What's going on with GMAC's car loan standards?
In its press release announcing the return to less responsible lending, GMAC made it sounds like a FICO score requirement of 700 was unreasonably high: "The actions of the federal government to support GMAC are having an immediate and meaningful effect on our ability to provide credit to automotive customers."
Here's the truth about a 700 FICO score: It puts your right around the middle. According to Equifax, this is an approximate breakdown of Americans' credit scores;
- 15% of the U.S. population is below 600
- 35% of the U.S. population is below 670
- 50% of the U.S. population is below 710
- 70% of the U.S. population is below 755
- 90% of the U.S. population is below 790
Looking at the dismal state of so many Americans' finances, I find this unconscionable. If your credit history is worse than 70% of the population, what business do you have taking out a loan to buy a new car? I know, it's your choice, but is that really something that the federal government should be subsidizing?