How lenders analyze credit scores depends on what the three major credit reporting agencies – Equifax, Experian and TransUnion – provide them. There are other entities – banks, credit card companies, and even identity protection services like LifeLock – that will give you a free credit score. To be aware. These scores might not encompass your full credit history and therefore might paint a rosier picture.
For example, a credit card company or a bank may provide a very high credit score, say 850. So you find a way to submit that number with the loan file. However, when the lender withdraws your credit along with the loan, the score can be 50 to 100 points lower, much to the chagrin of the loan seeker.
The cause of the discrepancy may be that the financial entity is basing your credit score solely on variables they know about, such as credit cards or mortgages you have with them. In other words, it’s a largely superficial representation, not your full financial picture. Typically, for the scores they provide to you for free, credit card and credit service companies have negotiated a bulk deal for a less expensive FICO model with the credit bureau(s). The FICO model they use to help with the credit decision is often more comprehensive and different from the model they provide for free to use their services.
To be clear: despite popular opinion, unless a potential buyer purchases rates from many different lenders, and therefore their credit profile is pulled multiple times in a short period of time, AOPA Aviation Finance or the one of its partners pulling your credit once will not significantly affect your credit score.
For the most part, in the world of aircraft financing, there isn’t a big difference between credit ratings. If a person has very bad credit — a score below 650 — they are unlikely to find financing. A person is considered to have good credit with a score between 680 and 700. Options such as term, amortization, and rates may depend on where you are within that range. There are also other factors besides the score itself – previous bankruptcies, foreclosures, write-offs, past due – how long ago and for what type of credit this factor in lenders’ decision-making process.
It is important to remember that a credit score is only part of the overall financial picture. That said, good credit generally corresponds to a score above 700 points. There are lenders that will lend to applicants with a credit score below 700, but they may have shorter terms, higher rates, etc.
Very good advice. Excellent rates. Helpful and responsive representatives you can trust. Three good reasons to turn to AOPA Aviation Finance when purchasing or refinancing an aircraft. If you need a reliable source of financing with people who are on your side, just call 800.62.PLANE (800.627.5263) or click here to request a quote.