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The good, the bad, and the ugly

Why are there differences in credit scores?

There are three types of credit scores in the eyes of an airplane lender: really good credit, good credit, and bad credit.

How lenders analyze credit scores depends on what the three major credit reporting agencies—Equifax, Experian, and TransUnion—provide them. There are other entities, such as banks, credit card companies, and even identity protection services like LifeLock, that will offer you a complimentary credit score, but be aware. Those scores might not encompass your full credit story and therefore might paint a rosier picture.

For example, a credit card company or a bank might provide a very high credit score, say 850. So, you find a way to submit that number with the loan package. However, when the lender pulls your credit in conjunction with the loan, the score might be 50 to 100 points lower, much to the chagrin of the loan applicant.

The cause of the difference may be that the financial entity is basing your credit score only on variables it’s privy to, such as any credit cards or mortgages you have with it. In other words, it’s a largely superficial representation, not your full financial picture. In general, for the scores they provide to you at no cost, credit card and credit service companies have negotiated a deal in bulk for a less costly FICO model from the credit bureau(s). The FICO model they use to aid in lending decisions is often more comprehensive and not the same as the model they provide free of charge for utilizing their services.

To be clear: Despite popular opinion, unless a potential buyer is shopping rates with many different lenders, and thus having your credit profile pulled many times in a short span of time, AOPA Aviation Finance or one of its partners pulling your credit once will not materially affect your credit score.

For the most part, in the aircraft finance world, there’s not a big difference between credit scores. If a person has got really bad credit—a score below 650—they probably won’t find financing. A person is considered to have good credit with a score that falls between 680 and 730 and excellent credit with a score more than 730. Options such as term length, amortization, and rates may depend on where you fall in that range. There are also other factors outside of the score itself that affect the lenders’ decision-making process: prior bankruptcies, foreclosures, charge-offs, delinquencies, how long ago the event was, and for what type of credit.

It’s important to remember that a credit score is only one part of the entire financial picture. Some lenders will lend to applicants with a sub-700 credit score; however, they may have shorter terms and higher rates.

[email protected]
800-62-PLANE (800-627-5263)

Adam Meredith

Adam Meredith

President of AOPA Aviation Finance Company
Adam Meredith, President of AOPA Aviation Finance Company, is an aircraft finance professional with more than 15 years lending, small business management and customer service experience. Adam is a commercial pilot with multi-engine and instrument ratings.
Aero-Space Reports

Aero Space Reports

Sponsor of Aviation Finance
Aero-Space Reports, a third-generation family-owned business, has been a leader in the aviation title industry for more than 45 years. In that time, they’ve seen tens of thousands of aircraft purchases: They’re all too familiar with what can go wrong, and they know exactly what it takes for things to go right.