What is an Auto Enhanced Credit Score and how do I leverage it?
Most people do not realize there is a difference between your normal FICO score and the score you are graded on when you apply for auto credit. Your normal credit score is simply referred to as Classic FICO Score (sometimes referred to as your BEACON score). The auto enhanced credit score is usually referred to as your FICO Auto Industry Option score. This score it not available for you to purchase and only dealers or finance companies are able to obtain it. Here are the major differences between Auto Enhanced Credit Score and Classic scores:
- The major difference between FICO scores and FICO auto enhanced credit score is that the auto scores are weighted more on how you’ve managed your previous auto credit. Most car lenders primarily care about how you have paid your auto previous loans. The auto score gives them this information.
- Have you made late payments on a current or previous auto loan or lease?
- Have you ever settled an auto loan or lease for less than you owed?
- 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?
How some car dealers use the lowest score availible to get you to pay more for your vehicle, and in turn, increase their personal commission
It is entirely possible that a car dealer has the ability to pull your traditional FICO scores AND your FICO auto enhanced credit score. That means they’ll have six scores on you. It’s a guarantee that some of those scores are going to be higher than the others. So which ones will they use when trying to get you financed?
It depends.
Are you familiar with the term spread? It’s how car dealers make money when they finance you. If they can quote you a higher interest rate than you deserve, they stand to make a nice chunk of change from the bank that finances you.
The only way to make a killer spread is to make you think that you have lower scores.
How to use your FICO scores to your advantage when buying a car?
Fortunately, you don’t have to fall for their dirty tricks. Now that you know all about FICO Auto Industry Option scores, you can protect yourself.
When you first walk into the finance director’s office, don’t tell him what your FICO scores are. Wait until he reviews the scores himself. Then ask him what your scores are. If the scores he reviewed are higher than the ones you have, don’t say anything and just go by his scores. However, if your scores are higher, then pull them out and show him. If he has a choice in the type of scores he can use, there’s a possibility that he’ll be able to use your highest score. It will also let him know that he doesn’t have a fool sitting in front of him. He can’t take advantage of you!
How do you find out what your FICO Auto Industry Option scores are before you walk into a car dealership?
Unfortunately, at this time, you are unable to access your auto enhanced credit score for any price. They are not available to consumers. They are only available to those in the auto industry.
So how can you use this information to help you get your next new car financed at the best interest rate?
First, get your three credit reports from annuacreditreport.com. Review your reports, and then purchase your two available credit scores from MyFico.com. You are unable to purchase your Experian credit score, but having the other two will benefit you.
How you handled your previous auto credit well—your FICO Auto Industry Option scores will be higher than your traditional FICO scores. So expect more from the lender. You can also ask the lender to show you their tier levels. Tiers are basically charts lenders use that have different interest rates based on your scores. You want to see which tier your fall in.
If they won’t show you, ask them to at least break it down verbally for you.
If you’ve handled your auto credit poorly then you simply try to find an auto lender that uses just the traditional FICO credit scores. When you find a lender that uses a traditional FICO credit score, you’ll have your best chance to get the lowest interest rate.
Start by calling dealerships and ask the finance person the following:
- What credit reporting agency do your lenders use?
- Do your lenders use FICO Auto Industry Option scores (or you can say, “FICO auto enhanced scores”) or regular FICO credit scores?
- What’s the minimum score that I need to get approved through your captive lender?
- What’s the minimum score that I need to get approved at the best rate by your captive lender?
- How does a discharged bankruptcy (or other major negative item) affect your loan decision?
- When was the last time you got someone with a [mention whatever concerns you about your credit reports here] on their credit reports approved? Tell me about that deal?
- What factors other than my scores go into your decision-making process?
- Can you dictate which score or which credit reporting agency the lenders you work with use to make a loan decision?
Knowledge is power. You are now armed with information to obtain the lowest interest rate!
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