Getting a Car Loan? Credit Score Effects

When looking for a car loan, credit score concerns are of primary importance. Your credit score determines whether or not you are able to get a loan at all, and it also determines what interest rate, loan terms and length of loan you will receive.

When you call a lender to ask about interest rates, they will give you a simple quote of an interest rate. These quotes are given for comparison purposes only, and are very general.

If you go to the trouble to fill out an application in an effort to be pre-approved for a loan or for loan approval once you have chosen a vehicle, then you'll need additional information about the car you intend to purchase. The year, make and model have an effect on the loan terms.

The lender will also pull your credit score. This score has an even greater effect on the terms of the loan that you are offered. You will find that the quoted loan rates go only to those with the best credit scores-generally speaking, those with FICO scores of 700 or higher. People with lower credit scores are offered progressively higher interest rates and progressively worse loan terms.

Borrowers often don't understand what determines their car loan credit score. Knowing what factors both raise and lower your score can help you get into a position to get the very best car loan interest rates and terms. The largest part of your credit score is determined by whether or not you pay bills on time. Do. This accounts for about 35 percent of your credit score. Another thing you can do to help your score is to maintain a high level of available credit, but use the smallest percentage of that credit as possible. Using no more than 50% of your available credit will help your score. This accounts for 30% of your car loan credit score.