Before you purchase a car, it helps to understand how your credit score can impact auto financing including the interest rate (APR) you may qualify for and the lenders that may be available. Credit scores vary by person, but many drivers fall in the mid-600s to mid-700s. For a quick estimate, try our Estimate Credit Score page, then explore next steps through our Finance Center. If you're also planning to use a down payment or trade equity, you can estimate your current vehicle's value with our Edmunds Trade-In tool.
To give you a better understanding of your credit score, here is a breakdown of its five components.Payment History
This is the most important factor in determining your credit score - it comprises 35 percent of the final score. Payments that are more than 30 days late are going to have the biggest negative impact on your score. On the other hand, consistent on-time payments are the best way to improve your credit.
Credit Utilization
This constitutes 30 percent of your score. Credit utilization refers to how much of your total available credit you are using. For example, if you have a credit card and student loans, this factor looks at the balance of these accounts compared to the maximum amount available to you. If your accounts are maxed out, this could be a big hit to your credit score.
Length Of Credit History
Since 15 percent of your credit score is calculated from the length of your credit history, the longer you have had credit, the more this factor will work in your favor.
New Credit
The next 10 percent of your credit score is based on how recently you opened new credit accounts. If you suddenly apply for a bunch of credit accounts at the same time, this could reflect poorly on your score, since it usually indicates that you are having a cash flow problem.
Credit Mix
The final 10 percent is based on your mix of credit. Lenders like to see that you can handle a variety of credit accounts, like credit cards and installment loans.
If you'd like to learn more about financing your next vehicle, visit our finance department at Lee Kinstle GM Sales & Service.
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Using Your Credit Score to Plan Your Vehicle Budget
Once you understand your score factors, it's easier to plan for monthly payments and vehicle price range. Many shoppers find it helpful to compare vehicles first, then align the loan structure (term, down payment, and trade value) to a comfortable budget. You can browse vehicles in all inventory and estimate your current vehicle's value using our trade-in tool before reviewing financing options in the Finance Center.