TransUnion, one of the three major credit bureaus, released their latest quarterly Auto Insurance Risk Index (IRI).  This Index is a barometer for the auto insurance industry and is related to expected insurance loss from auto claims. TransUnion’s Auto Insurance Risk Index decreased for the past four quarters and increased .03 percent in third quarter 2011 to an Index of 98.85, compared to an index of 98.82 in second quarter 2011.  It was .31 percent lower than a year earlier with an index of 99.46.   At the peak of the recession (second quarter 2009), the index was 99.58. read more »

First, what is auto loan yo-yoing?  You purchase a car and drive away with the car thinking that the loan has been approved. The dealer calls you to inform you that the financing has fallen through and you need to renegotiate. This scam is called yo-yoing because it seems as though the car is tied to a yo-yo string and the dealer can get it back. Individuals with poor credit are subject to this scam; they aware they have poor credit and can’t get the best interest rates.

How it works read more »

Equifax, one of the three recognized national credit reporting agencies, conducts a monthly report called the “Equifax National Credit Trends Report.” It uses Equifax data from more than 585 million consumers and 81 million businesses worldwide.  The latest report released in November 2011 was based on July 2011 data. The largest increase in new auto loans in the past two years was from auto finance companies, than from banks and credit unions.  This increase included both prime and subprime borrowers; subprime borrowers are those below an Equifax score of 640.

Report Highlights

In July 2011, 1.7 million auto loans were originated totaling $32 billion.  The breakdown was 51 percent from auto finance companies and 49 percent from banks and credit unions. read more »

In May 2011 Experian, one of the three major credit reporting agencies, released the results of their quarterly analysis of the automotive credit industry for Q1 2011.  It actually appears it’s a little easier to get a loan in 2011 than in 2010. It indicated an increase in new car loans in the last year to those with less than perfect credit and credit scores. The credit score used in the analysis was Experian’s proprietary credit score which has similar score ranges as FICO.  Experian’s credit score ranges are 330 to 830 and FICO’s range is 300 to 850. read more »

Your credit score has a major impact on the interest rate you pay for your car loan. MAJOR!  There are many online tools that give your rates based upon your credit score, but before you even begin to shop let’s dig into just how important that three digit number is to your ability to get an auto loan.

The credit score predicts credit risk and for most scoring systems a high score indicates lower risk.  As such, the interest rate will be lower.  On the other hand, a low score indicates higher risk and you would pay higher interest rates, or be denied straight out.  Those with lower scores will have to pay more to get financing. read more »

If you are evaluating whether to lease or buy a car, you need to be aware of all the costs.  And, what are the pros and cons of leasing versus buying?

Leasing advertisements focus on the monthly payments which are usually much lower than that of car loans. The lease terms are shorter and often require a large down payment. There are usually additional fees and penalties related to the lease such as penalties for exceeding mileage. At the end of the lease, you don’t own the car or have any car payments..unless you’ve exceeded the mileage allotment. read more »

There are many types of credit scores.  Most people are familiar with FICO’s credit score, mainly used for mortgages and refinancing home loans or home equity lines of credit.   However, there are many other types.  For example, there are alternative credit scores for auto loans, insurance and even to determine employment status.  All the scores are based on your credit report information, but are just calculated in different ways.

The auto score is a very popular alternative to the standard credit score and it is important consumers understand who can look at it.

The auto lending industry uses a specialized auto score, usually from FICO.  It’s called the Auto Industry Option Score.  Approximately 90% of auto loans use this auto score instead of the more familiar credit score.  The auto score judges your credit risk more heavily weighted to your prior auto loan or lease payment history.

Who can look at your auto score:  auto lenders, auto dealers and you.  Your permission is required, in the form of a signed credit application, for an auto dealer or lender to view your auto score.

You can view your auto score by becoming a member of SmartCredit.com Whenever you update your credit report, all your credit scores are updated as well, including your auto score.

Be sure you understand there is a difference between your credit score and your auto score.  Confusion often is to the advantage of the auto dealer.

Click here for more information on this Auto Scores >>

What can you do?

Be proactive by using SmartCredit.com and ensure all your scores are the best they can be.  Smart Credit’s patent-pending Action buttons communicate directly with your creditors for anything you need, including improving your auto and credit scores.

Its simple.  Just use Smart Credit’s innovative credit report and click on action buttons to talk directly with your creditors to get better interest rates or ask your creditor anything.  No need for phone calls, writing letters or looking up account numbers.  You can fix credit report errors, get goodwill corrections, recover from identity theft, replace a lost or stolen credit card or settle a debt all directly with their creditors.  It’s fast and effective!

Always Active Complete Protection gives Smart Credit members the most complete credit monitoring and identity protection available.  Having only one or the other is not enough.  It also includes our Mobile Rapid Response action button in alerts for the fastest way to stop identity theft.

David B. Coulter – Founder and C.E.O. of SmartCredit.com

When buying a car most people don’t know their credit score is not used to determine their car loan.  Instead, a different score is used.  It’s something called an Auto Industry Option Score (‘Auto Score’).  This auto score is usually calculated by FICO exclusively for use by auto lenders to determine your loan qualification, down payment and interest rate.

Almost 90% of auto lenders base their lending decision on your auto score. It is calculated primarily on your previous auto loan history and not your overall credit as would normally be the case for a mortgage or credit card.  You would be surprised how many people can get a car loan and not a credit card.

Many lenders are willing to give out auto loans to those with less desirable credit scores. This is because studies have shown people with poor credit histories will generally keep their auto loan payments in pretty good shape all the while letting their other credit go unattended in one way or another.  This is another reason why they need an auto score to better guide their lending decision.

Because lenders are more likely to use your auto score, instead of your credit score, getting an auto loan can be a great way to build or restore your credit. Make those payments on time and begin to build up a positive credit history.

Know your auto score.  SmartCredit.com includes our auto score at no additional charge.  It is heavily weighted on the following credit report factors, which FICO also uses in their auto score:

- An auto loan or lease sent to collections

- Any late payments on an auto loan or lease

- An auto loan or lease settled for less than owed

- A repossession by the lender

- Previous two year overall credit

Smart Credit’s auto score range is between 350 and 850:

How to best prepare for an auto loan application?

Make sure your credit report is the best it should be before you apply for an auto loan.  Use Smart Credit to fix errors, get good will corrections and settle out debts.  It’s fast and easy with our action buttons.

Being proactive with your credit will not only improve your credit score, but will have a positive impact on your auto score as well.  Especially, if you take these actions on your current or past auto loans.

David B. Coulter – founder and C.E.O. of Smart Credit