If adventure and exploring are synonymous to you, venture into a brand new experience of living on the edge. How about getting a new car to follow endless roads and exploring new places? Sounds good? Then don’t wait for your savings to go up, just get an auto loan.
Before getting an auto loan, did you check FICO Score? Well, some of you may be new to it while some may be well aware. In a layman’s language, FICO= First I(eye) Credit Overall. It means first have a look at your FICO Score to know your credit situation. It will be easy for you to get an auto loan with a good FICO Score.
A good score will get you easy auto loan with a low rate of interest and low monthly payments. So, instead of first eyeing your dream car, shift your attention to FICO Score. It is divided into five categories. The importance of each factor depends on the information which is provided in your credit report. When there is a change in information, the score also changes. The five categories in determining the FICO Score is mentioned as under:
30% – Amounts Owed
Factors such as monthly loan payments, amount owed across different types of accounts are covered under this heading.
10% – New Credit
Consumer can maintain different types of credits such as mortgage loan, credit card debts, personal loan etc.
15% – Length of Credit History
Factors like age of your oldest credit account, age of your newest credit account, duration of usage of auto loans or credit cards accounts.
10% – Credit Mix
Good credit mix depends on how you manage your different accounts (i.e.) revolving accounts, loan accounts, open accounts, etc.
35% – Payment History
Factors such as bankruptcy, late payments, repossession cause a major effect on the score.
Don’t have a good FICO Score? Let’s fix it with these easy tips:
>>Make timely payment of your bills.
>>A credit counselor is always there to help you out.
>>Try to reduce the amount of debt you owe.
>>List down all your accounts and the amount you owe. After studying the numbers, come up with a payment plan.
>>Credit cards are a big concern which can affect your score directly or indirectly (e.g. Balances should be kept low on credit cards to increase your score).
>>Don’t apply for a number of new credit cards that you don’t need, just to increase your available credit.
>>A closed account is also shown in your credit report. So closing an account to improve your credit score is not a good option.
These easy tips would guide you to improve your FICO Score. Building your credit score takes patience but a good FICO score will help you obtain an auto loan easily.
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