What is Tier 2 Credit Approval?

Numerous companies offer Tier 2 credit to their customers based on their credit score. Commonly known as the second- or third-highest tier available, different types of business offer Tier 2 credit approval for a number of different types of loans.

Auto Loans

Auto dealerships offer the most common form of Tier 2 credit approval. Usually based on a customer's FICO score between 660-699, dealerships also call this form of credit approval a B credit tier. New credit inquiries, slow pays and a number of small collections can drop a credit score into the Tier 2 level.

Business Loans

Small business owners can receive a Tier 2, or advanced trade, credit approval. Mostly used for loans between businesses, a Tier 2 loan can help a small business finance the purchase of equipment. This Tier 2 credit approval usually consists of larger amounts of credit and a longer term to pay off the loan.

Other Loans

Banks can offer Tier 2 credit approval for unsecured loans that homeowners may use for home improvement or a vacation. Receiving Tier 2 credit approval can lock in a low interest rate for these types of loans. Large chain stores can also offer Tier 2 credit approval on store credit cards, giving customers a lower interest rate on purchases.

References

• Insider Car Buying Tips: FICO Score Credit Tier Breakdown: How Auto Lenders See You
• BPlans: The Four Tiers of Small Business Financing
• The Columbia Bank: Lines of Credit
• Lowe's Consumer Credit Center