Do you plan to buy a car? Check out your FICO Score

A new scoring system which is revealed by FICO will be applied to people who plan to purchase a vehicle. According to Tom Quinn, FICO’s vice-president of scoring, while initial lenders of auto loans will start using it in several weeks, a credit bureau, such as TransUnion, began making the new scoring system available in March of 2009. Press-releases of FICO state that new system will identify 5 to15 % more potential delinquencies.

While some auto industry specialists view the release of the auto industry score as a positive step for consumers, no one can state whether it is good or bad for consumers at present.

Non-transparency of the scoring model is one of the things that make it difficult to state its advantageous or disadvantageous nature to consumers. This view was expressed by a publisher of the “Privacy Times”, Even Hendricks, and other experts who say that it would be better if more information on the criteria of eliminating the additional 5-15% of delinquencies was provided.

When FICO score is applied, the risk is measured with credit in general based on the credit report which can be purchased at MyFICO.com or Experian.com. Furthermore, FICO is also used to produce industry-specific scores to banks, auto lenders and mortgage lenders.

Quinn says that for the majority of consumers the auto industry score will be relatively close to the FICO score with a percentage of the population being different only. 

The new FICO score enables to better differentiate consumers with minor delinquencies from those who are with major delinquencies. This will benefit consumers in a way that they will not lose many points for having minor delinquencies. 

Given the possible benefits of the new scoring system, potential car purchasers will still have another difficulty for next year or two: they will not know the scoring model which their lender uses.