When scores don't mean 'doo-doo'

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A friend of mine recently got out of debt, which boosted his credit score.

But when he enthusiastically told me the news, I was nonplussed.

After all, what did his credit score really mean in the scheme of things?

Credit ratings are subject to each lender's evaluation and ranking. So what is considered near-prime with one lender might be subprime to another.

Case in point: I asked a couple of F&I managers for the current average subprime score.

I got various answers. It's basically a score below 600 or 590 with the bottom of the range at about 520. Anything below 520 is abysmal.

Meanwhile, a prime rating is usually defined as a credit score above 700.

But even that's a bit misleading.

As one of the F&I managers, Eric Judson of David Chevrolet-Buick in Niagara Falls, N.Y., said, "Credit scores often don't mean doo-doo."

Judson recalled two customers he had back-to-back, about two months ago. One was a vice president of a local business. He was in his 50s. This man has had numerous auto loans and mortgages and was earning more than $200,000 a year. His credit score was 771.

The next customer was a 19-year-old woman who had an authorized user account with a $500 limit in which her parents enrolled her when she was 12. She had a part-time job earning $900 per month. Her credit score? 778.

"The judging of credit scores is ambiguous at best," says Marv Eleazer, finance director at Langdale Ford in Valdosta, Ga. "Especially considering there are three major units publishing them, not to mention that lenders have their own internal scoring systems that augment credit scores."

He adds: "Which is why lenders have developed and constantly tweak the internal scoring systems. The bureaus publish scores for a variety of industries and market customized models for each."

I'm still nonplussed.

You can reach Jamie LaReau at jlareau@crain.com. -- Follow Jamie on Twitter

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