CNW: More Customers with FICOs Below 670 Gaining Approval
BANDON, Ore. — After plummeting to an average of 6.52 percent in October of last year, the number of customers approved for vehicles with a FICO under 670 is slowly climbing upward, according to the latest data from CNW Research.
In fact, as of February, this figure has reached 10.63 percent; however, this still remains below January 2008 when the number stood at 12.07 percent.
Furthermore, CNW reported that after reaching an average high of 759.49 in October, the median FICO score for February has also declined to 723.69 as of February.
"Some of this can be put at the feet of financial institutions willing to ease back on credit requirements and an equal amount can be attributed to those people with marginal FICO scores coming back to the market," Spinella explained.
In another analysis, CNW found that closing ratios have dipped for dealers.
Further explaining this trend, 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," he continued.
However, he indicated that these buyers are "beginning to come alive."
CNW's Floor Traffic Index showed some life after being down throughout much of 2008.
"The trend line is barely perceptibly up, but up nonetheless. And with that comes the concurrent decline in closing ratios. When will this be seen as solid sales gains? Considering the average new-car shoppers 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," Spinella suggested.
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