Financing a new automobile, but not sure where to start? There are several important factors to consider when financing a new vehicle, but knowing your credit score is critical to understanding how much it could cost you to finance that new car.
Credit scoring is a method by which creditors determine whether or not to grant loans to individuals. Information about your payment history on credit cards, auto loans, house payments, school loans, etc is collected and compared to other individuals with similar credit histories. This information helps creditors determine your likeliness to repay a loan, and enables them to designate a credit score that banks and other financial institutions use when deciding whether or not to issue a loan.
The lower your credit score, the higher your interest rate is likely to be on a new loan. If your score is too low, financial institutions will not loan you money because they may perceive you as too high a credit risk.
There are three major credit reporting agencies that can help you understand your credit rating and how likely it would be that a financial institution would provide you an affordable loan:
Trans Union: 800-916-8800
While there might be a minimum charge for your report, the cost is worth it for you to know how likely it is for you to be awarded an auto loan. Through creditreport.com, you can purchase all three reports containing your credit score in one location for $25 to ensure the information reported on you is accurate. If not, then you can also clean up your credit reports through phone calls to those financial institutions that have misreported information on you.
If you don’t want to pay for your credit report, there are several free resources through which you can check your credit report (your credit score will still be charged separately ranging in price from $25-30 depending on the resource).
Once you have taken the time to ensure your credit score and rating are strong, you will be in a better position to negotiate a low-interest rate auto loan with either your bank or with a dealer-recommended financial institution.