Which Credit Score Do Car Dealerships Use?

When you find the car of your dreams, it’s time to apply for financing. You can obtain a loan directly through your dealership, which will check your credit score to determine your eligibility as a borrower. You likely have various scores attached to your name because of the different credit bureaus and scoring models out there. Here at South Park Nissan, we’re here to help provide insight into which score your dealership checks. Read on so you can better prepare for the financing stage of your car-buying journey.

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Why Do Car Dealerships Check Your Credit Score?

MURANO. by MIKI Yoshihito is licensed with CC BY 2.0

Like any other lender, a car dealership checks your credit score to determine your reliability as a potential borrower. It wants to ensure you can make timely payments whether you lease a car, buy a new or used vehicle, or obtain financing for repairs. In addition to determining whether you qualify for a loan, your credit score can help the dealership set the appropriate interest rates. Typically, a higher credit score translates to lower interest payments. A dealership might charge higher interest rates if you have a lower credit score.

Which Credit Score Do Car Dealerships Use?

It would make things a lot easier if you only had one credit score to worry about, but that’s not the case. The three major credit bureaus (Equifax, Experian, and TransUnion) issue scores using models like FICO and VantageScore. These models have different algorithms, resulting in an Equifax FICO score being different from an Equifax VantageScore score. Even when credit bureaus issue scores using the same model, results can differ because of discrepancies between the data each bureau has. Thus, an individual’s FICO scores from Equifax, Experian, and TransUnion will likely be different.

Now that you know you have various credit scores floating around, you might wonder which one a car dealership uses. It’s likely that you won’t know exactly which score your dealership looks at, but you can familiarize yourself with the different types. This information can prepare you to negotiate and take the appropriate steps to raise your score. Here’s some more information about credit scores that your dealership might check when you request financing:

FICO Score

In 1989, the Fair Isaac Corporation (FICO) debuted an industry standard for scoring creditworthiness. FICO scores are three-digit numbers that use the information in your credit reports to determine how likely you are to repay any type of loan. The model is a fair way for borrowers to qualify for loans and for lenders to distribute loans. The scoring system for this model is as follows:

• 300 to 579: A score that falls within this range is “Poor,” meaning lenders would consider the consumer to be a risky borrower.
• 580 to 669: Despite this range still being below the average, lenders will typically approve loans to consumers with “Fair” scores.
• 670 to 739: A “Good” score is near or slightly above the average, meaning lenders will likely approve you for a loan.
• 740 to 799: Dependable borrowers have “Very Good” credit scores in this range.
• 800 to 850: An “Exceptional” credit score is well above the average and shows lenders that you’re a very dependable borrower.

FICO frequently updates its algorithm to meet the evolving needs of lenders. Similar to how computers have different versions of operating systems, the FICO model has issued various versions throughout the years. Experian, Equifax, and TransUnion commonly use FICO Score 8 and FICO Score 9 when issuing your FICO score. The most recent FICO Score 9 has updates such as:

• No longer allowing third-party collections that you’ve paid off to have a negative impact.
• Treating medical collections differently than other kinds of debt.
• Making unpaid medical collections have less of an impact on your score.
• Factoring reported rental history into the score.

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FICO Auto Score

While some dealerships look at your base FICO score, others might look at your FICO Auto Score. This industry-specific rating provides a more accurate picture of the likelihood of you repaying an auto loan instead of the likelihood of you repaying any credit obligation. Your FICO Auto Score still considers basic information like your payment history and the length of your credit history, but it tends to place more weight on your borrowing history as it relates to auto financing. For instance, a late payment on a past auto loan might damage your FICO Auto Score more than a late mortgage payment would.

Your FICO Auto Score can range from 250 to 900, with a higher number indicating better credit. It’s also similar to the base FICO model in that it has different versions to accommodate evolving lender needs. While the newest FICO Auto Score 10 is available, the most common models within each credit bureau are as follows:

Experian: FICO Score 9, FICO Score 8, and FICO Score 2.

Equifax: FICO Score 9, FICO Score 8, and FICO Score 5.

TransUnion: FICO Score 9, FICO Score 8, and FICO Score 4.

VantageScore

VantageScore is yet another credit scoring model that resulted from a collaboration between the three major bureaus and became available in 2006. It’s similar to the base FICO model in that it predicts the likelihood of you repaying any type of loan. it also has various versions, with the 3.0 and 4.0 versions using an industry-standard range of 300 to 850. The older versions had a scale of 501-990.

Tips for Improving Your Credit Score

Here are some tips for improving your credit score that can help you qualify for auto loans and lock in affordable interest rates:

• Check your credit report regularly and dispute any errors you find with the appropriate bureau.
• Pay your bills on time.
• Focus on improving auto-related aspects of your borrowing history, as a dealership might check your industry-specific FICO Auto Score.
• Reduce the number of new loans you apply for, as lender inquiries can lower your score.

While you might not know which credit score your dealership checks, maintaining good borrowing habits can make you a desirable borrower. If you need affordable financing, contact South Park Nissan today. Our team has a history of providing loans to customers even if other lenders have turned them down.