How to Use a FICO Score to Get a Car Loan
In order to get any substantial loan, it is a wise idea to know your FICO score. This especially holds true for a car loan. A FICO is what is commonly known as your credit score. This is a score that determines how good you have been at paying bills and balancing your past credit.
Lenders use this to determine if they will lend you money and at what interest rate. Take your good FICO score to car dealers and you’ll be able to bargain for the best price, rate and terms.
5 Steps to Use a FICO Score to Get a Car Loan
1. Get your FICO score, also known as your Fair Isaac Score
Each of the major credit reporting agencies produces a credit score. Equifax produces the FICO score. You may purchase your FICO score from MyFico. Your entire credit history is taken into account when Equifax produces your FICO score. There may be a charge to obtain your score. The better you have been with money, the higher the score.
2. Print your score and know what it means
Each FICO readout should come with a detailed explanation as to what your score means and whether it is considered good. Generally, each company grades on a separate scale, so it is handy to have this information.
3. Visit various loaning institutions with your information and find out if you qualify
Banks, car dealers and online loan companies are all good options to get started with. Compare the rates for each, because what one company sees as a financially risky score another may find as perfectly acceptable.
4. Show each lender your FICO score
This is a large determinant in whether many lending institutions will offer you a loan. In many cases you can find out what kind of interest rate and terms you can get in a car loan by simply showing the lender your FICO score. This is ideal for those who want to minimize the number of credit checks they have on their credit reports.
5. Find a car that meets the lender’s parameters
Most likely you will be preapproved for a loan and you can use this to base your car shopping on. This will be a maximum they will give you a loan for, which means it is the maximum price you can look for in a car.
Car dealers want to sell cars and they will always drop prices or offer better deals to buyers with good credit.
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