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| image courtesy of: cafecredit.com (flickr.com) |
Let's pause for a while from our car care topics. Let us instead take up one of the most important elements for owning a car - credit score.
The credit score
is the most popular number of the present generation. It has become the
framework of so many aspects of our lives. Modern business and economy has in
fact made it a basis for granting a person the opportunity to own certain
possessions through credit. Credit cards, mortgages and car loan applications
are among these.
If you want to purchase a
car with financing in mind, you’ll probably be concerned about your credit
score. But how can you determine if your credit score qualifies you to make a
smooth sailing car loan application? Please read on to know more.
What Number Makes a Good Credit Score?
You may not know it, but a
majority of businesses want to see a particular “magic number” that they
consider as the minimum for making you qualify for purchasing anything on
credit. That magic number, which is your credit score actually, happens to be
630. This is the absolute minimum. If your credit score is equal or greater
than that number, you have a good chance of getting an approval for a loan.
Here are the other credit ratings and their meanings:
Excellent – 760 or Higher
A credit score of 760 or
more is the credit sweet spot. It denotes that you are highly responsible with
your finances. This credit rating makes you attractive to lenders and
creditors. Your score also makes you qualify for the lowest interest rates
possible.
Very Good (725 – 759)
A “very good” credit rating
is still attractive to creditors – it should not give you much of a problem as
far as a loan application is concerned.
Good (660 – 724)
This credit score is still
okay with creditors and securing approval for a loan wouldn’t be much of a
problem to you. However, not all lenders are willing to offer lower interest
rates with it. You should however expect a possible resistance when you ask for
lower interest especially if you are at the lower end of this range.
Fair (560 – 659)
Although considered “fair,”
this credit rating doesn’t really guarantee sure loan application approval, and
if your loan is approved, chances are the interest rates could be a bit higher
than average.
Poor (300 – 559)
A “poor” credit score is the
least credit-worthy rating. It has the least chances of getting approved and if
some lenders would be willing to take the risk, the interest rates would be
high. A “poor” credit rating is the least any person would want to have because
it is considered “high risk.” If your credit score happens to be in this range,
you must strive to get out of it by making regular, timely payments on your
existing loans.
