FICO Score

Credit Tier Breakdown &
How Auto Lenders See You

Your FICO score is the first thing that most auto lenders will look at to determine:

• If they want to loan you money
• What credit tier you will fall into
• What rates you will qualify for
• What terms they will give you
• How much they will let you borrow
• How much down payment, if any, you may need

FYI: The term FICO score is general term used to describe your credit score. Most all credit reporting agencies determine your credit score using the Fair Isaac risk model. You may also here your credit score referred to as your BEACON score (very common in some areas of the country) or your EMPIRICA score.

If Equifax (one of the three major credit bureaus) is primarily used in your region of the country than BEACON score may be more commonly used than FICO score.

If TransUnion (another of the three) is primarily used, then EMPIRICA may be the most common term used.

The first thing you'll want to know when determining or understanding the credit tier you fall into is how auto lenders scoring models work.

All auto lenders are not created equal, but share some common traits.

The three main credit factors all auto lenders look at when determining if they'll give you a loan are and what credit tier you'll fall into are:

1. Ability
2. Stability
3. Past Credit History

Don't pass the lenders minimum requirements in one of these categories and it doesn't matter what your score is. Each of these is covered below.

Keep in mind that not only does a good score mean an easier loan process, but...

A good credit score can save money!
See your CREDIT SCORE in Seconds - $0

Before we get started with the different credit tiers, below, here are some other pages I've created that may be of interest to you:

Collection Removed
Don't Just Pay It, Remove It! This is very important to raising your FICO score, getting into the highest credit tier and overall improvement of your credit file.



How To Get Good Credit
4 Keys To An Excellent Credit File! There are some common traits people with high FICO scores with excellent credit files share. If you want to learn what it takes, then this is for you.



File Chapter 7 Bankruptcy
Should you? There are many customers that would certainly be better filing for Chapter 7 bankruptcy protection, while others have only some simple clean up to do. What category do you fall in?



Buying A Car After Bankruptcy
Some bankruptcy questions and answers that may help you understand the process of buying a car after bankruptcy.



The 700 Credit Score Myth, Shattered!
It ain't what it used to be! Don't be tricked into thinking a 700 FICO score means an instant, easy approval. In fact, with many lenders it's no longer the minimum requirement to get into their top credit tier.

Quick Links
A+ Tier | A Tier | B Tier | C Tier | D Tier | F Tier | National Averages

• 0 Tier Credit (Ford Motor Credit)
• S Tier (GMAC Financial)
• Diamond Tier
• Tier 1+ Credit (Auto lenders that don't use lettered credit tiers)

Customers that fall into the
A+ Credit Tier will qualify for:

• The best auto loan rates
• No money down loans
• Larger loans to value
  (borrow more money against the value of the vehicle)
• and May choose extended terms
  (72, 84 and 96 month loans)

To qualify for the
A+ Credit Tier you'll typically need:

• 5 years of well paid credit history
• 5 or more trade lines
• A well paid mortgage is preferred (but not necessary)
• A prior or current well paid auto loan(s)
• A 24 month history for either or both a mortgage or an auto loan
• Low balances on revolving credit (under 35%)
• Low total debt to income (includes mortgage, rent, loans, credit cards, etc.) under 50% DTI
• Have a payment to gross monthly income under 25%

Lenders do
not want to see:

• Prior foreclosures
• Prior bankruptcy
• Charged off accounts
• Collection accounts
• Slow paid accounts

The A+ Credit Tier is certainly the benchmark for anyone aspiring to have an excellent credit rating. It is well worth it to pay bills in a timely fashion and to not get in over your head with too much debt.

A+ Credit Tier customers will qualify for special car buying promotions like 0% financing with no doc loans^oac. With both the savings from low APR financing and the convenience of no doc loans, this is definitely the Tier you want to be in.

A 740 FICO score is considered great and a 775 or higher score is considered excellent. What’s your Credit Score? Find out FREE!.

The typical FICO score - BEACON score for the A credit tier is
700 - 739 and is also referred to as:

• 1 Tier Credit (Ford Motor Credit)
• A Tier (GMAC Financial)
• Platinum Tier
• Tier 1 Credit (Auto lenders that don't use lettered credit tiers)

Very similar to an A+ Tier customers with regards to the positives needed. Typically what causes someone to fall into the A Tier as opposed to the A+ Tier is simply a lower FICO score - BEACON score.

Credit scores for
A Tier customers drop when:

• There may be too much new credit reporting on you credit file.
• If there a multitude of new credit inquiries.
• Your revolving balances (credit cards) have gone over 35% of your available credit limit.
• A small (under $300) collection is reporting as unpaid.

The items auto lenders do not want to see is similar to A+ Tier, with a little, I stress a little, more flexibility for slow paid accounts or small collections.

The allowance for slow paid accounts does not include any slow paid mortgage or auto loan accounts.

It's fairly simple to fall from the A+ Tier into A Tier. Small things like going a few percentage points over your balance to limit ratio on credit cards, new inquiries, new accounts, etc.

If you want to keep your A tier credit rating, or even move up to an A+ tier credit rating, then you'll want to stay on top of your credit. What does your credit report say about you? Free Credit Report + Score. See yours at CreditReport.com!.

The typical FICO score - BEACON score for the B credit tier is
660 - 699 and is also referred to as:

• 2 Tier Credit (Ford Motor Credit)
• B Tier (GMAC Financial)
• Gold Tier
• Tier 2 Credit (Auto lenders that don't use lettered credit tiers)

Very similar to an A Tier customer with regards to the positives needed.

Credit scores for
B Tier customers drop when:

• There may be too much new credit reporting on you credit file.
• If there a multitude of new credit inquiries.
• Your revolving balances (credit cards) have gone over 50% of your available credit limit.
• A small (under $300) collection or multiple small collections are reporting as unpaid.
• There are slow pays reporting in the recent past (credit cards, etc.).

The items auto lenders do not want to see are similar to A Tier, with more flexibility for slow paid accounts and/or small collections.

One or two slow pays on a mortgage and/or auto loans are usually acceptable, but typically must be over 12 months old and not regularly late.

One small medical collection, that you may not even know about, can quickly drop you from either A+ or A Tier credit. It's easy to move up from B Tier, but you'll need to stay on top of your credit...Dispute any inaccuracies and settle any legitimate collections quickly.

Mistakes and/or inaccuracies in your credit report can cost you. The difference in rates between A+ and B tier can be 4% points or more. Mistakes in your credit report can cost you! Check it for accuracy - $0.

The typical FICO score - BEACON score for the C credit tier is
581 - 659 and is also referred to as:

• 3 Tier Credit (Ford Motor Credit)
• C Tier (GMAC Financial)
• Silver Tier
• Tier 3 Credit (Auto lenders that don't use lettered credit tiers)

This is the hardest tier for me to give advice on without knowing more about your Ability, Stability and Past Credit.

Customers that fall
into the C Tier typically:

• Less than 5 years credit history.
• They maybe moved a little bit with their jobs or residence.
• Have slowed paid on credit cards and maybe even auto loans a mortgage.
• Have high balances on credit cards.
• Have current collections (not totally out of control though).
• Some, but limited charged off accounts.
• Some, but not a lot of recent bad credit.
• May have had a bankruptcy in the past (over two years old).

As mentioned just above, C Tier customers can go in either direction fairly quickly. If you make the small investment of time to check your credit for inaccuracies (dispute them) and/or pay any legitimate collection accounts, then you can be back on top in a rather short period of time.

If you choose not to, then it is not too hard to slip into either the D or F tiers. It's ultimately up to you, but keep in mind the difference in rates between A Tier and F Tier can be 20% or more...Ouch!

Check your Credit Report and Score – Fast, Free & Easy at CreditReport.com.

The typical FICO score - BEACON score for the D credit tier is
520 - 580 and is also referred to as:

• 4 Tier Credit (Ford Motor Credit)
• D Tier (GMAC Financial)
• Bronze Tier
• Tier 4 Credit (Auto lenders that don't use lettered credit tiers)

Customers that fall
into the D Tier typically:

• Have no credit history or a bad credit history.
• Have limited or no good credit.
• Move job to job in short periods of time (three or more in a two year period).
• Relocate frequently, state to state makes for a higher risk.
• May have had a repossession and/or multiple slow pays.
• May have had a bankruptcy in the recent past.
• May have had a foreclosure (over three years old).
• Have multiple collection accounts and possibly multiple charged off accounts.

If you feel that you may fall into the D Tier, Do Not Despair!

It is still very possible to get approved for an auto loan, but you'll just need the help of a special finance loan specialist. See my bad credit auto loans page for your approval details.

Don't let one dealership, or lender turning you down discourage you from getting the vehicle you need. You may also qualify for No to Limited Money Down^oac* in this Tier.

Although you can still get approved for car loans it's in your best interest to try and repair your credit prior to buying. It can literally save you thousands of dollars in finance charges.

What does your Credit Report say about you? Check yours at CreditReport.com - $0

The typical FICO score - BEACON score for the F credit tier is
below 520 to 300 and is also referred to as:

• 5 Tier Credit (Ford Motor Credit)
• E Tier (GMAC Financial)
• Subprime Tier
• Tier 5 Credit (Auto lenders that don't use lettered credit tiers)

Customers that fall
into the F Tier typically:

• Have a substantially bad credit history.
• Have very limited or no good credit.
• Move job to job in short periods of time (three or more in a two year period).
• Relocate frequently, state to state makes for a higher risk.
• May have had one or more repossessions and/or multiple slow pays.
• May have had one or more bankruptcies in the recent past.
• May have had a recent foreclosure or are currently delinquent on a mortgage.
• Have multiple collection accounts and multiple charged off accounts.
• Have had major derogatory accounts after a bankruptcy.

If you feel that you may fall into the F Tier, as with D Tier, Do Not Despair!

It is still very possible to get approved for an auto, but you'll just need the help of a special finance loan specialist. See my bad credit auto loans page for your approval details.

By the way, your FICO score - BEACON score really don't have much of a bearing for an auto loan approval in the F Tier. Lenders are more interested in your ability to pay.

As with D Tier, don't let one dealership, or lender turning you down discourage you from getting the vehicle you need. No money down is probably not going to be an option here, but you may qualify for Limited Money Down or you may use the equity from a trade in.

Now that we've covered the different credit tiers and the typical FICO score - BEACON score for each, take a look and see how your credit stacks up to the rest of the country.

What’s your Credit Score? Find out FREE!

If you find that you are falling into one of those bottom tiers, it's time to do yourself a favor and start rebuilding your credit. Review your credit report, dispute any inaccurate information and start settling some of those collections today.

It's well worth the time and effort to raise your FICO score and clean up your credit...Trust me, it will save you thousands in the long run.

Ability is the Ability to pay back the loan. Do you make enough money to cover this new monthly payment you'll be taking on?

There are two areas auto lenders look at here:

• Payment to Income ratio -
  Car payment divided by your gross monthly income.
• Debt to Income ratio -
  Total monthly out go (from credit report) divided by your gross monthly income.

Stability gives an auto lender an idea of how grounded you are. A "more stable customer" will have a good work history, not a new job in a new field every 3-6 months.

The same applies for residence history:

If you were living in New York in 2005 and moved to Las Vegas in 2006, then to Los Angeles in 2007, and finally to Dallas in 2008, that's not good for an auto lenders scoring system.

You would be considered a higher risk.

Lastly, is Past Credit History, which was broken down for each individual credit tier above.

In addition, different auto lenders will have different criteria.

For instance, Lender "X" could use a 700 score to qualify for their A+ Tier loans, while Lender "Z" will only provide A+ Tier rates at a 740 or higher FICO score - BEACON score.

The same applies to non prime and sub prime auto lenders, although your FICO score - Beacon score won't play as big a factor as Ability, Stability and Past Credit History.

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