The Credit Score You Need for a Good Car Loan
Whenever you apply for credit or loans your credit scores play a deciding factor. The higher your score, the better the terms and rates for your auto loan.
This score is used by landlords, employers, mobile phone companies, and various other businesses to evaluate trustworthiness and reliability. The lower your score, the higher the finance charge on a loan and the more likely your new landlord will ask for more deposit money. The higher your score, the less your finance charges will be and your new landlord might qualify you for a lower deposit or a lower first-month rent. Poor credit scores can be a real problem when signing up for cell phone accounts.
Credit Score Target for an Auto Loan
If you are looking for an auto loan, to get decent terms and conditions, aim to have a FICO score of 650 or better. With a lower number, you may be obliged to come up with a larger down payment. With more cash down, the lender will figure that you will be less likely to default. And that lower score will also put your APR (annual percentage rate) into the double digits. Consequently, your monthly payments will be higher. So, it boils down to the fact that you may not be able to afford the car you really want. You might be able to get a late model Civic, but not an Accord.
To get the lower loan rates and thus the car you really want, look to get your FICO into the high 600s to the mid 700s. Having absolutely sterling credit is not necessary to get good rates. And, once you get your FICO past 760, your are considered as having arrived and can qualify for all the niceties that come with that kind of score. You will almost be able to write your own check for the car you want.
The Secret to Getting a High FICO for a Car Loan
Actually, getting a good credit score is not based on any inside skinny or secrets. Keep your credit card payments on time, keep debt levels relatively low (do not max out your charge cards), keep old accounts open but up to date, keep applications for new loans or new credit cards to a minimum, and have a good amount of diversity in your credit history – short-term loans, long-term loans, a house purchase, and student loans – with all of them showing on-time payments or satisfactory pay offs.
With a little effort, if it is not completely in the pits, you can improve your FICO in 6 to 12 months. It is very important to see exactly where you stand, especially before you go car shopping. Try to get your credit profiles before you start dreaming about your new car. You do not want to approach a lender for a car loan not knowing where you rank credit-wise. You are looking for credit scores from the three credit reporting agencies -- Experian, Equifax, and TransUnion. It is important to check all three since each has a say in how potential car loan lenders evaluate you.
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ABOUT THE AUTHOR
Amanda Hash is a Guaranteed Bad Credit Personal Loans Consultant with more than twenty years of experience. For more information about Military Loans Fast, Credit Cards, Unsecured Loans, Fresh Start Loans, Debt Consolidation, Student Loans and others please visit http://www.yourloanservices.com