Phone: 630-495-2282 Fax: 630-495-2260 Map/Directions

More customers with FICOs under 670 gaining approval: CNW

November 15, 2010

The number of customers with a FICO credit score under 670 who get approved for a vehicle sale or lease is climbing upward, according to the latest data from CNW Research.

After plummeting to an average of 6.52 percent of all approved loans last October, the number of approved FICOs under 670 grew to 10.63 percent in February. But that still lags January 2008, when the number was 12.07 percent.

CNW also reported that after reaching an average high of 759.49 in October, the median FICO score for February also declined to 723.69.

"Some of this can be put at the feet of financial institutions willing to ease back on credit requirements," said CNW’s Art Spinella. "And an equal amount can be attributed to those people with marginal FICO scores coming back to the market."

In another analysis, CNW found that closing ratios have dipped for dealers.

Spinella said: "It may sound weird, but the industry is showing some signs of life because of closing ratios coming down. Fewer people in showrooms are buying. How can that be good news?

"One of the reasons the closing ratios reached nose-bleed heights in the final quarter of last year can be traced to the fact a larger percentage of people buying cars were in need of a new set of wheels. The lookers, who turn into buyers some months hence, were staying home."

Those types of buyers are "beginning to come alive," Spinella said.

CNW’s Floor Traffic Index showed some life after being down much of 2008.  "The trend line is barely perceptibly up, but up nonetheless," said Spinella. "And with that comes the concurrent decline in closing ratios. When will this be seen as solid sales gains?

"Considering the average new-car shopper takes six months from initial consideration of buying a car or truck until actual acquisition, don’t expect too much before the third quarter of this year."