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What Goes into Your Credit Score, and How Does It Affect Buying A Car

Finding money to buy your next car can be an adventure. Chances are it's not just magically sitting in your bank account, untouched and just waiting to be used at your convenience. Life isn't that kind, so more than likely, if you're looking to buy a car, you're going to need to borrow some money.

In order to borrow what you need, you'll have to prove that you spend responsibly. There's one all-encompassing number that lets lenders use to determine whether to give you money; your credit score.

You've probably at least heard the term credit score at some point in your life, but if you don't know what it means or what goes into it, that's no problem. Let's break down what you need to know about the number that will put you in your next ride.

Your Payment History

This makes up the largest percentage of what determines your credit score, and while it’s not the end of the world if it’s not your strongest area, it undoubtedly helps. Basically, if you pay your bills on time, such as a mortgage, rent, utilities, or credit cards, you have nothing to worry about.

However, if you’ve made a habit of late payments, this can knock down your score and how late you paid also plays a part. For instance, paying a couple of days late is a lot better than paying a bill a month or two after its due.

What You Currently Owe

Chances are when you’re going to buy a car, you’re going to be rearranging your other bills to make room for the new payment. Hence, you probably already have a debt or two that you’re working off.

This is perfectly fine, as in some cases, having a debt or two can work in your favor. Of course, it depends on how much the debt is, as a credit card bill of several thousand dollars can make you look like an irresponsible spender, whereas a moderate mortgage loan that is consistently paid on time, shows you as someone who is both willing to take on debt and is able to follow through.

Previous Credit History

It may seem like a good idea to avoid credit debts altogether, but that doesn’t always work either. Lenders like to see that you have a track record of being able to pay off debts. So even if there’s a credit card you have open that you don’t use much anymore, it can still be a potential score boost for you when you go to apply for a car loan.

Of course, the flip side of this is that if you do have a long history of credit, but a tendency to make late payments, your score can take a big hit.

Any New Credit Accounts You Might Have Opened Recently

Just like how lenders like to look at your past credit, they are also very cognizant of your present. It’s not necessarily a bad thing to open new lines of credit but opening a bunch across a short time span can raise a red flag on their end.

This is typically because when people do this, it’s because they are experiencing cash flow problems and are trying to create a temporary solution for the present while they hope to sort it out later. This is a common behavior that gets a lot of people into a level of debt that forces them to declare bankruptcy. Simply put, if you’re constantly needing new lines of credit, you probably won’t be able to get a new vehicle.

How Many Different Types of Credit You’re Currently Using

Diversity in the types of credit you leverage is nothing but a good thing. It’s among the lowest percentages that factor into your overall score, but it can just as easily make up the gap for weaknesses in other areas.

Having different types of credit gives you multiple ways to boost your score and cements your validity as someone who can pay back money you owe.

How Credit Affects the Car Buying Process

All of these factors go into determining whether you can get financing on your next vehicle. Dealerships will take a long look at your entire credit history, and any missteps made in the past could hurt your chances. Simply put, just spend smartly and you'll be able to drive away in a new car when you're ready for an upgrade.


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L. T. Begnal Motor Co, Inc.

129 Route 28
Directions Kingston, NY 12401-7447

  • New Sales: 8456631047
  • Service & Parts: (845) 768-3686
  • Used Sales: (845) 481-2732
  1. L. T. Begnal Motor Co, Inc.

    129 Route 28
    Kingston, NY 12401-7447

    • New Sales: 8456631047
  2. L. T. Begnal Motor Company

    552 Albany Ave
    Kingston, NY 12401

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