Buying a new car can be super exciting and expensive. Not all of us can manage to pay the money at once and will require financial assistance.
There are lots of auto loans available on the internet that you can choose from. They surely help a lot. You can check websites, like Crediful, to find information about best car loans and what to know before buying a car.
Before going and applying for a car loan, it is extremely important to check your credit score. Your credit score is what determines how the lender sees you and whether he would like to do business with you or not.
In short, your credit score can be described as your ability to pay back the loan you will take. A high credit score shows that you can be trusted as you would make the payments properly on time and you will be able to pay back the loan on time.
What is your Credit Score?
Your credit score is the number that represents your ability to pay back a
loan. The credit score stays somewhere between 850 and 300.
There are lots of factors which determine how much your credit score will be. If you make late payments and use credit frequently, it will lower your credit score. It also depends on how many times someone gets your credit
review and what kind of credit you use.
Thus, basically, your good financial habits determine how much your credit score would be.
As per the latest researches, about 19% of people have an amazing credit score of about 800 to 850, 18.2% of people have a credit score of 749 to 799, about 21.5% have a credit score of 670 to 739, 20% of people have a credit score between 580 and 699, and about 17% of people have a credit score of about 579 and less.
Well, credit score is not the only way by which lenders decide whether you are loan worthy or not, but it is very important to decide whether you qualify for a loan or not.
How to find your credit score?
Credit scores are sometimes called FICO score, as there is a firm called FIC (Fair Isaac Company) which developed the most widely used software which uses very accurate algorithms to figure out your credit score. It sells this software to the credit-reporting agencies and lenders.
FIC constantly updates its software with time just like any other software so there are different versions. Hence, your credit score might vary from agency to agency depending on which software and what version they are using.
Thus, the lenders issue your credit score reports from these agencies. After reading the credit score, they will judge whether you will be a valuable candidate or not.
According to law, you are entitled to get one free credit report every 12 months. You can go to annualcreditreport.com to order your credit reports.
Some Tips to increase your Credit Score
So far you have probably understood how important credit score is when it comes to approval of your car loans. Now here are some good tips for you to increase your credit score to better your chances of getting accepted for the loan.
1. Automatic Payments are extremely helpful. Sign up for automatic payments from your checking account so you always make the minimum payment every month.
2. If you have multiple credit card account, do not close them. They have unused credit which is good for the long-term record.
3. Get your credit reports every year and if you find any misinformation, then file a complaint about it.
4. For increasing your chances of getting a car loan approved, never miss a car payment!
We hope it is clear how important your credit score is, not just for car loans but for any loans. Make sure to keep our tips in mind and apply them. They will surely help you out. Good luck!