Credit score is one of the most important factors to understand when applying for auto loans. Every time you apply for credit, a business will check your credit history with a credit agency. You will be assigned a risk score between 300 and 850, with 300 representing the highest risk and 850 the lowest. The vast majority of people have credit scores between 600 and 800, and factors that can affect your credit score include the number of credit channels, the number of recent inquiries, the timeliness of your bill payments, and any negative reports or collections that have been filed.
It is important to remember that if you have inquired about auto loans, student loans, or home mortgages within the past 30 days, each inquiry will count as one. Compare this to credit card company inquiries, which will all appear on your statement. The point is that shopping around for auto loans will not affect your eligibility, so you should continue looking for the best deal.
Your credit score will be considered when determining the type of interest you can obtain. In general, those with credit scores above 680 are eligible for low interest rates, while those with scores above 700 receive the best deals. As long as your score is above 600, you will likely not be considered a high-risk borrower and should be able to negotiate a reasonable rate.
Once you understand the relationship between your credit score and your ability to obtain a loan, how do you determine your rank? You may be surprised to learn that different agencies will assign you a rating that varies slightly. This largely depends on the type of credit or loan you are seeking, so keep this in mind as you shop. To get a general idea of your situation, you can request your own credit score and conduct a personal inquiry.
Overall, searching for auto loans should not be a particularly stressful endeavor. With the knowledge of how you are evaluated by lenders, you should be able to navigate the system and be well on your way to acquiring the vehicle you deserve."""