Credit Score Explained | Harlingen, TX
If you’re purchasing a new car, one of the most important financial factors to consider is your credit score. This three-digit number is a key component when a lender decides to provide you with an automotive loan. Bert Ogden Toyota is here to delve into what a credit score is and help you figure out how to improve yours.
What Is Your Credit Score?
A credit score is a three-digit number that ranges from around 300 to 850 (depending on the scoring company). The higher your score, the better your credit is. It’s determined by a mathematical algorithm that takes multiple factors into account and tends to demonstrate your financial well-being and dependability as a recipient of a loan.
How Is Your Credit Score Calculated?
Many people don’t know what, exactly, goes in to their credit score. Here are the various factors that can raise or lower your score.
- Payment history: Have you been paying your credit card bills and loans on time? This factor is one of the most influential on your credit score. A good payment history means your credit score is likely okay, though other factors do contribute.
- Amount owed: If you have a large loan or a high credit card bill, then your credit score can be low.
- Length of credit history: The longer you have a credit line open, the better your credit score will be. That’s because it proves you can be depended on to pay your bills due to your experience with credit.
- Types of credit: The more diverse your credit lines are, the better your credit score will be. There are multiple types of credit accounts, so make sure your portfolio is diverse.
- New credit: If you have recently opened multiple credit accounts, then your score can decrease.
How Can I Improve My Credit Score?
Improving your credit score can be done, though it might take a bit of time. If you know what your credit score is – and what factors influence it – you can focus on the following tips to help your score increase over time.
- Pay your bills on time: Timely payments highlight how reliably you pay your bills. It’s one of the main factors lenders look at before deciding to give you a loan.
- Pay off debt: You want to keep the balances on your credit cards low and try and pay off your debt as well as you can.
- Apply for new credit only when you need it: Try not to open a credit line unless you absolutely need it – even if you’re trying to get a better credit mix. Unnecessary credit can hurt your score because it can tempt you to overspend and increase the number of inquiries on your credit.
When you’re ready to buy a new Toyota, Bert Ogden Toyota’s finance team can help you find the best loan rate and repayment plan for your credit score and budget.