There are three kinds of people when it comes to credit scores. The first group of people can tell you exactly what their credit score is because they check it religiously. The second group of people has a vague idea of what their credit score is, but they arent too worried because they generally pay their bills on time and dont exceed their credit limits. The third group of people has no idea what their credit score is other than knowing its probably pretty bad, and they feel it would simply be better to not know.
Eventually, people from all three groups walk into a car dealership with the intent of purchasing a new car, and one of the first things the dealer will do is pull a credit report. The dealer is looking to establish what sort of interest rate will be available to each particular person, because a credit score basically defines if a buyer is a good financial risk or a dangerous one.
A credit score is comprised of many factors, including past and present payment histories, credit balances in relation to available credit, and the amount of credit available. The reason why it is important to keep a high credit score is because it is these people who are offered the best interest rates. The 0% financing offers which are so widely publicized by dealerships are actually only available to a minority of buyers whose credit is immaculate. Everyone else gets offered a higher interest rate, and, for some with poor credit, these rates can be up into the double digits.
This is why it is so important to not only know what your credit score is, but to keep close tabs on your financial health. A couple of missed payments can damage your credit score considerably and may wind up adding hundreds of dollars in finance charges to a high interest car loan. Having a high credit score will pay off when financing a new car. |
