BANDON, Ore. — CNW Research reported today that the average FICO score for used buyers came in at 622.17 in the opening weeks of September. Meanwhile, on the new-car side, the company said the average FICO score was 691.37.

Discussing the trend on the used-car side, Art Spinella, CNW president, said, "And again, the cause can be traced to incremental increases in financial institution requirements for obtaining a loan. In parallel, the share of used buyers with FICO scores under 670 inched up to 36.9 percent in September versus 37.28 percent in August. September's rate is the highest since October of 2007's 38.47 percent."

He went on to report that of the 26.9 million used cars sold through August, 13.1 million, or 48.6 percent, were financed. The rest were purchased by cash or trade, Spinella said.

"So, how can tighter credit square with higher number of units financed? We've seen through the most recent Purchase Path studies that a growing percentage of potential new-car buyers are turning to a growing supply of near-new used vehicles, most notably certified pre-owned models. They carry with them a higher FICO score and better credit history and are more able to afford nicer vehicles (thus the interest in medium to high-line used models). We've also seen that many used-car intenders with poor credit are simply not shopping, having decided they couldn't get a used-car loan anyway," Spinella explained.

Meanwhile, on the new-car side, the executive said September marks the fifth consecutive month that the average FICO score for new-car buyers was higher than the prior month. He noted the average FICO of 691.37 remains the lowest since September of 2005.

"The difference between then and now, the share of FICO scores under 670 is smaller today at under 13 percent. In 2005, the share was 16-plus percent. What's changed? Those receiving credit approvals in 2005 were clustered closer to the average while the latest data suggests that approvals under 670 are significantly deeper into the subprime category, thus requiring fewer contracts to drag down the overall average," he pointed out.

He went on to say, "But if credit is tightening and the overall scores are higher, how are the deeper subprime customers getting auto loans? Consider it an issue of the overall economy. Many financial institutions are looking not only at the FICO score, but at the personal histories of applicants. This is especially true of credit unions. A sizeable percent of those hurt by the economy in terms of their recent work history have long-term history of being responsible borrowers.

"In 2005, when even fast food chains were offering benefits to their part-time workers and jobs were plentiful, credit was easier, but the pool of applicants — because they were working in stable jobs and had money to spend — scored higher FICO numbers. As the industry discovered, those weren't the best criteria to use as the subprime began shredding under its own weight," he concluded.