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When it comes to securing an auto loan, your credit score is usually the primary method for determining whether or not a lender will provide a loan for you. At Indy Car Financing, we want to help our customers secure the most competitive rates possible on their auto loans. This helpful guide will explain how your credit score factors into applying for an auto loan.
What is a FICO Score?
Your FICO score is a numeric value assigned to you based on five different factors associated with your credit. These factors include:
- How much money you owe
- Your financial payment history
- The length of time you’ve had an established line of credit
- The number of credit accounts you have
- Credit types
The way in which your FICO score is calculated is not something that credit companies disclose, but it is speculated that about 65 percent of that score is determined by your debt and payment history. The length of time you’ve had a line of credit accounts for 15 percent, while other factors total approximately 20 percent.
Who are Prime Borrowers?
People who have a credit score of 660 or higher are regarded as prime borrowers. The higher your credit score, the better your rates will be from lenders, since they want to encourage borrowing. Competing lenders will try their best to lower their interest rates as much as possible to target prime borrowers.
Who are Subprime Borrowers?
People with a credit score below 660 are considered subprime borrowers. Since lenders view subprime borrowers as a higher risk, they are usually given higher interest rates. Sometimes, a lender might outright refuse to issue a loan if the credit score of an applicant is very low.
Be Prepared Before Applying
If you would like to apply for an auto loan with Indy Car Financing, it‘s in your best interest to know what your credit score is ahead of time. Once you’ve confirmed that number, do some research on the average loan rates associated with that particular score. This will give you a better idea of what to expect when securing an auto loan.
Choose Indy Car Financing Today
With all of this information in mind, feel free to apply for an auto loan with Indy Car Financing at your convenience! Our financial experts will work with you to make sure that you’re able to take home your ideal car with a loan that you can afford. If you have any questions or concerns, don’t hesitate to contact us online or at 855-468-6215.