A credit score is a number that represents a person's, (or a business'), creditworthiness. It's used by lenders and others to predict whether a person will make credit payments on time. Credit scores are important because the higher the score, the more likely you will be approved for credit.
Additionally, those with high credit scores are often eligible for lower interest rates and terms on new credit. (That's what "for well qualified buyers" means in the those TV ads. It means only those with the very highest credit scores will be approved for the low "teaser" rate in the ad.)
So what exactly is a "good" credit score, anyway?
FICO scores range from 300-850, but most people score in the 600s and 700s. Lenders typically consider credit scores above 700 to be very good. For those that have FICO scores below 600, they're usually considered high risk by some lenders, and as a result they may be required to pay higher interest rates. A low credit score may also cause a person to be turned down for credit completely.
There's no single credit score, as different credit reporting agencies will develop different credit scores. But regardless of where the score comes from, each is derived from a person's payment history, how much that person owes, the length of their credit history, and how much new credit has been opened, to name just a few factors.
But even if you have a low credit score, fear not- often times we can arrange for an auto loan for you despite the credit score. And the good news is- there is no better way to raise your credit score than to get an auto loan and make the payments on time.
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