The New FICO Score That Could Help Car Buyers

If you’re in the market for a new car, the latest credit score update from FICO could be good news.

The new scoring model, called The FICO Auto Score 9 XT, is designed to help paint a better picture of consumer’s financial behavior by analyzing up to 30 months of “trended” credit card data provided by credit bureau TransUnion. According to a FICO press release, the data includes “information about key risk factors, such as whether a consumer is increasing or decreasing credit card balances, making more than the minimum payments on revolving accounts, and increasing or decreasing credit utilization.”

This information is intended to providers lenders with an expanded view of a consumer’s credit use. (Traditional credit reports only offer lenders a snapshot of credit card data —generally what your balances are and whether an account is in good standing — at the time they are pulled.) It could help make auto loans more accessible and affordable for people previously shut out of the market.

“It allows auto lenders to approve more consumers or provide better terms by using a score that performs better for auto lender than prior versions,” Sally Taylor-Shoff, FICO Scores Vice President, said in an email.

The FICO Auto Score 9 XT also doesn’t include collection agency accounts that were paid in full and makes a clear distinction between unpaid medical accounts in collections and unpaid non-medical accounts in collections.

“The net effect of this approach is that many consumers with paid collections or medical collections in their credit files will have higher scores with FICO Auto Score 9 XT than with earlier versions of the FICO Auto Score,” the company said in the release.

Understanding Your Credit Scores

Of course, prospective car buyers with thin credit shouldn’t necessarily expect to have an easier time coming across an auto loan just yet. As this new FICO score was just announced, lenders haven’t adopted it yet.

“Most lenders will conduct an evaluation before switching to a new score,” Taylor-Shoff said.

Remember, there are dozens of companies with their own credit-scoring formulas, and these companies often have more than one scoring model. FICO alone has more than 50 FICO credit score formulas. Fortunately, you don’t need to see every single one to get a good idea of where you stand. Focus on what’s behind the scores, as opposed to the numbers themselves and track a specific score over time to see how your financial behaviors are affecting major credit score categories, like credit utilization and payment history. (You can see two of your credit scores for free each month on Credit.com.) You can also generally build good credit in the long-term by making all loan payments on time, keeping debt levels low and adding a mix of accounts as your wallet and score(s) can handle it.