Learn About FICO Scores to Get Good Credit Auto Loans in O’Fallon
July 23, 2019
If you want to get the most out of good credit auto loans in O’Fallon, 5 Star Auto Plaza is the way to go. Whether you have good credit, bad credit, or no credit, we have options to help you secure reliable financing with reasonable interest rates so you can drive off the lot happy.
Something you may want to know about to get a better sense of your credit is how credit scores are determined. Many free credit scores use the VantageScore model, as it is much more cost-effective than proprietary FICO scores. Most credit card scoring models are going to be within several points of each other, and the factors that affect them are overall the same. All information is taken from consumer credit reports concerning your credit, your debt, and your bill payment history.
Each model weighs these factors differently, but to give you a general idea of what to expect, here’s how the FICO model categorizes and considers your credit to achieve a correct score:
- Your payment history makes up roughly 35% of what determines your score. A history of on-time payments does not mean that you need to pay off all of your balance every single month. Minimum payments to lenders and credit cards count towards your on-time payments and can boost your credit score considerably. If you had a vehicle repossessed in the past, it can show up in this section and affect your credit score in a significant way.
- Your credit capacity makes up 30% of what contributes to your FICO score, and three components play a significant role in determining this. Your credit capacity consists of the credit that has been extended to you, such as loan balances and credit limits; the amount of credit you are allowed that you are currently using, and the percentage of available credit overall that you are using. If possible, keep your credit utilization at 30% or less. A lower number is better, but a credit utilization of 0% does not show lenders that you have experience in managing your debt.
- The amount of time that you have had credit accounts for approximately 15% of what contributes to your score. And not only matters how much that you’ve been credited with, but also how long you can be trusted with it. The longer you can responsibly manage credit, the better your score. If most of your credit is on credit cards that are recently open, your credit score might go down briefly. Buying a car, a house, or opening a new account can always make your credit score lower a little bit, but it quickly recovers as you build a history with those new accounts.
- New credit inquiries make up about 10% of what determines your score. Taking on more debt always affects your credit score, and the number of queries that you currently have, especially if you have quite a few at once, can have an impact on your score that may take a while to bring back up as you make regular on-time payments. Checking your credit score does not affect this, however. This only happens when potential lenders take a look at your credit.
- The last 10% that determines your FICO score is your credit mix. There is no public information about the ideal blend of loans, credit cards, and other obligations the offer best score. The pattern tends to be that a combination of both revolving credit options, like credit cards, and installment credit, like auto loans or mortgages, can support a good credit score as long as you take care of those debts with on-time payments.
Whether you need bad credit or good credit auto loans in O’Fallon, 5 Star Auto Plaza is here to help you get the most out of your auto financing needs so you can get the car that you want at an excellent price. For more information about our services, or to see what we currently have on the lot, stop by the dealership or call our team today at (636) 940-7600.