FICO announced that the auto industry is simultaneously migrating to the FICO 8 Auto Score, with most lenders expected to complete the adoption process by May.

A number of auto lenders have already migrated to the FICO 8 Auto Score, including Volkswagen Credit, Santander Consumer USA and First Investors, with a majority of the top 35 lenders planning to migrate within the next two months, according to FICO.

In addition, the nearly 18,000 franchised dealers and the majority of the more than 30,000 independent dealers using credit scores in the industry are also expected to migrate to remain in synchronization with their lender partners, reported F&I and Showroom.

The industry-wide migration to the new FICO 8 Auto Score will allow lenders and dealers to jointly share more consistent information as they finance vehicle sales and extend credit to their customers with greater confidence. Rating agencies and the general financial services community also use FICO Scores for their analyses of the auto industry.

“FICO seeks to help lenders position themselves for growth while controlling risk in their portfolios,” said Dr. Mark Greene, CEO of FICO. “Moreover, FICO knows well that the credit quality of the automotive consumer has changed over the last couple years. While there is cautious optimism around growth opportunities for the auto market in 2011, FICO realizes that sharper risk prediction tools are critical to our clients’ long-term profitable growth.”

The FICO 8 Auto Score is currently being used by more than 3,500 banks and finance institutions across multiple lending lines such as bankcard and mortgage.

“To minimize risk and increase profits, lenders need updated credit scores that incorporate the latest data and analytics for credit risk assessment,” said Craig Focardi, senior research director at TowerGroup. “Updated credit scoring analytics enable lenders to upgrade their loan underwriting and account management practices, which has a direct impact on the bottom line.”

DETROIT – Chrysler Group got a boost this week when Ally Bank, the former GMAC, lowered its credit-score threshold for Chrysler customers to qualify for a vehicle lease from 660 to 620, reported Automotive News.

The move by Ally, Chrysler’s preferred finance provider, broadens the pool of lease customers. A 660 FICO score is on the lower end of prime, while a 620 score is on the upper end of subprime.

In a memo to dealers this week, Chrysler confirmed that Ally had revised its minimum score. Dealers confirmed the 620 figure.

A credit score helps determine what interest rate a bank will charge a customer for a loan. FICO scores range from 300 to 850.

Chrysler’s leasing business collapsed in July 2008 when its former captive finance company, Chrysler Financial, left the leasing business when the resale value of its pickups and SUVs plunged amid soaring gasoline prices.

In 2006, when Chrysler Financial was still its captive finance company, leases accounted for about 22 percent of all Chrysler new-vehicle transactions. After Chrysler Financial left the leasing business, along with most of Chrysler’s lenders, that percentage plummeted to under 1 percent by mid-2009, according to Ralph Kisiel, a Chrysler spokesman.

“Since then, as lenders have resumed leasing, our corporate average has gradually been increasing to where we’re at today, 4 percent to 6 percent,” said Kisiel. “We are now taking a disciplined approach to leasing. We still want to remain competitive by offering a wide variety of financing options.”

Leasing will account for less than 22percent of sales, he said, and Chrysler is “comfortable” with leasing levels at their current level.

David Kelleher, owner of David Doge Chrysler Jeep in Glen Mills, Pa., and a member of Chrysler’s National Dealer Council, said the shift would be a big help to dealers in extending lease offerings to more customers.

Ally declined to comment on the change in Chrysler credit scores.