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.