One of the most complex aspects of car buying is applying for a loan. When doing so, you may learn that your credit score enables you to receive, or prevents you from receiving, optimal loan terms. Raising your credit score will maximize the options given to you by our Mazda financial service center.
Credit Score Overview
A credit score is a three-digit number between 300 and 850 which summarizes your reliability as a credit holder. Two types of credit scores exist: the FICO and VantageScore, which weigh your financial behaviors differently. The three major credit bureaus—Equifax, Experian, and TransUnion—calculate your credit score.
Factors Affecting Your Credit Score
Your ability to make payments on time and credit limit utilization are the most heavily weighted factors when calculating your credit score. Timely payments include bills, debt, and credit card payments. Your credit utilization refers to the percentage of your credit limit you use each month.
Your age, marital status, and employment history do not affect your credit score.
Credit Score and Car Buying
When applying for an auto loan, lenders usually use your credit score to determine your creditworthiness. Your interest rate is largely influenced by your score; typically, the higher your score, the lower your interest rate.
It can be a good idea to try to raise your credit score before applying for a loan. Here are some ways to do so:
- Pay bills on time by setting automatic payments, and pay off as much outstanding debt as possible without harming your finances
- Minimize the percentage of your credit limit utilization each month, capping it at 30 percent. It can help to request a credit limit increase.
- Dispute credit report errors
Contact Our MAZDA Financial Team for More Advice
Alongside the above advice, you may need additional steps to raise your credit score. The staff at Sentry West Mazda can provide guidance. Contact us today with any questions you may have!
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