One of the most important factors that determines whether you'll get an auto loan is your credit score. A credit score or rating is a number ranging from 300 to 850 that tells lenders how risky it is to lend to you. A good score can not only help you secure a loan, but it will often lead to lower rates. There are several factors that make up credit scores, including your payment history, amounts owed, length of credit, types of credit, and new credit.

Payment History

This makes up 35% of your credit score and it includes payment information. If you miss any payments or have any bad marks on your payment history, your credit will be detrimentally impacted.

Amounts Owed

This makes up 30% of the score. It includes the total debt that you owe to other lenders, though some debt is worse than others. For instance, revolving credit (i.e., credit card debt) is worse than something like a mortgage or student loans.

Length of Credit

This is 15% of your score. Even if you’ve never missed a payment, lenders still want to be sure that you’ll make payments. That’s why the length of your credit history is important. It includes the amount of time it’s been since you opened accounts and the duration of account activity.

Types of Credit

Making up 10% of your credit score, this refers to the diversity of credit accounts. It’s better to have a mix of revolving and installment accounts, as opposed to all of one kind.

New Credit

This also makes up 10% of your score, and it includes the number of recently opened accounts and inquiries. It’s a good idea to spread out big purchases so you don’t scare off lenders.
If you have questions about how credit affects financing, visit LaSorsa Chevrolet Buick today. Our expert staff will walk you through the process to ensure that you understand everything you need to know before signing any papers.

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