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Online Credit Reports: Why Their Scores Are Higher Than The Car Dealers

Updated on March 13, 2011

What's Your Auto Finance Score?

But I went online and got my credit score…

If you’ve done any research online about car buying, you’ve probably run across people giving advice about getting your credit score so you’ll know when you go into the car dealership what you can qualify for when it comes to the financing part of the transaction. I say don’t waste your money!

Why? Because when you go into a car dealership to have your credit pulled, they don’t use the same online service that you used. Why? Because the credit score that you pull from one of the online services, have a different scoring system. Sometimes the scores can be comparable while other times there can be a significant difference.

You could go online and get a credit score of 710. You go into the car dealership with your with your chest out thinking you have that elusive 700+ score that everyone tells you that you need to have in order to get a low interest rate.

When it comes time to crunch numbers, you’re told that your interest rate is 9%. Of course you blow a head gasket (no pun intended of course) because you’re thinking with your 710 credit score your rate should be in the 4%-5% range.

When you ask your salesperson why the interest rate is so high, you’re told that the rate is based on your credit score. Of course you respond back telling your salesperson about your 710 credit score that you have. The salesperson in turn tells you that your score isn’t a 710 it’s a 650!

So What Happened…

Now a 60 point swing in a credit report can equate to several points in an interest rate. It could be the difference between a 5% rate versus a 9% rate (or more). How much would that cost you in finance charges (that scenario could be my next Hub)? But the question that you have running around in your head that you want answered is why the 60 point swing? Your argument is you just got your credit score from an online credit reporting service the other day. Your score couldn’t have dropped 60 points!

Well the answer is quite obvious if you sit down and think with a little rational. You went online to some web site and got your credit score. When you went into the car dealership, and they pulled your credit they didn’t go to that same site. That being the case, do you think since the car dealership used a different service to pull your credit that your score could be different? You would think it should be the same or worst case scenario close.

Two Different Sources…Two Different Scores…Why?

When you go online and have your credit pulled you’ll receive what I would call a generic credit score. After all, it’s a score based on your whole credit history. Meaning it takes in effect how you’ve paid anything and everything you’ve had credit with; from auto loans, to mortgages, to credit card, to student loans, to personal loans.

If your credit file is deep with all the above types of credit, and you had a 30 day late payment on a car loan your overall credit score wouldn’t be tarnished much assuming that everything else on there was perfect.

When a car dealer pulls your credit they are pulling what’s called and Auto Finance Score. In other words, the credit score that they get from one of the three credit reporting services (Equifax, Transunion, Experian), is an auto finance score based more on your pervious auto loans.

So in the scenario above, if your credit file was perfect with all your creditors, but you had a 30 late payment on a car loan your auto finance score will take a big hit. It makes sense right?

The bottom line is there are two different scoring systems. When you go online you’re not getting an auto finance score. You’re getting an overall FICO score which is different than an auto finance score.  

Banks that make car loans want to know more about your pervious car credit than how you paid back a student loan. There are other factors that make up an auto finance score that are different than an overall FICO online credit report score, but since I’ve never worked for a credit reporting company I don’t know of the exact formula they use. 

When Buying A New Vehicle DON’T Get An Online Credit Report…

Like I said earlier…don’t waste your time buying a credit report online if you’re getting ready to purchase a vehicle. Let the car dealership pay for it by pulling your credit. Once they do, they will tell you (or show you) what your auto finance score is. That’s the only score you need to know when purchasing a new or used vehicle. 


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