Which Credit Score Do Car Dealerships Use and How Many Months Should You Finance a Used Car?
A substantial majority of dealerships will refer to your Fair Isaac Corporation (FICO) score when assessing you for financing. In fact, 90 percent of lenders rely on this score for credit decisions due to FICO’s focus on a borrower’s ability to repay a debt.
The other major but less commonly utilized score is VantageScore, which provides consistent scoring for Equifax, Experian and TransUnion. Credit score can significantly impact your car buying experience. If you have a subprime score, you may have more trouble securing approval or getting low interest rates.
At Easterns Automotive, we look at more than just your credit score when assessing auto loan eligibility. We’re the dealership where “Your Job is Your Credit™”. As long as you have a job, we’ll leverage our network of auto lenders to customize financing solutions to meet your needs, so you can secure reliable transportation easier and with minimal stress.
FICO vs. VantageScore
FICO is the most widely recognized credit score. With a range of 300 to 850, FICO scores are primarily utilized to assess a borrower’s risk level. A variety of factors are considered while evaluating your ability to repay an auto loan, but some carry more weight than others, including:
- Payment history (35 percent)
- Debts owed (30 percent)
- Length of credit history (15 percent)
- New credit inquiries (10 percent)
- Your amount and mix of credit accounts (10 percent)
VantageScore was created by the three major credit bureaus – Equifax, Experian and TransUnion – for the purpose of providing a consistent scoring method across all three bureaus. If you use Credit Karma, the score you see on your dashboard is your VantageScore.
VantageScore has the same range as FICO but places more emphasis on total credit usage, balances and how much credit you currently have available and less on your credit experience and payment history. Put simply, VantageScore fixates on your current credit situation, while FICO places more weight on your credit history.
When applying for auto financing, it’s typically better for borrowers to have their FICO evaluated than their VantageScore. FICO scores are only generated once a user has an open account for at least six months. In contrast, VantageScore will assign you a score even if your history is as short as one month. Longer histories are ideal for those looking to get a favorable loan on a new car since having a longer history typically translates into a better score and credit report.
Moreover, it’s easier to qualify for a good loan with a lower FICO score than a lower VantageScore. Lenders typically require a minimum score of 600, but those with a 500 can occasionally qualify (although they may be subject to higher interest rates, depending on the lender). A VantageScore below 700 will have a low chance of securing a favorable loan, and those with a 500 may have a hard time being accepted for a loan in general.
How Many Months Should You Finance a Used Car?
Your credit score will also impact the conditions of your auto loan, including your loan term. How long you should finance a car will depend. A long loan term can allow car shoppers to disperse the cost, but their monthly payments will usually be higher. A short loan term will not cost you as much on a monthly basis, but your interest rate will likely be inflated.
The most common auto loan terms include:
- 36 months: Shortest term available with lowest interest rates, but higher monthly payments.
- 48 months: Moderate term length with adequate monthly payments and interest rates.
- 60 months: Longer term with lower monthly payments but higher interest costs.
- 72+ months: Prolonged term with very low monthly payments but higher total interest costs.
If you can comfortably afford it, higher monthly payments can help improve your credit score more than a higher interest rate. If you can’t afford the higher monthly payments on a shorter term, you should try to secure a moderate loan term between 48 and 60 months with balanced monthly payments and interest rates.
We’re Dedicated to Helping You Find the Right Car at the Right Price – Regardless of Your Credit Score
Shopping at a dealership that focuses less on your score and metrics and more on your needs will elevate your chances of securing a stress-free auto loan. At Easterns Automotive, every payment you make through us will be reported to credit bureaus, so buying one of our reliable certified pre-owned vehicles can directly translate into gradual credit score improvements – allowing our customers to secure dependable transportation and improved financial stability simultaneously.
Call 888-650-4775 today to learn more about our assiduously maintained, certified pre-owned cars and our personalized financing options.
