Do car loans use Equifax or TransUnion?
Auto lenders use a special reporting system called FICO® Auto Score when determining the creditworthiness of a potential customer. The three credit reporting bureaus that contribute information to your FICO® Auto Score are TransUnion®, Equifax® and Experian™.
Auto lenders may rely more on Equifax and Experian for credit report insights, but TransUnion also sells consumer data to a number of automotive lenders. Credit scoring models such as FICO® Auto Score 9 generate a credit score based on the debt and payment information in a consumer's credit report.
What credit score do auto lenders look at? The three major credit bureaus are Experian, TransUnion and Equifax. The two big credit scoring models used by auto lenders are FICO® Auto Score and Vantage.
According to Darrin English, a senior community development loan officer at Quontic Bank, mortgage lenders request your FICO scores from all three bureaus — Equifax, Transunion and Experian. But they only use one when making their final decision. If all of your scores are the same, the choice is simple.
Neither your TransUnion or Equifax score is more or less accurate than the other. They're just calculated from slightly differing sources. Your Equifax credit score is likely lower due to reporting differences. Nonetheless, a “fair” score from TransUnion is typically “fair” across the board.
Most used auto loans go to borrowers with minimum credit scores of at least 675. For new auto loans, most borrowers have scores of around 730. The minimum credit score needed for a new car may be around 600, but those with excellent credit often get lower rates and lower monthly payments.
A target credit score of 661 or above should get you a new-car loan with an annual percentage rate of around 7.01% or better, or a used-car loan around 9.73% or lower. Superprime: 781-850.
When you apply for an auto loan, a lender is likely to use one version of the following credit scores: FICO® Auto Score, Base FICO® Score, or VantageScore®. FICO® scores are used by 90% of top lenders and VantageScore® credit scores are used by nine of the 10 largest banks.
Auto lenders use a special reporting system called FICO® Auto Score when determining the creditworthiness of a potential customer. The three credit reporting bureaus that contribute information to your FICO® Auto Score are TransUnion®, Equifax® and Experian™.
With your 640 credit score, lenders will generally consider you to be a higher-risk borrower. This means to get loan approval, you're likely to need strong qualifications when it comes to income, employment, and other debts.
Why is my TransUnion score 100 points lower?
One of the biggest reasons for a credit score drop is a missed or late payment. If you have perfect credit and hit a financial roadblock, a 30-day late payment can drop your credit score by up to 100 points. Typically, creditors won't report a late payment until it's at least 30 days late.
The credit bureaus collect slightly different data and use different scoring models, and since creditors are not required to report your data, each one may have slightly different information. If you have wildly different credit scores from the big three, take time to see why - they should be roughly the same.
Because there are varied scoring models, you'll likely have different scores from different providers. Lenders use many different types of credit scores to make lending decisions. The score you see when you check it may not be the same as the one used by your lender.
As someone with a 650 credit score, you are firmly in the “fair” territory of credit. You can usually qualify for financial products like a mortgage or car loan, but you will likely pay higher interest rates than someone with a better credit score. The "good" credit range starts at 690.
For instance, major credit bureaus frequently use the FICO score and VantageScore credit assessment models. However, users have often reported that their TransUnion score is usually lower than other credit scores. That is because the TransUnion credit scoring model is usually stricter than other ones.
Still, you typically need a good credit score of 661 or higher to qualify for an auto loan. About 69% of retail vehicle financing is for borrowers with credit scores of 661 or higher, according to Experian. Meanwhile, low-credit borrowers with scores of 600 or lower accounted for only 14% of auto loans.
It's possible to get approved for an auto loan if you have bad credit (sometimes called "deep subprime" credit), meaning a credit score under 580. But in many cases, options can be costly. To improve your odds of getting approved for a relatively affordable loan, follow these steps.
A 750 credit score is often considered very good — or even excellent. A very good or excellent credit score can mean you're more likely to be approved for good offers and rates when it comes to mortgages, auto loans and credit cards with rewards and other perks.
Credit score: You might need a credit score of at least 740 to be considered for a 0% APR loan. The minimum credit score depends on the dealership and the car you're interested in purchasing.
In general, you'll need a FICO credit score of at least 600 to qualify for a traditional auto loan, but the minimum credit score required with vary from lender to lender. As interest rates increase due to inflation, securing a subprime auto loan may be more difficult — but not impossible.
Is it easier to get approved for a new car or used car?
It's usually easier to secure a loan for a new car than a used car because lenders can more easily determine the value of a new car.
The base FICO score is also called FICO Score 8 or 9. It's not designed specifically for auto loans, but many lenders use it. It's a number between 300 and 850, and a higher score means that a person is more likely to make loan payments on time.
When you are ready to buy a vehicle or become serious about acquiring a car loan, group the hard inquiries and pre-approval attempts within two or three weeks. They will appear on your credit report but will be treated as a single hard pull. Therefore, they will only have a minor impact on your credit score.
Simply put, there is no “more accurate” score when it comes down to receiving your score from the major credit bureaus.
You will need a credit score of 580 or higher to get a $30,000 personal loan in most cases, along with enough income to afford the monthly bill payments. Other common loan requirements include being at least 18 years old, being a U.S. citizen or a permanent resident, and having a valid bank account.
