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Which Credit Score is Used for Auto Loan?

Which Credit Score is Used for Auto Loan?

It's common knowledge that your credit score is a vital factor in your chances of getting a car loan. But the picture isn't quite as simple as it first appears. There are several different ways of calculating an individual credit score, and which one is used depends greatly on what kind of credit you're applying for. Here's what you need to know about credit score calculations, used car loans, and how they work together.

 

How Does a Used Car Credit Score Work?

How Does a Used Car Credit Score Work

 

In general, credit ratings are calculated by giving each part of your financial history a plus or minus score and adding them together to get a final result. For example, every successful repayment you make on a loan will add a small positive amount to your overall rating, while defaulting on a loan will add a very large minus to it.

 

However, the precise details of the calculation can give more or less importance to each entry in your file. There are three main ways used car loan credit scores are calculated.

 

- The standard FICO score which is the generic and most commonly used way of calculating a score from a person's file.

 

- The FICO Auto score which takes the standard FICO score and increases the importance of auto-related file entries. For example, making previous car loan repayments will be rewarded with a better score than credit card payments, while having any kind of car loan default on your file will seriously damage your rating.

 

- The VantageScore system which is less restrictive on who can receive a score. With FICO scores, a person needs an active credit file with recent history, and if they don't have this they can be listed as having no credit at all. With VantageScore, a single entry of any age is enough to deliver a score, making it much easier to be approved.

 

The good news is that an estimated 70% of used car loans and lease arrangements are based on the VantageScore system, meaning it's easier to get a used car loan even if you have little or no credit history to draw on.

 

Tips for Getting Low Credit Score Car Loans

 

You won't often know which scoring system an auto lender is using, but for all three methods a few simple tips can help you get approved more easily.

 

- Pay down your credit card debts as much as possible while keeping your accounts open. The less of your available limit you're using, the better your score.

 

- If you can't pay down your cards, use affordable debt consolidation to reduce the balances.

 

- Get a free copy of your credit file and check it for errors. You can have any wrong information corrected to give your score a boost.

 

Apply for Any Credit Score Used Car Loans at Basant Motors

Apply for Any Credit Score Used Car Loans at Basant Motors

 

Whether you have great credit, bad credit, or no credit history at all, at Basant Motors we can help get you on the road with an affordable used car loan package. Visit our finance department to learn more, and start the easy online application process to open the door to more affordable car credit, whatever your circumstances.

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