Are you ready to buy a new car.
You've done all your homework.
you know your three FICO credit scores.
you determine that your highest FICO credit score is from Equifax (also known as your BEACON score).
So you find a car dealer who uses your highest score (which increases your chances of getting approved at a good pace).
You get the dealer and ignore all vendors by going directly to the office of the CFO.
but as the financial director reviews your credit report in front of you ... you can not help but think something is wrong.
Yes ... the dealer says your Equifax / BEACON score isn 't high enough for their lowest interest rates.
How can it be? You just checked your FICO credit scores by http://www.myfico.com/12 last few hours. It is possible - although unlikely - the information on your credit report has changed and that your scores have decreased since you last checked. Remember, your credit scores are dynamic and change whenever information on your credit reports changes.
Your credit reports can change several times a month as new information is added or updated by your lenders. But more than likely, your scores would not change in this situation (especially if there were only a few hours between when you checked your scores and when the dealership reviewed your credit reports).
So if your credit reports did not change, why the CFO is to watch your scores with a face daunting?
auto dealers can use "Different" FICO scores than those you see
car dealer is probably using what is known as the FICO score option to auto industry instead of a traditional FICO credit score. You see, car dealers not only get to select the credit reporting agency they receive FICO credit scores ... they also get to decide if they will use a traditional FICO credit score or a variation a FICO score called an Option automotive industry.
What is the difference between these two types of scores?
Not much to most people ... but there is enough variation to make the majority of auto lenders use the score of the option of the auto industry. The real difference between the two scores is the score of the automotive option gives much more attention to the way you have handled previous auto credit
-.? Have you made late payments on current or previous auto loan or lease
- Have you ever settled an auto loan or lease for less than you had
- Have you had a car repossessed
- Have you had an auto account sent to collections
- Did you include your car loan or lease in your bankruptcy?
These actions will affect your Option automotive score more they affect your traditional FICO score. Bottom line, if you have perfectly handled your previous auto credit, you should have a FICO auto industry high score option -. which is a good thing
But if you've had a few bumps in the auto credit road in the past? You guessed it ... your Auto Industry Option score will be lower. You'll be seen as a greater credit risk and the auto lender may either deny you or use your lower score to justify charging you a higher interest rate.
You see, auto lenders are different than other types of lenders. And I do not talk about their slimy ways, leisure suits, short ties, manly hairy chests, or gold bling.
Many other lenders look at your whole credit picture to determine whether or not to give you a loan. But many auto lenders care about only one thing ... how you handled your past AUTO credit. That's what a FICO Industry Option Score automotive gives car dealers - a way to identify how you handled what matters to them most
So even if all the stays on your credit report went to the toilet after. your bankruptcy, if you did not include your auto loan in your bankruptcy and has never defaulted or missed a car payment, your scores will probably automotive industry better than your traditional FICO scores!
Which former Director Finance Auto Revealed to me
I recently spoke with a former CFO, and this is what she told me ...
"so many people have helped, I could not believe their scores were so high with the FICO score Option auto Industry. they understood all their credit card debt and loan . mortgage in their bankruptcy, but they reaffirmed their auto loan which is the auto score is that it really helps the auto lender concentrate on what's important. - how the customer handles his / her auto loans
by our dealership having the auto enhanced FICO, it helped 30% or more of our customers get better rates "[
I do not think I'll say, but I think I may actually have found something good to say about car dealers! Well, some of them, anyway ...
As you can see, the FICO auto scores can work in your favor, if used correctly.
OK, I would not only be able to live with myself if I only said good things about car dealers.
Thus, in the interest of fair and balanced information, here's how to protect yourself against slimy car dealers that can use your FICO Auto Industry Option
mark against you ...
A Dirty Trick Car dealers can play with your FICO scores
imagine your score Equifax / Beacon FICO is 585. Not too good. With a low score, if you do get approved for a car loan, you'll probably end up with a higher interest rate and higher monthly payment.
So you go to a dealership and talk with the director of finance and tell him your Equifax FICO score is 585. The finance director then reviews your FICO score Option Auto Industry. And, without your knowledge, this score is actually higher than the Equifax / Beacon FICO score you pulled.
With this higher score, you have approved at a better rate ... right?
Not necessarily!
Here's what unscrupulous car dealers can do. They will not tell you that your auto score is higher than your traditional score!
They understand that they have a sucker sitting in front of them. So they will try you financed at a higher rate based on the lower FICO score (thus making more profit for themselves).
How Some car dealers "Playing the spread" to make you pay more
Now check this out ...
It is possible that a car dealership has the ability to pull your traditional FICO scores and FICO auto scores. This means they have six scores on you. There is a guarantee that some of these scores will be higher than the other. So who will they use when trying to get you financed?
It depends.
Are you familiar with the term "distribution"? It is how car dealers make money when they finance you. If they can quote you a higher interest rate than you deserve - and they stand to make a good chunk of change to the bank you finance
The only way to make a killer "spread" is to do. you think you have lower scores.
So what can you do?
do not despair ... I can help you.
How to Use Your FICO scores to your advantage when buying a car
Fortunately, you should not fall for their dirty tricks. Now that you know all about FICO Auto Industry Option scores, you can protect yourself. Here's what I suggest ...
1. When you enter the office of the Director of Finance, do not tell him what your FICO scores are. Wait until he reviews the scores himself. Then ask him what your scores are.
2. If the scores he reviewed are higher than you, say nothing and just go by his scores.
3. However, if your scores are higher, then remove them and show. If he has a choice in the type of scores he can use, there is a possibility that it will be able to use your high score. And he will know that he did not fool him sitting in front of him. He can not take advantage of you!
How do you find what your FICO scores options automotive industry are before you walk into a car dealership?
You can not.
Sorry. They are not for sale - at any price. Only lenders have access.
FICO would like to sell them ... but there's just not enough demand. I mean seriously, until you read this article, have you ever heard of the FICO score Option automotive industry?
Exactly.
Remember, we were just given access to purchase all three of our traditional FICO credit scores, June 11, 03, at 08:00 (I actually got misty that day ... the geek I am.)
only a very small percentage of the population even knows they have three FICO credit scores ... let alone three auto industry Option scores.
So how can you use this information to help you get your next new car financed at the best rate of interest
1. First, get your three credit reports. If you handled your previous auto credit well - your FICO scores options automotive industry will be higher than your traditional FICO scores. So expect more of the lender.
2. You can also ask the lender to show you their tier levels. Tiers are basically charts lenders use that have interest rates based on your scores. Want to see what your levels drop. To see an example of level program with an automatic lender, click here.
3. If they will not show you ... at least have them break down verbally for you. (Personally, I want to see with my own eyes, as I do not believe a word that comes from the mouth of most car dealers.)
4. If you've handled your auto credit bad .. . then you should simply try to find an auto lender that uses just the traditional FICO credit scores. Once you find a lender that uses a traditional FICO credit score, you'll have your best chance of getting the lowest interest rate.
5. Start by calling dealerships and asking the finance director if they use a traditional FICO credit score to make their decision to loan or if they use the FICO score Option Auto Industry.
These steps will get you in the right direction. It will not be easy, because many car dealers use the FICO score Option Auto Industry.
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