There are no limits to the benefits of having good credit when purchasing an auto loan. A credit rating shows someone's history of payments. A credit report details all of this. Creditors send the credit bureaus updates with the customer's financial information on it. The credit report has an assigned score that is determined by an individual's financial situation, and payment history. A high credit score shows any financial institution an individual's credit worthiness.
Therefore, if a person has high levels of outstanding debt, a poor payment history, or never has established credit, then the score is going to be a high low one. And vise versa, someone who pays all his bills on time and does not have a high debt ratio will have a much higher credit score. By using an individual's credit report a lending company can give different weights to the different portions recorded on it. Such as:
* 35% - Previous credit performance (specific to your payment history)
* 30% - Current level of indebtedness (current balance compared to high credit)
* 15% - Time credit has been in use (opening date)
* 15% - Types of credit available (installment loans, revolving and debit accounts)
* 5% - Pursuit of new credit (number of inquiries)
The most important factor for a good credit score is paying your bills on time. To make certain your credit rating is as good as it can be. Because a lending institution will look at the credit rating of an individual to determine what their interest rate will be, and even if they are willing to risk giving an auto loan to them.
Good Credit is something every person wants to have, it assures him or her they can get an auto loan anytime at a good rate of interest. Usually suffering no hassles, and gets what they want. Having good credit is priceless when purchasing an auto loan. As you can see the benefits are substantial, and worth having when purchasing an auto loan!
Matthew Henderson is editor at Auto-Fleet.com. Stop by for a huge selection of information regarding auto warranties, online auto loan, improving your credit, drivers ed, traffic school and much more!