FICO Score Irrelevance

[kornellred]

One of my sons obtained a Chapter 7 discharge about one year ago. A couple of months after discharge, he obtained a 14% auto loan and bought a new car. Three months ago, he converted the loan to a 6% loan through the credit union he joined at his workplace.
Last month, he traded in his vehicle and got a leftover 2011 Toyota Prius for 0%APR. When he first walked in to the dealership he was told that he did not qualify for the 0% promotion. As he was headed for the exit, the salesman blocked the door and said to wait - he would see what he could do.
I think it is probable that my son pulled off this feat because he was making double payments on the vehicle he traded in. But it does expose the gimmickry involved in so-called 0% financing offers. Dealers do not sell vehicles at a loss, and lenders do not lend money for free. Now my son is paying $100 per month less on an auto loan, and is driving a car that gets 70 MPG.

Chapter 7 bankruptcy is actually wonderful!

[DYLAN150]

Nice!

[justbroke]

FICO is not irrelevant. In fact, if a person had relatively good credit before filing -- some people actually do -- they will emerge quite successfully on the other side of a Chapter 7. Auto scoring is different than the standard FICO score. It's actually called an "enhanced auto score". My Auto Score is actually near 700 where my regular score is many points under that "auto score". The auto score looks at how you handle prior automobile loans and other installment loans. It's not as hard on you for DTI and credit limits on revolving cards as the regular FICO score is.

A year after a Chapter 7 discharge, without having alot of inquiries, new credit, high utilization, missed payments, collections, or anything else... a typical Chapter 7 debtor should be able to get a decent car loan.

A Chapter 7 discharge won't be as nice to a person with the opposite credit profile. In any event, 2 years after Chapter 7 and staying "clean" should have you easily in the high 600s even if you were "bad" before filing.

[DYLAN150]

JustBroke: How did you get your auto score? From Dealer?

[justbroke]

JustBroke: How did you get your auto score? From Dealer?

Yes. it was on the approval "certificate" from Toyota Financial Services. There was a time when Equifax would actually sell you the score, but no one offers the enhanced auto score for purchase to consumers any longer.