Your credit score has a big impact on many aspects of your life. Whether you are looking for a new vehicle, planning to purchase a home or even simply applying for a credit card, your FICO score is important. People with a good credit score will get a better interest rate and lower monthly payment than someone with poor or bad credit.
When shopping for a new car, understanding your credit score is essential to get the best interest rate possible for your loan. Often, borrowers have no idea what is on their credit report and this is a less than ideal situation. You should research your own credit score and know your FICO score prior to visiting a car dealership.
The first step is to know your FICO score before you start shopping for a new vehicle or apply for a loan. Getting your credit report is easier than ever. A federal law allows you to get a free credit report from each of the three major credit bureaus, Experian, Equifax and Trans Union, every year. You can get your credit report online at no cost to you at annualcreditreport.com.
A common mistake borrowers make is to get a report from one of the credit bureaus and assume that is all they need to do. Often, people think what is on one is on all of them, so why bother to get them all? This is not the case. Often, there are things on one that are not on the other two, so getting them all is the best idea. In addition, lenders often use an average of the three scores when determining approval for loans.
When you get your credit report, inspect it carefully for any mistakes or accounts that do not belong to you. Credit reports often have mistakes and these can be disputed and removed from your credit report, which can help increase your credit score.
The items that do belong to you will take some more effort to resolve. However, it is well worth the effort to clear up the issues. Even a small increase in your credit score can translate into big savings when it comes to interest rates for auto financing or other loans.
