Consumer Car Buying Advice Blog

All consumers but especially those with bad credit probably wonder just how FICO determines their credit score.

We know what you’re going through

At Auto Credit Express, we’ve been helping bad credit car buyers for nearly twenty years reestablish their car credit by financing a new or recent pre-owned vehicle with a bad credit car loan. During that time, we’ve tried to educate consumers on high to take advantage of the process – since these very same people begin with a distinct disadvantage due to the high interest rates charged by these loans.

We also stress the need to check your credit score (also known by the familiar term FICO score) before you decide to visit the dealer. This is because your credit score can determine both where you shop for a car as well as how you shop for a vehicle.

Your FICO score

There are 5 factors that FICO (formerly known as Fair Isaac) uses to determine your credit score. Where you fall in this ranking will determine whether you can finance your next car with a traditional lender or whether you will need to apply for a bad credit car loan (there will be more, later, on where and how you should do this). The 5 factors and how they affect auto financing include:

Payment History - Payment history affects approximately 35 % of your score. Making all of your monthly payments on time goes a long way towards being able to secure vehicle financing through traditional lending channels. If you have been a bit remiss in making your payments on time, bad credit car loans could be an alternative. Of special note: recent late payments will have more of a negative impact on your score while those from the past will not affect your score nearly as much.

Balances - How much do you currently owe to creditors? Your current debt load will affect about 30 % of your FICO score. If your credit cards are at their limits and your revolving credit is maxed out, this will have a negative affect on your score. Bad credit car loan buyers, especially, should try and lower their debt load before applying for a loan. The lower your balances (a rule of thumb is to keep your current balances at 30% of your credit limit or lower), the higher your score and the lower the interest rate that you will be charged on a bad credit car loan.

Credit Utilization - The types of credit you are currently using impact your credit score by approximately 15 %. Banks, finance lenders, credit cards, mortgages, and all other financing is included in this category.

Depth of Credit – How long have you been using credit? Your time “in the bureau” accounts for approximately 10% of your credit score. The longer you’ve been using credit, the higher your score will be.

Recent Credit Opened - Recent credit applications impact your score by about 10%. If you are constantly applying for new credit (loans, credit card application, etc.) this will be reflected in a comparatively lower credit score.

Applying for bad credit car loans

Bad credit car loan buyers have a choice: they can either drive around town, hoping to find a dealer that can help them, or then can go online to a web site such as the one you’ll find at www.autocreditexpress.com.

For nearly 20 years, Auto Credit Express has been helping people with credit problems get approved for new and used car loans. Our dealers work with a broad spectrum of lenders to get you approved. Once you’re approved, each month you make a timely car payment you will improve your credit score and reestablish your financial future.

Unlike many other services, we belong to the Better Business Bureau and our web site is SSL secured, ensuring the privacy of your personal information. Since our inception, we have processed over 1,000,000 online applications and closed over 1 billion dollars in bad credit auto loans.

Isn’t it time you visited www.autocreditexpress.com to see what we can do for you?

Tags: bad credit, bad credit car loan, bad credit car loans, better business bureau, car loan, car loans, credit card application, credit score, fair isaac, fico, Fico Score

This entry was posted and is filed under Fico Score. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.