How the credit scores of new auto loan recipients have changed over the past 10 years
Someone wants to lend you money. If they don’t know you, how do they know you can trust them to give them a full refund? Professional lenders turn to credit scores to get an overview of your reliability and calculate the likelihood that you will repay a loan on time. These kernels are a way to measure the risk associated with a lender lending you money.
A FICO score, one of the types of credit scores, is calculated by looking at your individual profile of amount owed, payment history, length of credit history, new credit, and combination of credit accounts , which is the combination of loans you have such as mortgages, student loans, and credit cards.
When buying a car and obtaining an auto loan, it is important to have a good credit score in order to obtain the most competitive interest rates from lenders. The exact rate will depend on many factors, including the amount of money you borrow, the terms of the loan, and your lender. However, the scale here is clear: the lower your credit score, the harder it is to get a low-interest loan.
For those who fall into the category of fair to low credit scores (699 or less) or who have a limited credit history, a subprime car loan is often the best or even the only option. “Subprime” simply refers to a borrower with a below average credit classification. Subprime auto loans have become big business…