Credit scores and how they impact getting a car

There is a list of factors to consider when purchasing a car. We sometimes get so busy picking out the actual vehicle and the amenities we want that we forget about how our credit score may impact the final amount we’ll pay for the vehicle. 

A credit score is a three-digit number compiled by credit reporting agencies. Scores typically range from 300 to 850. The higher the number, the better the credit score. The way this plays out is the better your credit score, the better - or lower- your interest rate when you purchase a car. Two people who purchase the same new vehicle at the same dealer, and who apply for the same loan, can have a different interest rate depending on their credit score. This results in the person who has the lower credit score paying more - increasing their monthly loan payment. A lower credit score may also mean a higher final price tag when buying a used car. Even a credit score 100 points lower than someone else may mean you pay more than double in interest than that of the other buyer.

So, how do you get the best deal at the car lot when it comes to your credit score? Maintain a good score, of course - ideally of 720 or higher. If your credit score isn’t where you’d like it to be, there are steps you can take repair your credit and, in turn, your credit score.

These suggestions can help you improve your credit score:

Know your score

Obtain your score from a credible credit reporting agency, such as Equifax, TransUnion or Experian. If you don’t know your score you’ll never know if there’s a need to improve it.

Fix any errors

If you notice a discrepancy on your credit report, fix it by reporting the discrepancy. Even one, seemingly small, error can throw your score off for the worse.

Make a commitment

A low credit score requires a commitment from you to repair it. You can raise your score by paying all your bills on time all the time. In fact, financing a new car or purchasing a used car is a method of helping fix your credit.

This guest blog post was written by Freedom Rims, a Responsible Military Lender since 1983. Freedom Rims offers military financing for a variety of rims and tires including Mezzano Rims and BIGG Rims throughout the USA.