Which Credit Score Is Used for Car Loans?

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Lenders can choose which credit score they want to use when evaluating your auto loan application. Different lenders might use different scores, and even the same lender might test several credit scores. As a result, you likely won't know exactly which credit score the lender will see when you apply for an auto loan.

What Is the Difference in Credit Scores?

While the fundamentals behind consumer credit scoring models are similar, each credit scoring model uses specific criteria to analyze one of your credit reports and generate a credit score.

Sometimes there are small, but potentially important, differences. For example, one credit scoring model might ignore paid collections accounts while another might consider a collections account a negative item even if it's been paid.

FICO® and VantageScore are the two market leaders in credit scoring, and the base scoring models they create also share some similarities.

Each model only looks at the information in one of your credit reports from Experian, Equifax or TransUnion to determine your score. A higher score is best because it indicates you are less likely to miss a loan payment.

The latest base models also have the same scoring range: 300 to 850. However, FICO® also has industry-specific scores, including scores for auto lenders, that range from 250 to 900.

What Credit Scores Do Car Lenders Use?

Although you might not know exactly which credit score an auto lender will use, the following types of credit scores are popular options:

FICO® Score 8 and 9. These are the latest generic FICO® scoring models. Although FICO® didn't create these models specifically for auto lenders, they are widely used credit scores, and auto lenders may use a base FICO® Score when reviewing auto loan applications.

FICO® Auto Scores. There are multiple versions of the industry-specific FICO® Auto Score, which is created specifically for auto lenders. The FICO® Auto Scores are based on a generic FICO® Score, and then the score is altered to better predict a person's likelihood of repaying an auto loan on time. Your history with auto loans could be especially important in determining your FICO® Auto Scores.

VantageScore® 3.0 and 4.0. These are the two latest versions of the credit scoring model created by VantageScore, a credit scoring agency founded by the three major credit bureaus (Experian, TransUnion and Equifax). According to a 2017 report from VantageScore Solutions and financial consulting firm Oliver Wyman, auto lenders used a VantageScore credit score for more than 70% of new auto loan and lease decisions from July 2016 to June 2017.

There are many minor differences between how FICO® and VantageScore use the information in your credit report and between the different scoring models from the same company. However, all these scores rely on a similar analysis of one of your credit reports. As a result, the actions that can help one score (like making on-time payments) could improve all your scores.

How Do I Check My Auto Score?

You can check your FICO® Auto Score by purchasing your credit reports and scores by enrolling in a credit monitoring product. However, there are also many ways to check your other credit scores for free.

While each score you receive will depend on the scoring model and the underlying credit report, knowing these other scores can give you a general idea of where you stand before you apply for an auto loan.

Some of the places you can look for a free credit score include:

  • Banks and credit unions
  • Credit card issuers
  • Private student loan lenders
  • Online financial product comparison sites
  • Credit and financial counseling organizations
  • Experian gives you free access to a FICO® Score 8 based on your Experian credit report
  • AnnualCreditReport.com offers one free report from each of the credit bureaus each week

Improve Your Credit Score Before Buying a Car

If you check your credit scores and think it might be best to work on your credit before taking out an auto loan, here are some suggestions for improving your credit:

  • Pay down credit card balances. Your credit utilization rate is the percentage of your revolving account (credit card) limits that you're currently using, and it's an important credit scoring factor. To figure out your utilization rate, divide your total credit card balances by your total credit limits. The lower your utilization rate, the better. If you currently have a high utilization rate (over 30%), paying down credit card balances could be a quick way to increase your credit scores.
  • Consolidate credit card debt. If you can't afford to pay down your credit card balances, you could apply for a debt consolidation loan and use the money to pay off your credit cards. Installment loans, such as personal loans, won't impact your utilization rate. As a result, transferring the debt from credit cards to a personal loan could improve your scores—as long as you don't then charge up those cards again.
  • Keep your credit cards open. Closing your credit cards, even a card you never use, will lower your available credit and increase your utilization rate. There are exceptions, though. For instance, some people may want to close their credit cards if they have trouble avoiding overspending or the card has an annual fee that doesn't seem worth paying.
  • Continue paying bills on time. Even one late payment could hurt your credit scores, and you want to make sure your recent credit history is as clean as possible before applying for a new loan.
  • Hold off on other loan applications. Applying for a new loan and taking on additional debt could hurt your credit scores. Unless you have a pressing need, such as consolidating debt, it may be best to pause new credit card or loan applications until after you buy a car.
  • Review your credit reports for errors. Double-check your three credit reports for errors that may be hurting your scores and file a dispute if you find one. The credit bureau must investigate your claim and either validate, update or delete the information.

These actions could improve all of your credit scores, which can make it easier to get approved for an auto loan with a favorable rate.

Don't Overthink Your Credit Scores

While your credit scores can be important, there are three reasons that it makes more sense to focus on general healthy credit habits rather than a specific score:

  1. Many consumer credit scoring models use similar criteria to determine your score.
  2. You don't know which scoring model an auto lender will use.
  3. If you apply for financing through a dealership, the finance office may submit your application to multiple lenders that could use different scores.

Building a positive credit history can help increase all your credit scores, and you won't need to worry about which score the lender uses.