Auto Loans: Auto Loan Credit Score

In order to receive the best auto loans available, a good auto loan credit score is necessary.  Below you'll read about how to improve your credit score to receive a better auto loan. 

Five factors play a part in FICO's score calculation: payment history, outstanding balances, length of credit history, new credit and types of credit used.

Payment history. Your payment history impacts about 35 percent of your total FICO score. Details regarding payments made on credit cards, retail charge cards, installment loans and mortgages play a part here. How timely have your payments been? How much do you owe? If you've made late payments, how recently did these payments occur? If you've got few or no late payments, your score will be improved. Also, recent late payments will hurt your score more than those made years in the past.

Outstanding balances. About 30 percent of your score is impacted by the amounts you've got outstanding to creditors. Owing a lot on many accounts won't necessarily hurt your score. If you're at or near your limit on your credit cards and other "revolving credit" accounts, though, your score will be compromised.

New credit. New credit acquired determines about 10 percent of your score. Applying for a slew of new credit is one of the easiest ways for people to mar their rating. The FICO model evaluates how many new accounts you've established, how long it's been since you've opened a new account and how many recent credit inquiries have been made by credit reporting agencies. Self-initiated credit report requests will not impact your score.

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