Most auto loan businesses turn to a FICO score as their primary resource. In fact, a special type of FICO auto score created especially for car loans. It’s pretty simple and cost-free to determine your FICO auto score.
The most crucial details concerning the FICO score, such as how to determine your score and how to improve it, will be covered.
A FICO Auto Score is what?
A simple FICO score gauges your dependability in repaying obligations. a car loan Your ability to repay auto loans is precisely assessed by your FICO score.
FICO score basics and vehicle loans FICO scores use several credit scoring models. FICO auto scores range from 250 to 900, whereas the base FICO score varies from 300 to 850.
The 9 XT version of auto score measurement is used to calculate the FICO auto score that lenders consider. This version uses information from TransUnion’s CreditVision system to account for the last 30 months’ worth of credit conduct.
This version of the FICO auto score is primarily influenced by five factors:
- Financial history
- Utilization of credit
- History of credit used
- Credit mixture
- Extra credit
The FICO auto score also stops several things from drastically harming your credit score.
For instance, there is less of a penalty for outstanding medical bills than for unpaid other payments. Additionally, paying off a debt that was in collections has no longer any negative effects on your credit score.
What Is My FICO Auto Score?
Before you take out a car loan, it’s usually a good idea to check your FICO auto score. This will give you a general idea of the loan terms and interest rates you might anticipate. It’s simple to check your FICO auto score, and you can do it right from FICO.
Experian, TransUnion, or Equifax all charge roughly $20 for a single credit bureau report, but you can purchase a report from each of the three for $60. It’s best to obtain your credit score from several credit agencies to get a clear view of your scores overall because your credit score can vary slightly based on the bureau.
Consider the scenario where your credit score is about 665. Your score is listed as 667 by TransUnion and 660 by Equifax. You would fall under the prime category according to the TransUnion report, but under the nonprime category according to the Equifax report. The majority of lenders are secretive about which bureau they order credit reports from.
Remember that each FICO report you receive has a 30-day expiration date. These reports provide as a momentary snapshot of your credit, which is constantly changing depending on your financial activity.
FICO offers services that allow you to keep track of credit changes if you’re interested in continuously monitoring your credit. Credit monitoring is a feature of each subscription plan offered by FICO.
Additionally, you can get perceptions of how lenders see you as well as a thorough evaluation of your credit score, replete with a graph of your credit and payment history. Additionally, these memberships might offer services like identity restoration and identity theft insurance.
How Do I Get a Good FICO Score?
Generally speaking, a credit score of 670 or more is considered good. The best likelihood of receiving favourable loan conditions is if you have good credit. You should strive for a credit score in the outstanding range to receive the best loan terms and lowest interest rates (720 to 850).
Some lenders might turn you down if your credit score is low. Despite the fact that there are lenders who focus on providing loans to borrowers with subprime or even deep subprime credit, the interest rates on these loans are frequently very high. For instance, debtors in deep subprime may receive loans with interest rates as high as 20%.
Can I get a free FICO score check?
You may check your credit score for free in a few different ways. Free credit reports are provided by a lot of banks, credit unions, and credit card companies. For instance, Experian includes a free FICO score with its credit report service. You can also obtain a free annual credit report from each of the three main credit agencies through AnnualCreditReport.com.
The Best Ways to Raise Your FICO Auto Score
Get your FICO auto score as high as you can before beginning to apply for an auto loan. Thankfully, there are a few strategies to raise your score.
Clear Your Credit Card Debt
Paying down your credit card debt is one of the quickest ways to raise your credit score. If money is tight, this may be difficult, but paying off credit card balances in full each month will improve your credit score significantly. Before applying for a loan, getting your balance to zero as quickly as possible might help you improve your credit.
Don’t Just Pay the Minimum
You’re expected to pay the minimal amount due on your credit card debt in order to keep your credit score high. However, you can raise your credit score if you are able to pay more than the required minimum. By paying more than the required minimum, you demonstrate to creditors that you can easily pay off your credit card debt. Additionally, if you pay it off sooner, you’ll pay less interest.
Although dealing with debt collectors can be challenging, paying off your collections is crucial for improving your credit score. Your credit score will almost likely drop if you have debt in collections, which might make it challenging to be approved for a car loan with favorable terms.
Keep your credit card usage low.
There is a cap on each credit card. Your credit score can decline if you approach that limit. A fantastic approach to raise your credit score before applying for an auto loan is to keep your credit use low. Generally speaking, spending 30% of your available credit or less demonstrates to lenders that you are a trustworthy borrower.