Your credit score is the most important factor to getting the
best car loan rate. Many shoppers make the mistake of going to
the car dealership and applying for a loan before checking their
credit report and score. By checking your credit score ahead of
time, you will know where you stand before seeking a lender. If
you have an excellent credit score, you should expect the best
car loan rate possible. Do not expect the lender to tell you
that you could save money by applying for a loan elsewhere. Make
sure you do your homework before applying for the loan. The
little time that it takes to receive your credit report from the
three major agencies could end up saving you a lot of money.
Understanding Your Credit Score
Your FICO credit score is more than just a number. Understanding
how your credit score is determined can help you to maintain or
improve your credit rating. Most credit scores will range in
number from 300-850 points. The higher your number, the better
your credit rating. Your credit score will be determined by five
different categories. Some items will have a greater affect on
your credit score than others.
1) How timely you pay your bills carries the greatest amount of
weight on your credit rating. While it is a good idea to always
pay your bills on time, lenders will look more at your recent
payment history.
2) Amount of debt- lenders will look at your total debt and the
outstanding debt on your credit cards. It is a good idea to keep
credit card balances well below the maximum amount allowed.
3) Length of your credit history- how long have you had open
credit accounts? Do you use credit on a regular basis.
4) How many credit accounts do you have open? What types of
credit accounts do you have?
5) Recent credit inquiries and newly opened accounts - lenders
will look unfavorably upon your credit record if you have had
numerous recent credit inquiries or if you have opened several
new credit accounts in a short period of time.
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