If you’re looking to buy or lease a new car, there are many things to consider. Not only do you need to know what you can afford to buy, but you also need to have an idea of your credit score to see what financing options will be available to you.
We here at Fred Beans Auto Loans want to do everything in our power to help our local customers in Doylestown, Philadelphia, and Quakertown, so we’ve compiled this information to help you determine your credit score and learn how to improve your credit.
What Are the Credit Score Ranges?
Most credit scores use a credit score range of 300 to 850. Within that range, there are different categories of credit:
- Excellent: 750+
- Good: 700-749
- Fair: 650-699
- Poor: 600-649
- Bad: 600 or below
Different lenders have their own standards for rating credit scores, but a credit score of 700 or higher is considered Good.
Lenders and financial institutions use this numbered credit score to determine if you’re worthy of a loan or credit card. The higher your score is, the better your chances are of approval.
In addition, having a good credit score also helps you secure more favorable rates and save money over the life of your loan, especially when it comes to financing a car.
That said, this number doesn’t guarantee you’ll be approved for credit or get the best interest rate available. But understanding how your credit score impacts your options can help you decide things like how much you can afford, what areas to improve, or which offers to apply for.
How to Get Good Credit
While your numerical credit score is important, there are other factors that lenders will look at before they extend you an offer.
Payment history, such as late payments, credit age, credit utilization (the amount of available credit you use), your debt-to-income ratio, and the different types of credit you have (loans, credit cards, mortgage) all play a role in determining your creditworthiness.
Many of these areas can be improved with time, but look at the areas that you can correct now to get a good credit score. Pay all your bills on time, try to keep your debt low (at ideally 10% of your total limits), avoid closing accounts, add a mix of different types of credit accounts, and try to avoid applying for too much credit in a short period of time.
What’s Your Credit Score?
When you’re looking to buy a car near Philadelphia, Quakertown, or Doylestown, it’s not enough to just guess at your credit score. Many free resources are available that’ll provide your credit score, as well as a breakdown of the many factors that impact your credit and recommendations to get the best score possible. Before you begin shopping around for credit and loans, check out your free credit score and credit factors to get an idea of where you stand, as well as what areas you should try to work on before obtaining a loan.
You want a good credit score to buy a car, so we hope this information assists you in your car buying process. Fortunately, our team is well-versed in auto financing and many credit circumstances, so don’t hesitate to call or visit us to discuss your options for auto financing.
The car finance tools from Fred Beans Auto Loans will help you estimate what your monthly budget may be after your purchase is complete. Contact us today!
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