Question about FICO Auto 8

Ask the Hackrs Buy/Finance
1

I subscribe to MyFICO so have access to my Auto 8 score. Is it common for dealerships to default to the lowest score of the 3 bureaus? My Equifax and Experian scores should keep me in Tier 1 or at least Tier 2 for my MF, but they are exclusively using my Transunion which pushes me below Tier 2

2

In the case of BMWFS, I believe they use TU, but if a dealer runs your Experian and itā€™s in a higher tier, they can request a bump.

I think no one really uses Equifax anymore.

3

any experienced f&i manager can usually ā€œcall in a favorā€ if being tier 2 keeps you from closing a deal.

4

F&I definitely cannot call in a favor to affect underwriting. They may be neutering the CFPB, but thereā€™s no way a credit risk process would allow this.

F&I can possibly work with the GSM to put more discounts to offset the more expensive financingā€¦ or help you shop a cheaper loan with a local CU that pays an origination spiff. But that wouldnā€™t help on a lease.

5

iā€™m sorry, what? this happens all the time. these are car loans/leases, not mortgages. i personally have had tier bumps with captives by threatening to walk

6

Loans and leases have to be packaged up and sold or re-financed via asset backed securities or warehousing the debt through established financing vehicles.

They arenā€™t able to ā€œtier bump youā€ since ultimately your FICO, FCF, and other underwriting metrics need to go into the bundle of loans/leases.

The F&I person can help find money out of the margin to help keep the payment the same, but they canā€™t affect where underwriting and credit risk had you scored and the interest (to cover their spread and possible losses) were priced.

If someone told you they ā€œtier bumpedā€ you, it was just to stroke your ego so you felt like you were a Tier 1 again. The reality is you remained at your previous tier, and they had to subvent the difference on their own. Net-net they closed the sale and you got what you wanted. But donā€™t delude yourself that some F&I person can affect how a credit risk model scores you.

Conversely, they could have always quoted you at a higher interest rate and simply dropped down to the buy rate if underwriting didnā€™t have you come back as Tier 1. I think thatā€™s why some showrooms out here in California will refuse to quote buy rateā€¦ since so many people donā€™t qualify for buy rate they need the flexibility to give up financing margin if someone doesnā€™t come back as Tier 1.

7

I think youā€™re reading way too much into my original statement. thatā€™s why I put ā€œcall in a favorā€ in quotes, there were no favors other than someone in a call center overriding a decision made by a robot

8

Yeah one interesting thing that was news to me was when thevolvoguy mentioned Volvo either approves people or they donā€™t. He indicated there was no tier scoring and sliding scale as credit risk went up. This suggested thatā€¦

  1. Volvo wouldnā€™t approve low credits (which would take out a ton of borrowers and unit sales).

  2. Volvo was subventing loans and leases for people that should have been Tier 2 (or worse) to be as if things were Tier 1 (ultra expensive for Volvo)

  3. Volvoā€™s true Tier 1 high FICO customers were paying a premium to offset how lower credits were paying the same financing rates. (would mean if you were really a Tier 1, getting a Volvo would be a bad idea).

9

Volvo does

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TU is the one I rarely have to unlock.

F&I calls their buyer at the captive and ask an (ideally their) Analyst to review it and see how they might team up to push it through. Sometimes itā€™s an exception, often itā€™s more documentation/stips.

10

Or the ā€˜favorā€™ is to shop it to another bank.

11

This is not what they pulled they just reported a new account.
Most banks report to all 3

12

Thatā€™s how MCā€™s credit reporting tool display an inquiry (under notifications), the account open date was a couple days later.

They can hypothetically pull from all 3 but typically just 1 - I just had a business credit card pull 2/3.

They can hypothetically report to all 3 bureaus like you mentioned, not all captives always choose to.

13

I donā€™t recall ever having more than one bureau pulled for the same auto finance transaction, loan or lease. Sometimes thereā€™s a dealer pull and a finance company pull on the same transaction, but theyā€™re generally from the same bureau.

[Iā€™m doing this from memory]

14

Thanks everyone for the input. I was able to get the dealership to acknowledge my Experian score to get me to tier 1.