What is the FICO Auto Score? An Intro for Car Buyers

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The Score You Haven’t Met, But Dealers Already Know

You’ve done your homework. You know your credit score, you’ve been monitoring your Credit Karma credit score, and you feel prepared to walk into a dealership. Then, the finance manager comes back with an interest rate based on a credit score you’ve never seen before.

What’s up with that?

Welcome to the world of industry-specific credit scores. Lenders in different fields view risk through different lenses, and auto lenders are no exception. The score they’re most likely using is your FICO Auto Score, and understanding it is the key to unlocking the best possible loan terms on your next vehicle.

What Exactly is the FICO Auto Score?

Think of your regular FICO score as a primary doctor - it gives a great overview of your general financial health. The FICO Auto Score, on the other hand, is like a specialist - a cardiologist for your car loan.

It’s a specialized score designed by FICO to do one job: predict the likelihood that you will make your car loan payments on time... every time!

While your regular FICO score ranges from 300 to 850, the FICO Auto Score has a different range of 250 to 900. The higher your score, the less risk you appear to be, and the better interest rate you’ll be offered.

How’s it Different From a Regular FICO Score?

The main difference is emphasis. While both scores use the same core data from your credit report (from Equifax, Experian, and TransUnion), the FICO Auto algorithm gives greater weight to factors relevant to auto lending.

Here’s what it cares about most:

• Your Auto Loan History: This is the #1 factor. It looks at all your previous car loans. Were your payments always on time? Did you pay one off successfully? Any repossessions or 60-day late payments on a past car loan will have a much bigger negative impact on this score than on your regular score.

• Other Installment Loans: Your performance after you get personal loans, student loans, and mortgage loans also matters, as it shows you can handle fixed payments over time.

• Rate Shopping is Understood: And now... some good news. The FICO Auto Score model is smart. It knows that when you’re buying a car, you’ll likely apply (or the dealer will apply for you) for financing at a few different places. Therefore, all auto loan inquiries made within a short period (typically 14-45 days) are treated as a single inquiry, preventing your score from dropping with each application.

How to Improve Your FICO Auto Score

Improving your FICO Auto Score means focusing on the fundamentals, with special attention paid to how an auto lender sees your report.

1. Pay Every Bill On Time, Every Time. This is the foundation of all good credit scores. Late payments are the fastest way to lower your score.

2. Demonstrate You Can Handle Installment Debt. If you have a car loan now, make every payment on time. That positive history is the most powerful fuel for a high FICO Auto Score.

3. Keep Your Revolving Debt Low. Even though it’s an auto score, lenders still get nervous if they see you have maxed-out credit cards. Keep your credit card balances low (ideally below 30% of your limit).

4. Don’t Open a Bunch of New Credit Before Car Shopping. A whole bunch of new accounts can signal risk. The one exception is rate shopping for your car loan itself.

5. Shop Smart. When you’re ready to buy, do all your rate shopping within a 2-week window to ensure the inquiries are bundled together and have a minimal impact on your score.

Lastly, Take Control Before You Go to the Dealership...

Your FICO Auto Score is one of the most important numbers in your car-buying journey, directly impacting how much you’ll pay over the life of your car loan. A higher score can literally save you thousands of dollars.