You’ve probably heard about the importance of checking your credit score before you apply for a car loan. But are you checking the right score? Your FICO score may be excellent, but the lender may be using a different score that you didn’t even know was out there.
Why do I have more than one score?
You have dozens of different credit scores: ones provided by your credit card company or credit monitoring websites, one from each of the three credit bureaus, and a FICO score – the scoring model used most often by lenders to determine if you are creditworthy. What you may not know is that you have multiple FICO scores that depend on whether the lender is pulling your credit for a mortgage, an auto loan, or a credit card.
What score is used for auto loans?
That depends. It’s likely the FICO Auto Score, an industry-specific version of the FICO score designed to predict whether you’ll pay as agreed specifically on an auto loan. It’s weighted heavily by how you’ve used car loans in the past.
To make matters even more confusing, FICO changes its scoring formula every few years to keep pace with the changing credit landscape. When a new version is released, each lender determines if and when it will upgrade to the latest version. Some lenders upgrade quickly, while others wait years. As a result, there are five versions of the FICO Auto Score (versions 2, 4, 5, 8, and 9) currently in use, so your score can fluctuate even among FICO Auto Score versions.
To find out which score the lender will use, you can ask from which credit bureau they’ll pull your score since each bureau uses a different pair of scores. For example, if your lender is evaluating your auto loan application based on an Experian credit report, then it will likely be using FICO Auto Score 8 and FICO Auto Score 2. You can find out more about which scores each credit bureau uses at myFICO.com.
Then you can elect to pay for access to that specific score from myFICO. If you’re not willing to shell out $19.95 per score, you can always get an approximation of your score for free through a variety of tools, including credit cards and websites. Your base FICO score will not have been impacted nearly as much by your history with auto loans. However, if you have a history of on-time payments on previous car loans or leases, you can safely assume that your FICO Auto Score won’t be too far from your base FICO score. Once you are able to determine your correct credit score, personalize your financing terms without impacting your credit at carvana.com/get-approved and then automatically apply them to every vehicle in Carvana’s inventory. To see rates based on credit scores and how Carvana fares in comparison, check out our Auto Loan Comparison Calculator!
How can I improve my FICO Auto Score?
If you’ve had some credit missteps in the past, FICO’s newest scoring model may improve your chances of qualifying for the best terms available to you. The FICO Auto Score 9 was released in 2016, and it looks at how your credit behavior is evolving. It takes into account whether your credit card balances have been increasing or decreasing, whether you’ve been making the minimum payments on revolving credit accounts, and whether your credit utilization ratio has been increasing or decreasing.
It’s certainly helpful to know your FICO Auto Score, but what’s more important is using credit wisely in ways that will help all of your credit scores. Your FICO Auto Score can be improved using the same methods used to increase your base score. There are no “quick fixes.” You’ll need to pay bills on time, keep your credit balances low, and open new credit accounts only as needed. Beyond that, save up as much as you can for a down payment. The less you have to borrow, the better your chances of getting a loan and the less you’ll end up paying in the long run.