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Credit scores for auto lending
Dear Max,
Is there such a thing as an auto inflated Beacon score through Experian? I recently leased a vehicle, but I didn't qualify for their prime leasing program because my score was too low. I just bought a house, and I know two of three of my scores were over 700. They showed me a score in the 640's and said it's different because it's auto inflated.
- JKR
Dear JKR,
You can't get a Beacon score through Experian. A Beacon score is the Fair Isaac Corporation (FICO) score calculated using information from Equifax. The FICO score calculated using Experian information is called the Experian/Fair Isaac score. When the FICO score is calculated using information from Trans Union, it’s called the Emperica score.
It’s the same Fair, Isaac risk score, but the formula has been adapted to work with the different computer systems at each of the national credit reporting agencies. The names are different for marketing reasons.
The FICO score you refer to is a “generic” credit risk score, meaning it is used in many different types of lending decisions.
I'm not sure what the lender meant by “inflated,” but there also are credit risk scores specifically designed for auto lending. It is quite possible that the auto-specific score would be different than a credit score used for general lending purposes, or credit scores designed only for mortgage lending.
Credit scoring systems all look at the same information – the details in your credit report. However, the systems look at the information slightly differently depending on the risk the score is measuring.
Those differences are usually very subtle. The things that indicate lending risk – late payments, charged-off accounts, collection accounts, maxxed-out credit card limits – are the same, no matter what credit scoring system is used. The way those issues are measured by the credit risk scoring system is just different and is based on actual results demonstrated by consumers in those specific lending situations.
For instance, credit risk score developers have told me that people are more likely to skip a car payment when things are tight than they are a house payment. As a result, a recent late payment might make a bigger difference in an auto-specific score than in a mortgage-specific score.
To find out what most impacted the credit scores you received, look at the risk factor statements provided with them. The risk factors describe what elements from your credit history most impacted the scores. Because the elements that indicate risk are the same, the risk factors will likely be very similar, if not identical.
Use those factors to change your credit behavior and the information in your credit history, and all of the credit scores calculated using your credit report will get better.
Thanks for asking.
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