Understanding Your Credit Score
Have you been considering a loan to purchase the boat or RV of your dreams? One of the first things you might think about is your credit score and how it affects your loan. As your financing expert, we’ve answered some of the most common questions below, and we are always here to help you make the most of your good credit and realize your dream.
What is a credit score?
A credit score is the numerical value of your credit history, that evaluates a consumer’s borrowing history, and the probability that they will repay their debts. There are five main factors evaluated when calculating your credit score:
1. Payment history
2. Total amount owed
3. Length of credit history
4. Types of credit
5. New credit
Your credit score affects your ability to to borrow money as well as the cost of borrowing.
What is a good credit score?
While every creditor defines its own ranges for credit scores, (for instance, many lenders think anything over 720 is excellent), here is the average score range:
- Excellent: 750 and above
- Good: 700 to 749
- Fair: 650 to 699
- Poor: 550 to 649
- Bad: 550 and below
What affects my credit score?
There are five main factors that are evaluated when calculating a credit score. Those factors are your payment history (accounts for 35%), total amount that you owe (accounts for 30%), your length of credit history (accounts for 15%), types of credit (accounts for 10%), and any new credit that you have (accounts for 10%).
Each lender has specific criteria that they will request from the credit reporting agencies, based on the type of financing requested.
How can I check my credit score?
Newcoast recommends that you obtain a copy of your credit report and score at least once per year from www.annualcreditreport.com. You can also purchase your credit report and score directly from one of the three major credit bureaus, Equifax, Experian, or Transunion.
Read another article from Newcoast to find out how to get the best interest rate. Click here to read.
It's always a good idea to regular review your credit score and especially as you prepare to take out a loan for your dream boat or RV. Our professional team of loan experts are ready to answer any questions you may have. Contact us today