Which Credit Score Is Used for Car Loans?

What Is the Difference in Credit Scores?

Credit scoring models are complex algorithms that turn the information in your credit report into an easily readable and understandable score.

The fundamentals behind the many consumer credit scoring models are similar. For example, each model only looks at the information in one of your credit reports from one of the national consumer credit bureaus—Experian, TransUnion or Equifax—to determine your score.

Many models also have the same scoring range: 300 to 850. However, FICO has industry-specific scores, including scores for auto lenders, that range from 250 to 900. A higher score is best because it indicates you are less likely to miss a loan payment.

However, each credit scoring model also has its own specific criteria, which can result in different scores. For example, various credit scores might treat old collection accounts, trends in your credit history and credit inquiries differently.

Although you don't need to know all the details, these differences explain why your credit scores can vary even if they're based on the exact same credit report.

What Credit Scores Do Car Lenders Use?

FICO and VantageScore^® are the two market leaders in credit scoring. They create different credit scoring models, and sometimes different versions of their models, for lenders to use.

VantageScore's latest credit scoring models are VantageScore 4.0, VantageScore 4plus^™ and VantageScore 5:

• The VantageScore 4.0 was one of the first credit scores to consider trends in a consumer's credit history.
• The VantageScore 4plus lets you connect your bank account or credit card and uses information from your account to adjust your credit score.
• The VantageScore 5.0 improves predictiveness when scoring people who are new to credit or have a thin credit file. It's also designed to be more stable for lenders when market conditions change.

Auto lenders can choose one of these scores. Or, they might use a FICO^® Score^Θ instead.

Learn more: The Difference Between VantageScore Credit Scores and FICO^® Scores

Which FICO^® Score Do Auto Lenders Use?

FICO offers many types of FICO^® Scores to auto lenders. Some of the models that your lender might use include:

• FICO^® Score 8 or 9: These are older generic FICO scoring models, meaning they weren't created for a specific type of lender. However, many lenders still use them, including some auto lenders.
• FICO^® Score 10 suite scores: The FICO^® Score 10 is the most recent generic FICO scoring model. FICO also introduced a 10 T variation, which considers trends in your credit history when calculating your score. There are also FICO^® Score 10 BNPL and FICO^® Score 10 T BNPL models, which can incorporate buy now, pay later (BNPL) data into your score.
• FICO Auto Scores: There are multiple versions of the industry-specific FICO Auto Score, which is created specifically for auto lenders. The FICO Auto Scores are based on a generic FICO^® Score, and then the score is altered to better predict a person's likelihood of repaying an auto loan on time. For example, there are FICO Auto Scores 8, 9 and 10 based on the respective generic scoring model version. Your history with auto loans could be especially important in determining your FICO Auto Scores.

Learn more: Why Is My Credit Score Different When Lenders Check My Credit?

How Do I Check My FICO Auto Score?

You may be able to check your FICO Auto Score by purchasing your scores or enrolling in a paid premium membership.

There are also many ways to check your other credit scores for free. While each score you receive will depend on the scoring model and the underlying credit report, knowing these other scores can give you a general idea of where you stand before you apply for an auto loan.

Some of the places you can look for a free credit score include:

• Banks and credit unions
• Credit card issuers
• Lenders
• Online financial product comparison sites
• Credit and financial counseling organizations

Tip: Experian gives you free access to a FICO^® Score 8 based on your Experian credit report.

What Factors Affect My FICO Auto Score?

Your FICO Auto Scores largely depend on the same criteria as the base FICO^® Score from the same suite.

FICO breaks the scoring criteria into five categories, with percentages representing each category's importance for the average person. A category may be more or less important depending on what's in your credit report, but this is a good general guide:

• Payment history (35%): This shows whether you've made or missed payments on loans, credit cards and other financial obligations. On-time payments can help your scores, while late payments, collection accounts and filing for bankruptcy can hurt your scores.
• Amounts owed (30%): The amount you owe, outstanding balances relative to the initial loan amounts and how many accounts you have with balances can affect your FICO^® Scores. Your credit utilization ratio on revolving credit accounts such as credit cards, which is the most recently reported balance relative to the account's credit limit, is also an important factor.
• Length of credit history (15%): The average age of your accounts, the age of the oldest account and the age of the newest account can all affect your score. FICO^® Scores consider open and closed accounts when calculating age-related scoring factors.
• Credit mix (10%): Your credit mix depends on whether you have installment and revolving accounts with balances. Having a mix of both types of accounts can help your FICO^® Scores.
• New credit (10%): Applying for new accounts can lead to hard credit inquiries, which may hurt your scores temporarily. Opening a new account can also affect your scores in different ways, such as impacting the average age of your accounts and total outstanding balance.

FICO doesn't create a new category for its industry-specific scores, but it tailors the FICO Auto Scores for auto lenders. With this in mind, your history of paying or missing payments with auto loans or leases could have a larger impact on your FICO Auto Scores. Additionally, unlike the base FICO^® Scores, which range from 300 to 850, the FICO Auto Scores range from 250 to 900.

Learn more: What Is a Good Credit Score for an Auto Loan?

How to Improve Your Credit Score Before Buying a Car

If you check your credit scores and think it might be best to work on your credit before taking out an auto loan, here are some suggestions for improving your credit:

• Pay down credit card balances. Your credit utilization rate can be an important factor, and it's one of the few scoring factors that you can change quickly. To figure out your utilization rate, divide your total credit card balances by your total credit limits using numbers from your credit report. A lower utilization rate is better for your scores. If you have a high utilization rate, particularly if it's over 30%, paying down credit card balances could be a quick way to increase your credit scores.
• Consolidate credit card debt. If you can't afford to pay down your credit card balances, you could apply for a debt consolidation loan and use the money to pay off your credit cards. Installment loans, such as personal loans, won't impact your revolving utilization rate. As a result, transferring the debt from credit cards to a personal loan could improve your scores.
• Keep your credit cards open. Closing your credit cards, even a card you never use, will lower your available credit and may increase your utilization rate. There are exceptions, though. For instance, some people may want to close their credit cards if they have trouble avoiding overspending or the card has an annual fee that doesn't seem worth paying.
• Continue paying bills on time. Even one late payment could hurt your credit scores, and you want to make sure your recent credit history is as clean as possible before applying for a new loan.
• Hold off on other loan applications. Applying for a new loan and taking on additional debt could hurt your credit scores. Unless you have a pressing need, such as consolidating debt, it may be best to pause new credit card and loan applications until after you buy a car.
• Review your credit reports carefully. Double-check your three credit reports for errors that may be hurting your scores; you have the right to file a dispute if you find one.

These actions could improve all of your credit scores, which can make it easier to get approved for an auto loan with a favorable rate.

Learn more: Things Lenders Look at Besides Your Credit Score

Frequently Asked Questions

Don't Overthink Your Credit Scores

While your credit scores can be important, there are three reasons to focus on general healthy credit habits rather than a specific score:

1. Many consumer credit scoring models use similar criteria to determine your score.
2. You don't know which scoring model an auto lender will use.
3. If you apply for financing through a dealership, the finance office may submit your application to multiple lenders that could use different scores.

Building a positive credit history can help increase all your credit scores, and you won't need to worry about which score the lender uses. If you're not already a member, check out Experian's free credit monitoring to see your score, monitor changes and get personalized tips on how to improve your credit.