Life is a series of milestones, and when it comes to finances, information is your greatest and most valuable asset.
- Purchasing a Car
- Buying a Home
Whether it’s your first car or your dream car, buying a vehicle is a big step, and navigating the ins and outs of financing can be tricky. Preparation is key, from determining what vehicle you can afford to checking your credit report and credit scores and planning for how to manage hard inquiries on your credit report from potential lenders. It’s important to understand what role credit plays in the terms of your auto loan.
Q. What does a potential lender look for on your credit report?
Your credit report tells a detailed story about you, your financial accounts and your payment history. Potential lenders and creditors may accept or deny your applications for credit based in part on information installment loans in Mississippi in your credit report, as well as their own lending criteria.
- Payment history: Are you paying your credit accounts as agreed, or do you have missed or late payments? Do you have accounts in collection? While a few missed payments may not result in a denial, they can result in less favorable loan terms.
- Debt to credit ratio: Using a large percentage of your available credit can be a red flag to potential lenders.
- Length of credit history: Do you have a long track record of responsible credit use?
- Types of credit: Lenders generally like to see a good mix of different credit types and that you have previously used multiple sources of credit reliably.
- New accounts: Have you opened a large number of new credit accounts recently? If so, lenders may question your ability to repay.
Q. How does your credit impact other aspects of vehicle use, like renting a car or finding the right auto insurance policy?
In addition to playing a role in a car purchase, your credit may also figure into things like car rentals and car insurance. Read More