When you’re looking to finance your next car, credit plays an important role. Rated by three reporting agencies and FICO, a person’s credit score represents the likelihood of repaying loans. This score is based on borrowing history, among other things.
Financing your next car purchase often comes with credit and borrowing options. These frequently asked questions will help drivers near Coconut Creek, Coral Springs, and Pompano Beach, Florida, be better equipped for future financing. You can always call the financial experts at Al Hendrickson Toyota for more information.
What Is a Credit Score?
A credit score gives lenders an idea of your trustworthiness. Specifically, your likelihood of making payments on your loans is calculated; better credit scores let lenders know that a borrower is likely to repay the loan.
FICO scores range from 300-850. These scores are the most common credit score available to the average borrower. Higher scores mean better credit, which means you’ll be more likely to secure a loan and with a potentially lower interest rate.
What Is a Good or Bad Credit Score?
On the FICO scale of 300-850, anything above 700 is considered a good credit score. Higher numbers mean more opportunities for loans and lower interest rates. The average credit score is around 680.
A FICO score of below 620 is called “sub-prime,” and is considered a low score. Just as high credit scores mean more possibility for loans, low credit scores limit your borrowing potential.
How To Improve a Bad Credit Score?
If your credit isn’t as high as you’d like, fear not. Millions of people suffer from poor credit scores from a wide variety of potential causes.
Your first step is to get reports from all three credit agencies to determine what is lowering your credit score. There may be some inaccuracies that you can work to have corrected, thus improving your credit score.
When you’re looking to improve your credit score, the simplest way to do that is to make regular payments on your current debt. When you pay off higher balances and make payments on time, your credit score will improve.
How Can I Raise My Credit Score?
There are a few different things you can do to improve your credit score. By following these simple steps, you can build your score and build trust with lenders:
- Paying credit statements on time: This shows that you can be trusted with making regular and timely payments on loans. By paying these right away rather than late or missing a payment, your overall creditworthiness will improve.
- Don’t open new credit card accounts: To keep your potential credit and amounts owed to a minimum.
- Keep your credit balance at a minimum: To keep the ratio between debt and income low. Plus, it’s much easier to pay off a credit statement that’s lower.
How Can I Keep My Credit Score High?
Maintaining a good credit score is less work than building up a poor one. By continuing to make payments on time and not resorting to credit for regular purchases, you can keep your credit score in good standing. Don’t close your old accounts and avoid any major shifts in your credit status to maintain a steady build on your good credit.
Contact Our Toyota Finance Department Today
Now that you know more about credit scores and how to improve them, you can be better equipped when financing your next car purchase. Drivers near Boca Raton, Pompano Beach, and Coral Springs, FL, can be ready for their next car shopping experience with this financial knowledge. If you have more questions, contact the finance team at Al Hendrickson Toyota today!