The Benefits of Having Good Credit & Learning How to Improve Your Credit Score

Your financial journey to acquire the things you want revolves around your credit score.  When it comes to making large investments - like buying a home or purchasing a new car - having good credit helps show bank lenders that you are a reliable buyer.  If you're in the market for an auto loan to help you afford a new vehicle in Fall River, MA, this beginner guide to understanding credit is just for you.

Good Credit vs. Bad Credit

Good Credit

Maintaining a good credit score is crucial to helping you manage your financial portfolio. The better your credit score is, the better chances you'll have of getting approved for a large sum loan. Your credit score - indicated by a three-digit number - operates on a scale that teeters between high and low, good and bad.  The higher your credit score, the more reliable you'll appear to lenders when applying for an auto loan.

Bad Credit

Bad credit, on the other hand, represents a poor financial background and potential account trouble that may dissuade lenders from approving you for a loan.  Not that it's impossible to get approved for a loan with bad credit, but the chances of you securing a low-interest financing rate are slimmer than if your credit score were average, at best.  Depending on your unique financial situation, the experts at Autoloan Credit Express are trained to help you understand and improve your credit score today!

What Factors Make Up Your Credit Score?

When determining one's credit, there are several different factors that help come up with a numerical score - low indicating bad and high indicating good.  To help you calculate and understand your credit score, there are two popular models that offer a good baseline for what's considered good and what's bad, including FICO.  Using FICO's scoring model, let's dive in and highlight which factors have the biggest influence on your credit score, including:

  • Payment History - This is the biggest factor that contributes to 35% of your overall credit score.  The key to maintaining a healthy credit score is never to miss any payments and to always make payments on time.  Even if you don't pay the full amount, making timely payments is essential to maintaining your credit score.
  • Amounts Owed - This is the second largest factor that makes up 30% of your credit score, taking into account all of the money you owe compared to your total credit limit.  Also known as your credit utilization rate.
  • Length of Credit History - 15% is determined by the length of your credit history.  The longer and more consistent line of credit you have, the better chances you have of securing an affordable loan with low interest rates.
  • New Credit - Depending on how often you open and apply for new credit accounts, it will affect your overall credit score by 10%.
  • Credit Mix - Your credit mix contributes to 10% of your overall credit score.  The more diverse your portfolio, including installment loans, credit cards, mortgages, etc., the more points you will earn based on your lending history.

How to Improve Your Credit

The best way to improve your credit score is to be diligent in making payments on time.  The more you spend and pay back on time, the higher your credit limit will be, giving you more freedom to spend extra money on the new car of your dreams.  Taking into account each dollar you spend and how you spend it will help you itemize your budget and get you deeper insight into how your credit score is uniquely tangible.

Contact Us

For more information about credit, please call or contact us online at Autoloan Credit Express in Fall River, MA, today!  We look forward to meeting you!

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  1. Autoloan Credit Express

    428 Pleasant Street
    Fall River, MA 02721

    • Sales: (508) 673-7646
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