Santa Claus is making a list and checking it twice? Don’t forget Santa maintains a list of who has been naughty, and what a coincidence, so does the OFAC with their SDN list.

Their very long and extensive SDN list contains all the folks around the world who have been naughty and so we are not allowed to do business with them. Businesses such as car dealers are required to bounce your name off the OFAC SDN list and make sure you are not a terrorist, or some other person banned from doing business.

The penalty for non-compliance of the OFACs SDN list is huge, and the OFAC fines numerous entities every month. Here is a sample of their SDN list below:

OFAC Specially Designated Nationals list of blocked persons

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Can I Still Get An Auto Loan With Bad Credit

Yes, credit is a major factor in getting an auto loan, but you should also keep in mind that most dealers really want to sell you a car. They’re often willing to work with you in order to do so. Nerdwallet points out that, “…at the end of 2017, the average credit score for a new-car loan was 713, and 656 for a used-car loan, according to an Experian report. But nearly 20% of car loans go to borrowers with credit scores below 600, according to Experian. Almost 4% go to those with scores below 500.”

While you’ll likely be able to get a vehicle loan with less-than-stellar credit, it might have a pretty significant impact on the maximum loan amount, the loan term, or annual percentage rate that you receive. So the worse your credit is, the higher the rate, longer the monthly payment schedule might be, and the less money you might be able to borrow towards your new vehicle.

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 its below 660, 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 theyre 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.

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What Credit Score Is Used When Buying A Car

Different car lenders check different credit scores, so you won’t know for sure which one they will look at when determining your auto loan application. Your best bet, however, would be to check something called an industry-specific score.

FICO provides industry-specific scores that consumers can refer to when making certain purchases like a car or home. Just like a standard credit score, your industry-specific score helps determine future loan terms and interest rates.

The FICO Auto Score considers your usual credit behaviors but puts more emphasis on how you’ve managed auto loan payments in the past. It considers things like: have you consistently made your loan payments, and on time? FICO Auto Scores range from 250 to 900 and have several versions, including FICO Auto Scores 2, 4, 5 and 8. The easiest way to check all four FICO Auto Scores at the same time is through FICO’s credit monitoring service.

Knowing your auto-related credit score can be useful when financing a car, since it can affect your loan terms and rates. Any increase in your interest rate can lead to a higher monthly payment and paying thousands of dollars more over the course of a loan.

Check For Errors On Your Credit Report

Car Dealers DON’T CARE about your Karma Score – Here’s what score they look at and why!

Its currently estimated that one in five Americans has an error on his or her credit report. Thats roughly 42 million people possibly suffering from bad credit who shouldnt be.

If you do see an error, dont delay. Begin acting immediately to get it corrected. Contact the agency by writing and dispute the error. If you can, provide any evidence to support your argument. Do not email or call. It needs to be done through writing.

After they receive your letter, they have thirty days to review your case. If they dont do so within this time frame, the item must be removed from your credit report. You should also receive an updated copy of your report and score. By getting negative items removed, it should improve your credit score.

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Dealers Don’t Need Your Social Security Number To Check Ofac List

All they need is a name, not a number. As we showed you above, if you are paying cash and the car dealer checks your name against the OFAC list, you can easily see they don’t need your Social Security number, so this is why I say it’s bogus when they force you to fill out a credit application when you pay cash.

Other unscrupulous dealers lie and say the “Patriot Act requires you to fill out a credit application”, which is just a flat out lie. Also the OFAC requirements were in place years before the Patriot Act. Ever since the early 2000’s we here at CarBuyingTips.com have received complaints from car buyers telling us the dealer told them it is required by the Patriot Act when they pay cash.

We warned about this scam in a previous article called Patriot Act Car Dealer Financing Scam.

In that article we advised you how to get a downloadable copy of the Patriot Act and how to search it and there of course is nothing in that PDF file referring to car dealers and credit applications. It’s just a lie some of them like to make up because it sounds believable to most people.

We suspect that some of these morally challenged salespeople are just trying to trick car buyers into financing through the dealer and earn a little more profit and commission, or running an unnecessary credit check on cash buyers to sway them into car financing instead of paying cash. Don’t let this happen to you.

Go To A Dealer That Specializes In Buyers With Poor Credit

If you cannot qualify for a loan at a traditional dealership, you may be able to get financing from one that specializes in buyers with poor credit. Typically advertised as buy here, pay here dealerships, they offer in-house financing for used vehicles.

However, these dealers tend to charge very high interest rates to offset the risk of lending to borrowers with lower scores. As of 2020, the average interest rate offered by independent dealers to deep subprime borrowers was 21.31%.

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Fico Score 8 Vs Vantagescore

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. Its 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, its widely used and key in most auto lending decisions.

Another well-known credit scoring model is called VantageScore, and its similar to FICO in how it considers your credit reports, but isnt as widely used by dealerships. Its 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.

There are also three different major credit bureaus: TransUnion, Equifax, and Experian. Depending on whats 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 its 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.

What Credit Scores Do Car Dealers Use

What Credit Score Do Car Dealers Use?

It’s no secret that the overwhelming majority of auto lending decisions are based on FICO Scores. However, not as well understood is that most auto lenders pull FICO Auto Scores, an industry-specific version of the FICO Score tailored to be a better predictor of paying your auto loan on time. Similar to the broad-based FICO Scores, a history of paying as agreed, using available credit wisely, and only applying for credit when needed will typically result in a higher FICO Auto Score.

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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.

Some Dealerships Check Credit Illegally

The vast majority of salespeople will move on quickly when you don’t agree to a credit check, opting instead for other add-ons, such as upgraded floor mats, useless undercoating, and extended warranties. But some will do an illegal credit check anyway against your wishes. Believe it or not, providing your driver license for a test drive can provide all the information necessary to run your credit. No you don’t need to provide a Social Security Number for someone to run your credit.

While you are out for that test drive, someone at the dealership could be working the numbers in order to find out how to undercut the financing you already received.

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Contact North Coast Auto Mall Of Bedford For Financing Today

At our dealership in Bedford, weve helped hundreds of drivers get approved with bad credit. North Coast Auto Mall believes that even if you have a poor credit score, you can find the car of your dream. Reach out to our team online or by phone to discuss your personalized credit history and to explore your financing and used car options. Our team of finance professionals understand what a new car means, and well be happy to help you answer your questions and feel confident in your next purchase.

Fico Auto Scores Vs Other Fico Scores

Sub-Prime Auto Financing: How Dealers Use Credit to Scam Customers

The most significant difference between your FICO® Auto Scores and base scores is in how your credit history is weighted. Base FICO® scores take into account your overall credit information as laid out in your credit reports, including your credit card debt, payment history, student loans, etc.

The FICO® Auto Score model also takes these elements into consideration, but assigns more weight to auto-loan-specific risk behavior.

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What Credit Score Do Car Dealers Use The Balance

If you’re a savvy auto loan shopper, you know to check your credit score before walking into the dealership. Your credit score is a 3-digit number that lenders use to estimate how likely you are to repay debt, such as an auto loan or home mortgage. A higher score makes it easier to qualify for a loan and can result in a better interest rate.

What If I Dont Want To Pay For My Fico Auto Scores

You can monitor your TransUnion auto insurance score for free on Credit Karma, along with your free credit reports and VantageScore 3.0 scores from TransUnion and Equifax. Just remember that your auto insurance scores are not the same as your credit scores, and a lender may not use your auto insurance scores.

Even if you cant see your exact FICO® Auto Scores, reviewing your credit reports means having access to your auto loan history and can help you determine what you can do to improve your credit.

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Re: Looking For Car Loan That Only Pulls Experian

If you are cleaning up your reports because fraud, wouldn’t it be best to wait until those are off your report before financing a 40k car? At your current scores, it’s not going to be pretty.

Best bet is to find a credit union that pulls Experian. If you have an Amex, this might be a good resource:

The larger credit card companies can vary their pulls upon state, so it is a best guess approach. Credit unions are generally smaller, so it is more likely they MIGHT only use a particular bureau.

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