Asheville Used Cars: Credit Questions

Do you know what your credit score is right now? There are some people who check their credit score on a regular basis, and some who subscribe to a service that allows them to check it at any moment. For most of us, however, our credit score is not part of our daily, monthly, or even yearly life! Our credit checks mainly occur when we are actively seeking a loan to pay for a home, tuition, or other major purchase-which includes, of course, shopping for Asheville used cars. At those moments, your credit score can seem like a number dropped out of the sky into your lap, making it either easier or harder for you to get the loan you're looking for. Here are some basic ideas that will help you understand just where that number came from and how it will affect you.

 

What Does the Number Mean?

As you shop for Asheville used cars, you or a potential lender will look up your credit score. The number that comes up as a result is between 300 and 850-the higher the better. Speaking very broadly, a credit score above 700 is good, while one below 600 is bad. That single number is calculated by a company that looks at the many different factors of your "credit history" over the course of your life (see below for specifics), giving you and your potential lender a simple, compact indication of your performance so far. Specifically, that number tells the lender how likely it is that you will be able to pay him back the money you want to borrow from him, based on your past activities. If that likelihood is very high, the lender will be happy to give you a low interest rate. If it seems less likely, though, the lender will impose a higher interest rate to balance the risk that he is taking.

What Affects My Credit Score?

It isn't easy to compress an individual's credit history into a single number! Here are some of the most important factors that make that number slide up or down, divided into positive and negative factors:

Positive Factors:

  • Many years of history to look at. The longer you have been working with credit, the more accurate your credit score will be.
  • On-time loan payments. This shows that you take your payments seriously and make sure they get to your lenders on time.
  • High credit limits and low balances. A high credit limit means that a credit card lender trusts you, and a low balance shows that you don't rely heavily on credit.

Negative Factors:

  • Little or no credit history to consider. This makes you a "wild card" from the perspective of someone loaning money for Asheville used cars.
  • Frequent missed payments. A single missed payment several years ago won't have a big impact on your score, but a pattern of missed payments makes potential lenders very nervous!
  • Several credit cards with high balances. This suggests that you rely on credit without having enough money to pay the loans back.

Credit Scores and Asheville Used Cars

So, how does that single credit score affect you as you look at Asheville used cars and a way to pay for one? Although the number is simple, its effect on your loan is not. Each individual bank or lender takes your credit score into account differently. One bank might be willing to take a greater risk than another one, approving a loan for a customer that another bank has turned down, or one bank may offer a lower interest rate than another bank for the same loan.

It is a good idea to request a credit report and credit score (they aren't the same thing!) before shopping for Asheville used cars. If your credit score is under 700, you should be ready for a lender to offer you moderate to high interest rates-which will have an impact on the monthly payment amount that you can afford. If you have an excellent credit score, you probably don't need to worry about being denied a loan or paying a high interest rate.

Call or email us today to talk more about credit and how we can help you choose the perfect new vehicle from among the Asheville used cars on our lot!
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