Auto Credit

To get low rate auto credit, think like a lender.

While it may be difficult, even painful, to view your credit history from a lender's perspective, it will help you understand the "why" behind the auto credit terms and rates you are offered. Read on to get a lender's perspective.

• Start by checking your own auto credit. Your credit report is the foundation for your credit score, ensure each account is accurate. Pay particular attention to accounts that show late or overdue payments (or worse). Click here to find out how to get a copy of your credit report.

• Know your credit score. Your credit score, commonly called FICO, reflects your auto credit-worthiness. It is based on the data in your credit report. This data is used to predict the likelihood that you will repay automotive credit extended to you. The benefit it provides US auto credit lenders is speed (most auto lenders and car dealers can access your credit score within seconds) and objectivity (your auto credit profile is based on the profiles of thousands of others like you). All FICO scores range from 300 to 850. The higher your score, the better. The median fico score is 723. A score of over 720 is considered good. A score of less than 620 is considered “sub-prime”. If your score is sub-prime, learn about bad credit auto financing here.

• Understand how your score is determined. Your credit score is based on a number of factors. Your payment history accounts for about 35% of your credit score. Lenders want to see that you have borrowed money and have repaid it on time. Your credit score reflects at how often you are late, how late you are, how much you've borrowed, etc. Outstanding credit balances, including auto credit, account for about 30% of your credit score. Your credit history drives 15 percent of your score. This involves how long you've been borrowing. Unfortunately, if you're just starting out, there's not a lot you can do to improve this part of your score quickly, so start building your auto credit history. Recent credit acquired drives about 10% of your score. This includes new accounts you may have taken out as well as recent auto credit inquiries. Finally, credit type drives about 10% of your score. In general, lenders prefer borrowers with a mix of auto credit, mortgages, retail accounts, credit card and finance company accounts. Read more in our consumer credit guide.

• Understand your score's impact on your auto credit. Auto lenders such as United Auto Credit consider your credit score when determining whether or not to extend auto credit. If your credit score falls outside of their target range, it will be very difficult to secure automotive credit. Should it fall on the borders of their preferred range, they may require additional information to substantiate your score. Finally, your score has a significant impact on the auto credit rate you pay. All things being equal, the auto credit rate you pay increases as your credit score decreases. This is because lenders require higher compensation for what they perceive as higher risk of default.Click here to estimate your auto loan interest rate.

Now you understand the auto credit basics. Get started by filling out our easy auto credit application.<. We'll help you find auto credit regardless of your credit history.

Related Links

• If you find your credit is bad, learn about auto loans for bad credit.

• Want to run the numbers? Try our auto loan calculator.

• Interested in a used car? Read more about used car financing.

Disclosure: We developed the content for SmartCarCredit™ while working with automotive industry clients. We hope you find it helpful in making informed decisions. While we believe the information to be accurate, we do not guarantee its accuracy.