CREDIT RATING INFO
Credit Score: A Key Element for Your Auto Loan Application
Your credit rating plays a pivotal role in your chances of securing loan approval for vehicle financing. Whether you’re just starting to build your financial profile or are looking to improve your credit score, it’s essential to understand your financial portrait before applying for a loan.
Understanding the Importance of Your Credit Score
Understanding your credit score is crucial for maximizing your chances of getting an auto loan with a good rate. Lenders review your credit history to assess risks and adjust interest rates. That’s why it’s essential to be well aware of your credit score before committing to a loan.
Maximize Your Borrower Profile
If you want to improve your borrower profile, start by regularly checking your credit score and correcting any errors. Careful financial management will enhance your access to credit and help you secure better loan terms.
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Credit rating, your financial portrait
The credit score is an instant snapshot of your borrower profile. Two companies, Equifax and TransUnion, develop and provide your credit score and report to Financial Institutions and other applicants (e.g. insurance). Note that you can view your credit score and report for free with these two companies. However, consulting your credit score by a third party, a supplier for example, requires your approval.
The degrees of a credit score
Credit score is a number between 300 and 900. Although each lender has their own criteria, in general, credit scores between 660 and 724 are considered good, 725 to 759 as very good, 760 and above as excellent. Below 660, a rating is considered low. Below 500, it can be very difficult to get a loan (but not impossible).
The importance of a good credit score
Credit score represents your risk level to a lender. The higher the risk, the more severe the loan conditions and the higher the rates. It is therefore very advantageous to try to improve your rating score. Conversely, a high credit score makes you an exceptional client and highly sought after by Financial Institutions. Automobile manufacturers even offer, for this category of borrower, subsidized rates as low as 1% to encourage the sale of certain models. Your credit score also affects your insurance premiums downward or upward, and even access to housing.
Maintain and improve simply your credit score
- Pay your bills on time, “all the time” is the golden rule. This doesn’t just include credit cards. Late or missed payments on other accounts, such as cell phone or electricity, can negatively impact your credit score. Never skip payments, even if you want to dispute a bill. Also, remember that it can take a few days to process a payment. You must therefore pay well before the due date.
- Keep your credit card balance below 30% of the authorized limit if you cannot pay it in full. A higher balance can impact your credit score.
- Apply for credit moderately. For example, accepting a store card, just one more, to get a short-term discount is not a very good idea.
- Check your credit report regularly. Request a free copy of your Equifax and TransUnion credit reports to ensure the information is accurate. Remember that consulting your files will not affect your credit scores.
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DDC Crédit has developed a hi-tech application powered by artificial intelligence. It allows us to analyze a request and provide a response in just a few seconds. This application is directly connected with more than 20 financial institutions.