Your FICO Score can be the key that opens the door to approvals with low rates or the key that completely locks you out...
Your all important FICO score will range from roughly 0-877 (depends on the credit bureau version) and is the major factor in determining what credit tier most lenders will place you in.
Like the scales of justice, a lower score will equal higher interest rates and a higher score will equal much lower rates. Overall this can equal thousands of dollars in interest charges!
It's well worth it to pay attention to yours as a big score is like a master key that opens many doors to many lenders, while a low score opens far fewer doors...
Your FICO score is the first thing that most auto lenders will look at to determine:
The first thing you'll want to know when determining, or understanding, what credit tier you fall into (below) is how most lenders scoring models work. In other words, How Lenders See You!
All auto lenders are not created equal, but share some common traits. The three main credit factors (besides score) all auto lenders look at when determining if they'll give you a loan and what credit tier you'll fall into are your:
Don't pass the lenders minimum requirements in one of these categories and it
doesn't matter what your FICO score is...You're not getting a loan!
If you do pass those requirements, then your score is key to you getting the best rates. Keep in mind...
A Higher FICO Score =
Lower Monthly Payments!
The typical FICO score for the A+ credit tier is
740 - 877 and is also referred to as:
Customers that fall into the
A+ Credit Tier will qualify for:
To qualify for the
A+ Credit Tier you'll typically need:
not want to see:
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 loansoac. 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.
Here are 4 keys on How To
Get Good Credit. 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.
A 740 FICO score is considered great and a 780 or higher score is considered excellent.
The typical FICO score for the A credit tier is
700 - 739 and is also referred to as:
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.
Credit scores for
A Tier customers drop when:
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 within the last two years.
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.
There are also some myths surrounding a 700 Credit
Score. Let me tell you, it ain't what it used to be! Don't be tricked into
thinking a 700 FICO score means an instant, easy approval.
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?
The typical FICO score for the B credit tier is
660 - 699 and is also referred to as:
Very similar to an A Tier customer with regards to the positives
Credit scores for
B Tier customers drop when:
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.
The typical FICO score for the C credit tier is
581 - 659 and is also referred to as:
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:
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.
Get that Collection
Removed. When you are cleaning up your credit it's important to not just pay
it, but remove it! This is very important to raising your FICO score, getting
into the highest credit tier and overall improvement of your credit
You may also want to consider whether or not to 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?
If you've already had to file bankruptcy and are looking at Buying
A Car After Bankruptcy, then you'll want to follow that link to view some
valuable questions and answers that may help you understand the
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!
The typical FICO score for the D credit tier is
520 - 580 and is also referred to as:
Customers that fall
into the D Tier typically:
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 Downoac* 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.
The typical FICO score for the F credit tier is
below 520 to 250 and is also referred to as:
Customers that fall
into the F Tier typically:
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 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.
|499 and below||5 percent|
It's interesting to note that the 2 levels of credit that have changed the most in recent years is the very highest level (increased 146%) and the lowest credit tier (increased 250%).
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 clean up your credit, raise your FICO score and get into the top credit tiers...Trust me, it will save you thousands in the long run. Read Understanding Credit Report Score for more information.