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What Score Do Auto Lenders Use?

In general, auto lenders use the same credit score to determine your eligibility for an auto loan. Few borrowers are aware of this score, and it is not available to anyone other than lenders. This score is called the “FICO Auto Industry Option Score.”

The FICO Auto Industry Option Score

This score, also know as a “FICO Auto-Enhanced Score,” is built differently than you traditional credit scores. It is based largely on your past use of auto-related credit:  auto loans and leases. The main components are late payments on previous auto loans/leases, auto loans/leases included in bankruptcy filings, and any auto loans/leases that were settled for less than full value. This enables the lender to get a better picture into your debt repayment behavior specifically as it relates to vehicle finance. Again, this score is not available to consumers – only to the dealers and lenders themselves.

Which is Higher:  Regular or Auto Industry Score?

Unless you have made a complete mess of your previous auto-related credit, this score is typically higher than your commercially available credit score. The only way to improve this score is to make all of your auto loan/lease payments on time. If you are applying for your first auto loan, keep in mind that you need to make at least twelve payments to improve your score. To achieve optimal improvement in your score, you should make eighteen payments on time. If you have made a mess of your auto loans or leases in the past, you might want to ask the dealer whether they use your traditional or auto-enhanced score. If they use your traditional FICO, you might be better off, because your score will be higher, leading to lower interest rates.

A side note: all of the major credit reporting agencies offer an autocentric credit score, but they are not going to be considered when you apply for an auto loan.

About the Author

The author has many years of experience in automotive finance and insurance. However, each consumer's situation is unique. It is best to contact a finance specialist for further assistance.
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