OCTOBER 2004

Auto Loan Delinquencies and Credit Scores

Experian, one of the three large national credit report repositories in the U.S., has developed an interesting website for consumers to learn more about their credit reports and credit scores (www.nationalscoreindex.com). From time to time this site also reports on national trends in credit scores, as calculated in the Experian National Score Index. In a recent report, Experian provides some insight regarding the impact of auto loan delinquency on credit scores.

The Experian National Score Index is based on a representative national sample of 3 million individual consumer credit reports. For each credit report in the sample, the company calculates a proprietary PLUS score (acronym for Plan, Live, Understand and Succeed). This score is roughly comparable to the better-known FICO score product from the scorecard firm Fair Isaac. In fact, the PLUS score is scaled similarly to FICO scores, ranging from a minimum of 330 (signaling very high risk) to a maximum of 830 (signaling very low risk).

In its latest website posting, Experian reports 38% of consumers have at least one auto loan or lease on file, and 22% of these were opened in the past 12 months. The average balance on open auto loans and leases is $23,143. The average monthly payment for auto loan and lease holders is $383. About 11% of consumers who are financing autos have monthly loan or lease payments in excess of $400. Experian's PLUS score falls sharply with an auto loan delinquency. The average PLUS score for auto loan or lease holders with no delinquency is 689. But, the average PLUS score for consumers with 1 or more late payments on auto loans or leases drops to 596. About 1.5% of consumers with auto loans on their credit report also have a repossession listed as well.