Which Credit Bureau Is Most Used for Auto Loans?

Buying a car should be an adventure: You feel joyous at the prospect of getting a new car and excited to see how the vehicle will perform on the open road. But when you have to add your credit score to the entire calculation, it can suddenly seem like a lot less fun.

For example, there are multiple credit scores on one side and the FICO score on the other. FICO scores themselves have several versions. Then, there are the three credit bureaus.

Each one uses its score system, which makes an auto loan credit check sound like rocket science. Not to mention that car dealers might be in contact with all three credit agencies or perhaps just one of them when assessing your creditworthiness.

Worry not. We’ve gathered all the tips and tricks you’ll need to turn those credit checks to your advantage.

Why Your FICO Score Is Important

When buying a car (unless you already have the whole sum you’ll need) you’ll have to work with auto lenders. More than 90% of car lenders use the FICO credit score. An individual FICO score results from an algorithm that factors in many aspects of your credit history, such as unpaid debts, the number and types of open loan accounts, and how long you have kept these accounts open.

Then, there is the percentage of the total credit you’ve used, new credit requests, potential bankruptcy reports, foreclosure, and debt collections.

We’ve mentioned the credit score first because every time you apply for an auto loan, a FICO score check will be performed to determine your creditworthiness. Credit bureaus are intrinsically important to the overall story. Still, as a potential car buyer, you should know your credit score beforehand.

Obtaining Your Credit Score

The most straightforward way is to go to myfico.com and ask for the 1B report. The service isn’t free, but the good thing is that this report is very exhaustive: It includes 28 industry-specific scores, and one of them is the auto credit score you need.

Another way to obtain your credit score is to check your monthly billing statements from the company that issued your credit card. Bank of America, Citibank, and American Express offer free FICO score status for their clients.

You can also get your FICO score via the Discover Credit Scorecard program that is free for all users. You only need to leave your Social Security number along with a few other personal details.

Improving Your FICO Score

FICO scores go from 300 to 850. The higher your score, the better your chances of getting favorable loan terms. Good score ratings go from 670 upward, with most credit holders having a score between 600 and 750.

Buying a car with a bad credit score means you’ll have fewer options to choose from when looking for an auto loan to finance your new car purchase.

Luckily, there are ways to improve your FICO score. Pay your bills on time, keep as low as you can on the credit card balance and credit utilization rate (preferably below 30%), and only request a new line of credit when needed. Check if your credit reports are frozen because, if they are, the lenders will not be able to access them, and that could lead to your loan request being denied.

Some additional tips to improve your FICO score include asking for a debt consolidation loan to settle your credit card debt, but this should be viewed as a last resort measure. Don’t close your credit cards since keeping them open will positively affect your credit score. Lastly, avoid taking a second loan until you get the car loan.

The Difference Between FICO Score and Credit Score

Different types and versions of credit scores can enter the car credit report that lenders will pull to determine your creditworthiness.

The name FICO comes from the name of the company that issues these scores, called Fair, Isaac, and Company. Other companies, too, give credit scores that may look similar to FICO. Still, the formulas they use vary significantly, leading to scores that can differ from your FICO score by as much as 100 points.

This can sometimes create problems as it can give you a false sense that your credit is in good standing and that you’re likely to get approved for a loan.

Other Credit Scores

CreditVision is designed to help auto lenders, dealers, and financial companies when approving loans. It’s a TransUnion credit score that anticipates the odds of a 60-day delinquency happening in the first two years of the life of the auto loan. This score varies between 300 and 850 points. There is a chance an auto lender will use it to decide if you’re suitable for an auto loan.

VantageScore versions 3.0 and 4.0 were also used by every most used credit reporting agency in auto loan checkups. This credit scoring model calculates the influence of multiple variables on your credit history.

Payment history is most influential, followed by the length and type of credit, credit utilization, while credit debt has the lowest impact. VantageScore was created jointly by Equifax, TransUnion, and Experian.

Versions of FICO Score

We’ve spoken so far mostly about FICO because it’s the most used model not just among car dealers but overall. But its algorithm is constantly changing. There have been nine versions of it so far. Something that didn’t affect one version of the FICO score might negatively impact a newer version.

The most used versions of FICO scores are models 8 and 9. Auto lenders will most likely look at your recent credit history, information about bankruptcy, previous auto loans, and late payments.

The FICO Auto Score

One more thing you have to keep track of when dealing with FICO scores is the type of FICO scoring algorithm that the industry uses. Different FICO score types have specially optimized algorithms for specific uses.

There is a dedicated FICO score type - called the FICO Auto Score - car lenders frequently look for in credit reports. It uses the standard FICO score and adapts it to give auto lenders realistic chances of how likely you’re to make regular loan payments.

FICO Auto Score has several versions. Most auto lenders use FICO Auto Score 8, as the most widespread, or FICO Auto Score 9. It’s the most recent and used by all three bureaus.

FICO Auto Score ranges from 250 to 900, meaning your FICO score will differ from your FICO Auto Score.

Auto Loans and Credit Bureaus

Both Experian and Equifax earn a sizable chunk of their profit from business plans tailored specifically to auto lenders, while TransUnion comes in third place.

Keep in mind that knowing which car dealer works with what credit bureau is not as important as knowing your credit score or FICO score since that will help you get the best loan rates.

The Bottom Line

If you know the rules of the game, you’ll be able to get the best out of your credit score when buying a car. Focus on your FICO score and Auto Score to secure an auto loan. Use myfico.com to check your score in a specific FICO version.

If you’re not sure, ask auto lenders which version they use. Once you know your credit score status, go through the list of financial aspects auto lenders will look for in your credit report and try to improve them.