Credit Score Basics for a Zero Credit Car Buyer
Posted: Jun 19, 2019
Do you want to buy a car? Do not shy away from your credit score. It is a financial element that is of utmost importance to everyone. According to a survey, close to 70% of Americans would prefer to talk about their weight, rather than reveal their credit scores. The building block of anyone’s financial life begins by understanding his credit score. If you are starting out on your financial journey, getting a hang of your finances and credit score will help you to take the correct measures to build a strong financial foundation.
Burning Questions Answered: Know all About your Credit Score
Possessing little or no knowledge about your credit score should be no reason to stay in the dark. Make the most out of the questions that will give you a base to understand your credit and use the tools in a useful manner to build a better credit score.
1. What exactly is a Credit Score?
Throughout your life, you will borrow money, rent an apartment, or open a bank account. When you borrow money, you ask someone to trust you to repay the money. However, auto lenders cannot contact every person from your past so they look at your credit report and credit score. A credit score is a three-digit number that is composed of your ability to borrow and repay the money. The higher your credit score, the higher your creditworthiness in the eyes of the lenders. Keep in mind that an individual who has no credit history will not have zero credit score. It will be always be in the range of 300 to 850.
2. What is a Credit Range?
A credit score is usually calculated on your payment history, accounts owned, length of credit history, credit mix and new credit. The FICO (Fair Isaac Corp) is one of the most legible methods of credit scores. An excellent FICO score is anything above 720; and a poor credit score is 579 and below. However, a credit score in the range of 670 to 720 is considered a good credit score. As higher credit scores carry less risk, interest rates are lower on a good credit score. Alternatively, a poor credit score will attract high interest rates on your auto loan.
3. How to build a Good Credit Score and maintain it?
A credit score can initially be built through secured credit cards that work as normal credit cards though you do make a payment upfront which is equal to your credit limit. A secured credit card will help you create a stellar credit history. Another way to build credit is to apply for a credit-builder/secured loan. You can invite a cosigner on the auto loan of the car that you wish to purchase. The more regular you are with your monthly payments, the better your credit score. Therefore, focus on completing one credit cycle at a time and you will build yourself a strong financial foundation.
Bit by Bit – Build Your Credit
A stellar credit score is not built overnight. But it doesn’t mean you cannot get an auto loan without a solid credit score. A credit history isn’t always necessary to obtain an auto loan. Consistency, alertness about your borrowings and awareness about your credit report are a few ways that will help you to build your credit, bit by bit. Work with an auto financing company who has experience of zero credit auto loans. Bring a cosigner and make a substantial down payment to improve your approval chances.
Understanding your credit history is essential before applying for any type of auto loan. Luckily for car buyers without established credit history, you can get the most affordable zero credit car loans online. Do not worry if down payment is an issue for you. Apply now to get guaranteed auto loan instantly.
Being from the auto financing industry, I know that it is extremely diverse. New loan programs are launched daily which create confusion among car buyers.