Thompsons Sales: The Importance of Your Credit Score When You Buy a Vehicle

At Thompson Sales, we deal with all aspects of car sales, including the credit check and financing details. To be approved for a car loan, your credit score must be adequate for the amount you wish to borrow. This means that a credit check could essentially determine how much you will spend on your next vehicle. 

Our customers are important to us at Thompson Sales, which is why we want you to understand your options when it comes to credit scores and car sales. Here’s some information you may not have realized regarding your credit check. 

Understanding Credit Scores

Your credit is checked on a score ranging from 300-850, with an excellent score being 800 or more. A score of 700-800 is a good score and will pass most credit checks with ease, however, most Americans range between 600-750, which is quite a broad range. Generally, 600 is considered fair and 750 is considered very good. 

A high credit score is important when trying to obtain any type of loan, especially a car loan. The higher your credit score, the more money you can borrow to borrow. Your credit check usually draws information from credit reporting agencies such as Equifax. 

Credit Scores and Vehicles

Just because you don’t have amazing credit doesn’t necessarily mean you won’t be approved for a loan on your vehicle. At Thompson Sales, we see plenty of customers approved with a score in the mid-range, and even some with low to fair credit. Having a lower than average score means that you may not be approved for a high loan and that interest on your repayment will be higher. Having better credit also means not having to put down a large down-payment on a vehicle. Some retailers may even offer 0% down to those with excellent credit. 

The reason you pay more on interest and require a larger down-payment if your credit is below par is that you are a greater risk to the lender. Your credit score depreciates based on missed payments, high loans, and other contributing factors. Poor credit indicates to a lender that you aren’t reliable at paying bills on time or that you might already have too much debt to take on more. By paying a large down payment, you minimize the amount required for the loan on the vehicle, making it less risky for lenders. 

Tips to Improve Your Credit Score from Thompson Sales

Fortunately, having poor credit isn’t a permanent problem; you can improve your credit score over time. At Thompson Sales, we don’t pretend to be financial experts, but we do know a bit about financing and credit scores when it comes to vehicle sales and we want our customers to have the most options when it comes time to buy.

To improve your overall credit rating, you can begin by making payments on your debt in a timely fashion. Pay early or on-time and remember that if you make a payment on the day it’s due, it likely won’t be processed for up to 48-hours, making it appear late. You can also improve credit by paying more than the minimum, which usually comprises of interest only. For example, if your credit card payment is $50 per month, paying $100 per month looks better and pays your debt down faster. Keeping credit cards below their maximum limit also helps.

It isn’t just those with poor debt who need help with car loans. At Thompson Sales, we often see customers who just haven’t established their credit yet. It isn’t bad credit, but no credit, that is the issue. If this is the case, you can begin building credit by obtaining a credit card or a monthly cell phone plan. Make payments on time and keep your balance low.

For a closer look at new and used vehicles from Thompson Sales, or to check your credit for affordable vehicles, contact us at (417) 763-6811 today!