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Welcome to another In Wheel Time podcast, a 30 minute mini version of the In Wheel Time car show that airs live every Saturday morning 8 to 11am, central Live from Studio A.
It's the In Wheel Time car talk show and coming up, lena Bouchois from Equifax Credit Score Impact on Car Insurance.
We hope to talk to her about that because I'm certainly interested.
We all should be interested in that.
Had no clue.
Conrad is going to have the In Wheel Time car clinic.
I'll bring you this week's auto news howdy along with David Ainsley.
Thank you, david, so much for coming in God bless you my friend.
Me.
Timmy, I came for Kalachi so Well, and you got here.
Oh, that's why I got the emergency call at 4.30
this morning, exactly.
We have King Conrad along here with us and Fresh Back from Vacation and the UP of Michigan.
You call me Fresh Back Is we always need more?
Jeff Zekin, I'm Don Armstrong.
Thanks so much for joining us today.
You per yeah, it's the you per.
It was a great time for us up there the week that David invited Leslie and I up there Absolutely stunning, but beautiful, and we had so much fun, so laid back.
What a history, oh my God.
The history from you know the settlements, the Indians, all that, the different tribes that were up there, and my cousin Doug just sent me a note saying that there are more shipwrecks in the Great Lakes are superior than there are in the Bumir Triangle, Bermuda Triangle.
I would believe that that that's well, you know they.
Obviously there's a huge commerce part of vacationing up there, because all of the iron ore and all of the rocks and all the stuff that they move across the lake, they do that up until the lake freezes and they can't do it anymore.
The Edmund Fitzgerald go down in superior.
Superior, I was a November 10th 1975 and that ship was actually built in 1958.
So it did have a bit of a longevity.
It's down about 500 and so feet, just a little bit short of the total length of the ship.
So when it went down I read this when it went down it actually hit the bottom and the back end was still sticking up out of the lake, but it broke.
The front end of the ship off Broken in half.
Yeah, it's 1300 feet plus deep.
Well, it's actually 30 miles north of Marquette, where we were.
Marquette's a beautiful town.
Oh, it's like a cross between old Sugar Land and maybe new Bronfels across section of that you walk up and down the streets.
A lot of fairs and street, so sugar fills street.
Things going on yeah.
Well, you know, the one thing that is easy to forget, especially when you're up there at this time of the year, is January and February.
Oh, the good point, because you say the locals well, not a lot of people are local.
It is a university town, there is a college up there, so obviously go to school.
But the folks that are running these tourist events they leave in the middle of October and they come back in May.
So in one of the boat captains that we took a cruise on, yeah, I go down to the port of Tampa and I work that for the winter and it comes up and works.
Yeah, it's funny because that's the one of the things that we learned when we were up there.
We were talking to one of the waiters and what do you do in the wintertime?
Well, I'm down in Florida, yeah, or where it's on or something like that, and so they work up north in the summertime and then they go down to Florida in the wintertime.
And you know I was born in Detroit, lived there 22 years and moved to Texas.
But you never appreciate it until you're gone and you go back there.
We took my granddaughter to Kylie there.
She loved it, you know, in the trip of the year until next year and then, of course, you save up and go to the next one.
We've already got plans for the next one, yeah, tons of them Very cool.
So you just joined us.
It's Lena Bougiois with Equifax.
And hi, Lena, how are you?
Hi, good morning.
How's everyone doing Well?
we're just great.
We're just reminiscing about vacations.
Where are we speaking to you from?
I'm in Northern Virginia, about 15 miles outside of the city of DC, and so I live in a in a old kind of farm neighborhood called Franklin Farm, and it's a great, great place to raise a family.
I got three kids, and I just came back from weighing in my son to play tackle football.
Oh, cool All right, he just made it so.
Awesome.
How old is he?
Good morning.
How old is he?
He's 12.
12.
Oh my God, the perfect age.
Yeah Well, are you from that area originally?
I am not.
I've been here for 18 years, so I believe this to be home.
But I grew up in Europe, moved here in my mid-20s, I lived a little bit all over the country, but 18 years so far here.
Well, I'll tell you this, that that European accent is just killing me.
That's all I can say.
So, lena, let's talk.
Let's talk about Equifax, and it's a car credit reporting agency.
Correct, correct, yeah, and so you're one of what three or four of them?
We are one of three, one of the three major CRAs credit reporting agencies and the oldest.
We're a 180 year company.
We started the Bureau of Business many years ago.
We're based in Atlanta, Georgia, so we're a southern company and we love supporting automotive.
I run the automotive business Equifax now for the past three and a half years, but been in the automotive space for almost nine years now, so love the industry and just blow it away by just the ingenuity and the resilience of this economy which is such a big influence in our world today.
So I think that the focus of our conversation was going to be on insurance and how credit.
Your credit score affects how much you pay for car insurance, but I want to talk about all of it, if we can, in the next 10, 15 minutes.
So why is it important to have good credit?
Well, for many years now, and I should mention when I first moved to this country I did not realize how important credit was, but I started my life here in California and, as you know, you can't get anywhere in California without a car.
Correct.
So before I even got a place to live, I went to buy a car.
And when I went to buy a car I was looking at really nice cars, you know from my mid-twenties in the, you know, 15 to $20,000 car and I needed to finance it.
I didn't have $20,000 cash in my bank account.
I needed to finance it and they looked me up and they couldn't.
They had to.
In order to finance they have to pull a credit report to see how are you able to get a car.
And I was able to meet your financial obligations.
If I'm going to lend you money and take that risk, I need to see what kind of risk you are in meeting your financial obligations.
And because I hadn't lived here before, there was really no credit history on me and I couldn't get a loan.
So I had to downgrade my choice for a car.
I bought a 1986 Toyota Tursale.
It was $8,600 cash.
It was a Coca-Cola red Toyota, two door manual windows.
You were hot baby.
Yeah, no AC.
But you know that really struck me like how important it is.
You cannot get any financing without a credit report and, more importantly, in this day and age, with prices and interest rates being so what they are, having good credit can really be a difference in hundreds of dollars of your payment for a car for the same price car.
So it's really important.
So how does that translate to car insurance?
So car insurance is a little different and I run automotive and insurance for Equifax, but there are obviously a lot of linkage there.
When you are buying a car, you have to also buy insurance for the car and insurers also look at they don't look just at a credit, they look at just you know car history, you've had a car before, how you treated the car, and so they look at a bigger part of your profile and making sure that you're also not going to be a risk, right, you're not going to go out in the first couple of months, wreck your car and then I have to, as an
insurer, kind of cover for that and you've and I haven't recouped that from you as a consumer.
Insurers look at different, different.
We have an insurance score, so we've created scores specifically for different type of risk.
So we obviously have mortgage scores, we have automotive scores, we have insurance scores, right, and so it's all about risk because you're as an insurer, you're looking to take on a consumer, you want to make sure hey, this is going to be a good customer for me.
Profitable.
I'm not going to be underwater in this relationship.
You know, there obviously there's accidents.
You can't predict that and they do have models that allow them to balance.
They don't want to over over stretch on the risk because then they're they're not going to be able to be profitable, which is really, you know, why they're in business.
So all of that is important.
How about income and being able to not only have good credit to go out and buy a, let's just say, a $50,000 EV today?
How is that going to translate to my car insurance for a brand new car if I don't have good credit?
So, if you're right now, there's.
So we segment consumers into different, I would say, groups, and they range from deep subprime to very, very prime.
What does that mean?
What does that mean Deep subprime?
Yeah, Subprime is basically in the bracket that you offer your credit score, so credit scores go from like 480 to 850.
Right.
And an 800 plus is super prime, meaning you have had a long standing credit history, you have paid all your financial obligations on time, you are not over leveraged with your credit and you are an ideal and they get the best loan terms right and they usually look very you know, they are almost like no questions asked type of insurer.
What are the percentages of people that have that ultra high score?
I mean, are they like only 20% of the population, 10%?
What are they?
Yeah, so there's like about 5 buckets right and they are pretty well distributed 20% in each bucket.
Interesting.
And so it is a broad spectrum.
But we have invested quite a bit.
You ask you know how does income play in?
So we've done a, we've invested.
Equiface has in what we call alternative data.
Now credit is how we assess.
Your credit score has to do with what the institution, financial institutions, report to us as your ability to meet those financial obligations.
So they report trades basically on you.
You have a credit card, this is your balance, this is your rolling balance.
You've been able to pay, and that all information then put together in a composite score.
The time and the length of history plays into your score that you get.
The more history we have, and the better that history is for media financial obligation, the better your score is.
Well, I'm a 100 years old, so how much history do you need?
Do you make your payments?
done.
We most, most lenders look at at least like 5 to 10 years.
But what I was going to say is you have a lot of young consumers, students, they're coming out.
They haven't worked too much, they haven't had a chance to take out many credit cards or a significant loan to show that they can pay.
So they they what we call thin file or no credit consumers, and what we've done is we've actually brought in all other alternative data to assess risk.
So, for instance, most kids out there are students or young professionals have paid a cell phone For many years, right, and they probably may be also paid for cable, for utilities, right, and we are not taking that all of that information in.
So lenders now have much broader sense and what we are able to do with that data is we can actually risk assess 16% more consumers and get to a yes, basically get them to be able to get loans and get insurance 16% more often than they did without that information.
And that's really kind of transformative, because those are the consumers like I was when I came to this country right, they're the ones that truly need it.
Right Is the people that are in the lower end, the subprime and the deep subprime, the ones that are usually paying higher interest rates for their loans.
With that data, they're now able to get better loans, better terms.
They're able to actually get a loan in the first place and start building their credit and as you bill your credit, then that it gets improved if you do really well on those loans.
So so we've done a lot to help consumers.
We have a big mission and for facts to help consumers live their financial best, meaning you know we want everybody to have access to those access to credits.
We want them to get the best terms and an automotive right now because of interest rates to being what they, what they are, it has a huge impact in their ability to afford.
Well, also the price of the car, and that's the one I want to talk to you about that how, how does the price of a car figure into a credit score?
I know that the better the credit score chances are, I can buy a more expensive car, and I think that a lot of people are doing that these days and getting upside down in payments and what the car is worth, and it just as a big ball.
Once you get down the road 3 or 4 or 5 years and you go okay, well, I'm ready to trade my car in or sell my car.
Now my car isn't worth as much as it was when it was new and now I have no equity in the car to be able to transfer that to another down payment.
How does all of that play?
That's a great question.
So most people believe that, as you know, car average car prices now around 750.
And 2 years ago that was under 500.
Right, if you're talking about monthly payments monthly payments wow.
In the last year there has been a huge increase in car payments, over $1000.
Right, I can see that $100.
Yeah.
We have looked at that segment of consumers and you said they're usually prime consumers because they are the ones that can afford the car in the first place Right At least.
But what we've seen is that they're not that risky, honestly, and that lenders should not be too, too concerned about putting those consumers on their portfolio, meaning to lend to them, because these guys, even though their payment used to be 750 or 800 before they, have the ability to stretch to 1100 because they don't have a choice today.
They have to take that out and they're able to make it.
They're also not the ones concerned about the equity in their car.
They already knew going in that they probably overpaid for their car.
They're willing to do so.
They got the best terms possible to make the payment and you know what they're going to hold on to that car.
You know most of us don't buy a car for equity, to grow equity, but we, what I think what's going to happen in the industry is that car prices are going to stabilize, but I don't think that they're.
You know manufacturers, lenders and dealers have come to, you know, get used to a certain level and consumers have been conditioned to pay.
More and more every year.
Msr.
P or more and so I think that over time in my balance.
But by then you know this whole cycle would have come around and he wouldn't have been.
You know you're not going to see consumers in cars that thousands of dollars undervalued and like that's not going to really hurt them financially because they're going to hold on to their cars.
They might hand it over to their son or daughter.
No, I got all of that.
But here's my issue is paying for a car a thousand dollars a month for eight years?
I'm sorry, I got a little problem with that and my question would be the subprime and the prime.
But there's two levels of the prime, because you've got a person of wealth that will go out and buy a vehicle.
They know they can afford it, so they're going to go out by what they want.
They're either going to draft it or pay cash or if they do finance it, it's only going to be for a short term, like a year, and then pay it off.
So those are the advantages of the folks with wealth and the prime.
But there's other folks that try to build that from the subprime up to the prime by paying their bills.
Right.
So you absolutely right those.
What we've seen is the super prime.
They take on the loan because you know they get some incentive associated with it potentially, and then they pay it off within six months to 18 months and they pay it off.
And then you have subprime that are really hurting.
What we've seen, though, is that that subprime consumer, in the last year or two, have been taking themselves out of market, meaning they're holding off on actually purchasing cars right now because they don't want to be stretching that far, because they can't or they don't want to be underwater.
They think cars are overpriced or the used car market is still not as healthy as it needs to be from an inventory, so they're waiting for those cars to come back into market.
So, unless they're absolutely forced to they're, they've really taken themselves out of the market right now.
Okay, so what?
What can a consumer do to increase their credit score?
You know, let's say I'm a mid 40s, early 50s consumer and I've got, you know, 15, 20 different credit cards and as I pay them off, is it my benefit to increase my score, to pay them off and close the account, or just to pay them off and leave that open available credit limit on that card?
How does that?
How does that work?
It's a great question.
We get a lot of that now because of interest rates being so high.
People want to know how do I, can I improve, because this makes such a big impact on their ability to get better interest rates and better payments.
15 credit cards are way too much.
Even 10 are way too much, even seven are too many.
What you want to do is have enough information, enough credit history, meaning you would have maybe two, maybe three cards so you can show that you can meet your financial obligations.
But when you reach a certain number of credit cards, then it looks more like you're trying to split you over, extend it because you're trying to afford more than you you know, buy more than you can afford and you kind of spreading it across.
You know 10, 15 cards and that doesn't look good on your history because what you don't want is too many open balances and too much you know debt Available credit.
Available credit.
Well, also, you don't want to look like you, you know, because a lender is going to look at that and say, well, you know, if he has to pay off 10 credit cards and then I add the loan to the auto, what's going to?
What's what is going to if anything happens?
What's?
it going to pay for?
What's it going to prioritize Right?
Well, I have to give you an example.
So when I was on vacation a month ago, I will tell you I lost my only credit card.
So I wound up with half of my vacation with no credit card.
So what I did was, when I got back, I got that card replaced and then I opened up a new card, which I have not done in years and years and years.
How does something like that affect your credit score?
If you only have the one and you open another one is actually it helps your credit score.
Okay, good.
It helps this credit score as long as you pay off the card, I'll tell you.
You know, paying the minimums are probably not the right thing to do, but paying off more or paying all of it off every month helps your credit score incredibly, because that's a rolling, you know, payment that you're making every month and it looks great on your credit file.
That's good to know.
Okay, I want, before we run out of time, I want to ask you credit finance trends for EV shoppers versus engines, gasoline engine vehicles.
Let's talk about that for a second.
Let's talk about that it's a hot topic, it's been a lot of conversation, but they are very much the prime consumer.
Okay, these are the guys that have, you know, the higher end scores.
They're also on the higher end income and socioeconomic segment and you know, that's really where we see that and they're the ones buying EVs today.
Yeah, and it has to do a little bit not only about, you know, then, maybe being in the right, you know, socioeconomic, but it's really the prices of the car.
Evs are still more of a luxury car kind of option and that's why that kind of falls to that segment as we see EVs go down market and then get into the smaller car more, you know, reasonable.
More affordable cars yes.
More affordable.
You'll see more consumers you know have.
You will see that distribution be a lot more spread, but right now it's usually a 750 or higher in credit score and you know their average payments are over $1,000.
And you know this is more than once.
Now that you said 750 on a credit score, it seems to me that that seems to be the cutoff between subprime and prime.
It is the.
It's basically prime.
So 750 to 800.
850 are really prime consumers.
And then you have it goes all the way down to 640 and you're still prime.
It's really under 640 that you start looking at near prime subprime, and then 540 and below is like deep subprime.
That's the roach.
Yeah, yeah, that's bad.
So what do you see things?
How do you see things in the next year as far as credit and credit scores?
You know what happened after the pandemic.
With the stimulus, the average credit score went up 40 points.
Wow, that's a lot.
So what happened is yeah, and it was primarily in that subprime space, they were the ones that were most of the recipients of the stimulus, and when they didn't have anything to go out and spend that money on, they basically paid off their debt.
And when you pay off your debt, your credit score goes up, and so they were really coming out of the pandemic in 22,.
They entered the market and they were a huge consumer in the auto industry, and so now we're seeing how they play out.
But that hasn't come down, it has stayed, and so if the link with these hold and if the subprime consumers are able to manage their payments for the car, they are going to continue to move up the credit band, and so we're seeing a positive movement of subprime improving their credit scores because of the stimulus and what happened after the pandemic.
If I want a road to go to improve my credit, is there somebody or some place that I can call and get help and some guidance as to, for instance, through Equifax, and get them to help me learn and go in a certain route to improve my credit?
Absolutely.
I would recommend going to the CRAs.
Come to Equifax's website, equifaxcom, and ask and do information about my credit score.
There is a full part of our website FAQs frequently asked questions, how to improve a number to call to get a free credit report.
Every year a consumer is eligible for a free credit report on themselves If they see anything that they don't know what it is or that looks off and they don't recall that every part of there.
they can call an 800 number and get that investigated, and search, and to understand Understanding your credit score is really, really important.
What's happened, though and I want to call this out specifically?
There's a lot of other third party organizations that offer information about your credit score.
All these apps look up your credit score and stuff.
Some of that information can be misleading.
They are not credit reporting agencies.
They are not the ones holding this information and are not regulated and supervised and governed the way we are.
That can create a lot of confusion and misinformation with consumers.
So I really recommend Go to the aquifax website or any of the two, the three top credit bureaus.
We have all the information and it is what matters.
Is there any truth to that?
When you get your credit checked, often that can drive the number down.
Yes, there is.
There.
Is that that perception and we we answer this question.
I was the most frequently asked question, like I don't want you to pull my credit score.
But here's what happens when you're shopping for a car or you're shopping for a house, usually do that over a very short period of time, and if there is a number of credit scores within a 30 to 45 day Time period, it only counts as one, because we know that that is because you're shopping for the one thing, right, it's not like you're shopping for multiple.
It's like it is.
You're in market and you're looking for a house, you're looking for a car and you have multiple dealers pulling your credit score.
It doesn't hurt or negatively impact your score.
It's just when that happens month over month 12 a month Then it does look a little weird.
In fact it might be fraud, and so we might flag you and say you know what's happening here.
So, so that's something to to manage.
But if it's happening within a short period of time, like a month, it really does not impact your credit score.
Lena, you have been an absolute world of knowledge and we certainly appreciate you.
You're a joy to talk to and thanks so much.
And let's check in soon, maybe within the next year.
So my credit score goes down and up, or whatever I need to do.
Yes, thank you so much for your time and I appreciate it, and have a great morning, thank you.
Absolutely wonderful interview.
Okay, the end real time car talk show continues right after a quick break.
Everyone at the tailpipes and tacos cruise in at the loopy tortilla Tex-Max and Katie.
Thank you for participating in the best cruise in around and look forward to seeing you again.
You'll hear about the next cruise in date right here on in real time.
Next time you're in the West Houston energy corridor area, be sure and stop in at the original loopy tortilla Tex-Max at I 10 and Highway 6 or the Katie location on the Grand Parkway at Kingsland Boulevard when passing through Beaumont or College Station.
Stop in and have loopies, award winning beef fajitas and frozen margaritas.
There's always a celebration of loopy tortilla.
Loopy tortilla founder Stan Holden, his wife Sheila are winning racers on the NHRA drag racing circuit and have a collection of hot rods and classics that everyone appreciates.
Look for them at the next tailpipes and tacos cruise in.
The date will be announced soon and will once again be held at the loopy tortilla Tex-Max on 99 in Kingsland Boulevard, just south of I 10 and Katie.
We'll give you all the details right here on the in wheel time car talk show and online donations benefit God's garage.
We'll see you then.
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That's it for this podcast episode of the in wheel time car show.
I'm Don Armstrong, inviting you to join us for our live show every Saturday morning 8 to 11 am Central on Facebook, youtube, twitch and our in wheel time dot com website.
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