What Determines Your Credit Score?

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Assessing Your Credit Score and How It Affects the Car-Buying Process

Looking to buy a new or used vehicle? Most people need financing to help cover the cost. In most cases, you'll have pretty reasonable monthly payment rates if you have a good credit rating. A poor credit score can make things more difficult. At Taylor Hyundai, we realize that many factors, including some that may be beyond your control, can cause your credit rating to suffer. Our expert finance team is diligent about finding ways to help you with financing, regardless of your credit situation. 

We strive to do whatever possible to assist you in attaining a solution that will fit within your budget. Taylor Hyundai will explain all your loan or lease options, and give you advice on what kind of payment plan will best fit your needs. If you know your credit score and what factors impact it before you begin shopping, it can give you a leg up on the car-buying process. Read on to find out what factors are used in determining your credit rating and what you can do about it.

Payment History

The most important factor in calculating your credit score is your payment history. According to FICO (the Fair Isaac Corporation), past long-term behavior is used to forecast future long-term behavior. FICO monitors both revolving loans – such as credit cards – and installment loans, such as mortgages or student loans to predict your expected ability to pay debts. 

FICO scores consider the frequency, recency and severity of reported missed payments. Missing a loan payment is not generally considered to be more negative than missing a credit card payment. One of the best ways you can improve your credit score is by making consistent, timely payments. If you still have some outstanding debts that you are able to pay, it's best to do that before you apply for a car loan or lease.

Credit Utilization

Another major factor that affects your credit score is credit utilization, which is the percentage of available credit that has been borrowed. Borrowers who habitually max out their credit cards - or get very near their credit limits - are viewed by FICO as people who cannot handle debt responsibly. People with the best scores tend to have an average credit utilization ratio of less than 6 percent, with three accounts carrying balances and less than $3,000 owed on revolving accounts. 

Credit utilization is measured individually by card, and across multiple cards. As a general rule, it's always best to maintain low credit card balances if possible. If you pay your bills on time and don't carry big balances, you're two-thirds of the way toward a good credit score.

Credit History

Another major factor that affects your credit score is credit utilization, which is the percentage of available credit that has been borrowed. Borrowers who habitually max out their credit cards - or get very near their credit limits - are viewed by FICO as people who cannot handle debt responsibly. People with the best scores tend to have an average credit utilization ratio of less than 6 percent, with three accounts carrying balances and less than $3,000 owed on revolving accounts. 

Credit utilization is measured individually by card, and across multiple cards. As a general rule, it's always best to maintain low credit card balances if possible. If you pay your bills on time and don't carry big balances, you're two-thirds of the way toward a good credit score.

Manage Your Credit Wisely

Ten percent of your total FICO credit score is determined by new credit and credit mix. Even if you're new to credit, you should avoid opening too many credit lines at the same time, since such behavior could suggest you're in financial trouble and need significant access to lots of credit. Credit mix involves your history of repaying a variety of debt products. 

People with no credit cards tend to be viewed as higher risk than people who have managed credit cards responsibly. If you've had both credit cards and installment loans that you've repaid in a timely manner, it will greatly help your FICO scores. Generally, if you pay off your debts to the best of your ability before you apply for financing, you'll have a lot smoother sailing when it comes time to get approved. Let Taylor Hyundai assist you in getting financing for a new or used Hyundai vehicle today.

Contact

Taylor Hyundai

3233 Washington Rd
Directions Augusta, GA 30907

  • Sales: 706-868-1200
  • Service: 706-868-1200
  • Parts: 706-868-1200

Hours

  • Monday 8:45AM - 8:00PM
  • Tuesday 8:45AM - 8:00PM
  • Wednesday 8:45AM - 8:00PM
  • Thursday 8:45AM - 8:00PM
  • Friday 8:45AM - 8:00PM
  • Saturday 9:00AM - 6:00PM
  • Sunday Closed
  1. Taylor Hyundai

    3233 Washington Rd
    Augusta, GA 30907

    • Sales: 706-868-1200
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