What Determines Credit Score?

If you’re thinking about buying a new car, you’ve probably realized that determining how you’ll pay for it is an extremely important part of the process. For some, this can be the most stressful and confusing aspect of buying a new vehicle. What exactly is a credit score, for instance, and how do you improve yours? Read on to find out.

What Is A Credit Score?

A credit score is used by lenders to determine the amount of risk they will take on by offering you a loan. This means your individual credit score will influence the amount of credit available to you and influence the lending terms (interest rate, etc.) you end up with. A higher score indicates a lower risk to lenders, so you want your credit score to be as high as possible.

What Determines Your Credit Score?

Your credit score takes into account many factors of your current and past financial habits. These include the amount you currently owe in debt or financing, your payment history, and the length of your credit history. Generally speaking, missing credit payments, being in extreme debt, and having a very short credit history will all affect your credit score negatively.

How To Improve Your Score

If you’re credit score is lower than you’d like it to be, there are some simple steps you can take to improve it:

Get current on all your open lines of credit and continue to make payments on time.
Reduce the overall amount you owe.
Work on paying off debt, not just moving it around.
Don’t open up more lines of credit than you really need.
Use credit cards, but manage them responsibly and stay current with payments.

Don’t let less-than-ideal credit keep you from getting behind the wheel of your dream car. Instead, learn about your credit and adjust your financial habits to expand the possibilities available to you, especially here at Rob Green GMC in Twin Falls, ID.