Credit scores are a large part of the American economy. Credit scores determines what we purchase, what kinds of homes we buy and the type of cars we drive. In the event you have good credit, it becomes less of a hassle to get things done, however if you have bad credit, it can be terribly difficult to get a mortgage loan, car loan or credit card.
With a poor credit score, the interest rates you will be charge on borrowing can be very high. High interest rates can lead to difficulty in making timely payments as your payments may be higher than the average.
The mortgage financial crisis was basically brought about by mortgage lenders approving loans for people with sub prime credit ratings. Their poor credit or sub prime scores meant that interest rates were exorbitant, although interest rates on the average were low . With employment on a downward spiral, people could not afford to pay for their homes any more.
Their payments fell farther and farther behind which lead to massive foreclosure with people with credit score of 600 or lower. So Where Between 300 and 850 is Your Credit Score
The average credit score is 680, so if your credit score is about 680 or above you can easily get a car loan. By the way only 13% of the nation’s population has scores above 800 so do not be too hard on yourself if your FICO rating is lower than average. You will, however, be charged a higher interest rate than someone else with, say, 750 FICO score.
If you score is about 650, which is rate at which prime begins, you will have little trouble getting a car loan. If you have bad credit or sub prime credit score you will have to work to improve your FICO score before applying for the car loan.
You can start paying your bills on time, reduce the amount of retail store credit cards and try to reduce your debt to asset ratio. Once you know you credit score, keep regular check to ensure that your credit is not hampered by hackers and discrepancies in credit reporting. You can sign up for Equifax credit watch through which you can update reports in the event something unusual is report on your report.
Also, apply for a free credit report ONLY through www.annualcreditreport.com. This website was created by the government for every American to get a free copy of their credit report once a year
If you are thinking of a car loan check your credit score between 300 and 850 to see if you may have to improve your score to get a better interest rate