Where does your credit Score align on this scale? If you have a 659 or lower credit score banks consider you a higher risk. This means higher rates, worst terms, and more documents needed to close on your car loan.
You probably know that having a good credit score makes car buying much easier and cheaper. But do you know what your credit score says about you when banks look at it?
Read on to learn more about bad credit scores and how they may affect you and how to get approved with your current credit score.
Poor Credit Scores From FICO
FICO considers a credit score to be poor if it falls below 580. According to FICO, a person with a FICO score in that range is viewed as a credit risk. Why? Their research shows that about 61% of those with poor credit scores end up delinquent on their loans.
This level of risk could make it difficult to get approved for credit cards, mortgages, car loans, and more. A poor score can come with other consequences too. For example, you may need to pay a fee or put down a deposit to get a credit card or home utilities.
What Determines Credit Scores?
Your credit score is determined by 5 things.
1. 30% Amounts owed - How much you owe creditors across your accounts reported.
2. 35% Payment History - How often do you pay your bills on time
3. 10% New Credit - How long you’ve had credit and loans open
4. 10% Credit Mix - How many kinds of credit do you use, including credit cards and installment loans?
5. 15% Length of Credit history - How long you’ve had credit and loans open
Do credit pulls impact your credit score?
According to Equifax: Some consumers are reluctant to check their credit reports because they are concerned that doing so may impact their credit scores While pulling your credit report does result in an inquiry on your credit report, it will not affect your credit score. In fact, knowing what information is in your credit reportand checking your credit may help you get in the habit of monitoring your financial accounts. It also allows you to compare and shop for better terms and interest rates so you can get the best deal on your automobile purchase.
What info should you bring to the car dealership with you?
If you have under 659 Credit Score keep this in mind:
TIPS TO GET YOU APPROVED FAST AND HASSLE FREE when you have challenged credit.
* Money down or trade equity is key. The more you have the better terms and conditions you'll get. (% rate, the term of the loan, actual car the bank will approve, lower payment, etc) 10% is a good number, 20% is a better number 30% + will be amazing.
* Bring with you your Most recent pay stub showing income and taxes.
* 2 utility bills showing proof of where you live. (must be A computer-generated bill from a company that provides you Water, Electric, Sewer, internet, phone services, or rental agreement)
* 3 names (up to 6), addresses, phone numbers of different household family members or friends,
* proof of full coverage insurance (must be dated correctly)
* 1099/self-employed employees your need the last 3 months of bank statements and possible 2 years of tax returns,
* If your income is a government source (social security, court-ordered child support, etc.) you will need 3 months of bank statements showing direct deposit, and an award letter from the agency of income.
When you show up to the dealership with all the above-referenced info the transaction will go SMOOTH and in a TIMELY manner.
Remember, Buying a Car Doesn't Have to Suck™
Mike Davenport is the Chevy Dude. Famous Youtuber and owner of Mike's Car Store in Georgetown, In. helping you to not get taken advantage of when buying a car. If you are looking for tips on buying your first car or trying to buy a car in today's crazy market he's here to help!