What Is a Credit Score? What Is The Difference Between Bad Credit And Good Credit For A Car Loan?
A credit score is a three-digit number that represents your creditworthiness. It states how likely you can repay your debts and to what extent a lender will be taking the risk by lending money to you. Your credit score is responsible for your credit cards or loan approval or disapproval by a bank or lenders. It is based on your credit report, and all the information received from credit bureaus.
What Is a Credit Report?
Your credit report is prepared by the financial information sourced from any one of the three major credit bureaus; Equifax, TransUnion, and Experian. A credit report holds a summary of the information about your credit history, payment histories, and any data reported to your credit bureau. Potential lenders and dealerships (buy here pay here car dealerships) analyze this credit report to decide whether or not to let you borrow money. Not only lenders and creditors, but landlords and potential employers may also access your credit report to choose whether to provide you with the lease or a job, respectively.
In America, the generic or classic FICO credit score ranges between 300 and 850. The VantageScore 3.0 score ranges from 300-850. The old VantageScore was between 501 and 990.
What Is Good And Bad Credit Score?
Your credit score may fall in any of the two categories that are, poor credit score and good credit score. A credit score typically ranges from 300-850. In general terms, a credit score nearly or above 700 is considered a good score while 800 and above is an excellent credit score. Below 650 is considered to be a poor credit score. Generally, the majority of credit holders have credit scores between 600 to 750. You are a “subprime” for a lender if your credit score is below 650-600 or somewhere between 300-550. This means being a borrower; you may face some hard time to pay back the loan. Being a low score holder, you may get disheartened in many aspects, but you don’t have to worry about it. Having a bad credit score does not mean you have to live with this for the rest of your life.
You have several ways to add positive items to your credit report and increase your bad credit to good credit in less than the expected time. One of the most common ways is, getting a used car from a buy here pay here car dealership in Texas (Arlington, Humble, Joshua, Garland, Richardson, and Houston TX) and make on-time monthly payments. Your in-house car financing dealership will report these timely payments to your credit report; hence, your credit score will increase.
The Difference Between Bad Credit And Good Credit For A Car Loan
A car is the second most pressing need and investment after your house. It is a high-ticket item that requires some serious funding on a cash purchase. When an individual lacks the cash, he needs to get a new set of wheels, the second option he avails is car financing for a used car via in-house car financing dealership.
Before you visit any buy here pay here car dealership near you, do you check your credit score? Wondering why? Your credit score is the most critical element when it comes to car financing. As stated above, lenders and car dealerships consider your credit score before they provide you with the funding. If your FICO score falls in the first credit score category (700+), then you are eligible to opt for any dream car with the most favorable terms offered. These terms may include reasonable interest rates, more variety of vehicles to choose from, the lowest monthly payments, etc.
On the other and, if your FICO score is below 650, probably a poor credit score, then you may have started convincing yourself to forget about the car. Fortunately, bad credit scores cannot stop you from getting behind the wheel. With bad credit score comes other several options that can aid you in getting your hands on a quality used vehicle.
Options For Bad Credit Holders
The top-most suggested option for bad credit holders is to work upon their credit scores first, increase it, and then buy a car. But if you are desperate for your vehicle and need the car as soon as possible, then here are some options you can avail of. These options will aid you in getting the car even with bad credit:
- Look for a bad credit lender that will finance your vehicle even if you have bad credit. There are uncountable lenders and buy here pay here car dealerships in Texas that offers bad credit card financing. It is easier to find a dealership that is fine to take a chance on you.
- If you are a bad credit holder, it is recommended to bring some better amount as a down payment. Paying more as a down payment with a bad credit score will make a more comfortable deal for both; the dealership and the buyer. Paying more down will lessen your interest rate automatically.
- You can also bring a co-signer that can be any of your parents or guardian if you are a student and have no credit history. When a co-signer signs the financing papers for you, the lender or the buy here pay here car dealership is no more stressed as the risk falls on the shoulder of co-signer.
- With a bad credit score, it is highly recommended to look for the highest budget-friendly vehicle. Make sure the car you are getting is the one you need, not the one you want.
Take Away
Having a presentable credit report serves you better in every aspect of financing your life. You are treated warmly to avail car financing on favorable terms or any principal loan with a good credit score. The problem arises when the credit score is terrible, and you desperately need some funding, such as car financing. Don’t worry if your credit score is not allowing you to get behind the wheel. In-house car financing dealerships like CarsMaster in Texas (Arlington, Humble, Joshua, Garland, Richardson, and Houston TX) can offer some valuable deals even with bad credit. With 400+ vehicles to choose from, you are warmly welcomed at CarsMaster to get your hands on a quality used car with a clean title and enjoy a free test drive.
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