Credit Scores

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What’s Behind the Numbers?

Banks, finance companies and credit unions make loans based on a number of factors including the customer’s credit score. The higher the score the better a consumer has been shown to handle their financial affairs.

Lenders will also look at how a previous auto loan was paid over its term. This will include evaluating the amount paid for the down payment and your payment and employment history.

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More About Your Credit Score

The information contained in the consumer credit files changes over time so this means scores may fluctuate based on data on file. A number of factors affect a credit score, including:

  • Payment history

  • Public records

  • The length of the credit history

  • Any new accounts which have been opened

  • Inquiries into the credit file

  • How many accounts are in use

Credit reporting agencies like Equifax, Experian, and Trans Union all have proprietary metrics they use to establish credit risk score for consumers. While there are differences in their financial analysis, most of these risk models consider similar factors and share a common theme — generally, the higher the consumer score, the lower the credit risk.

Another term heard often is FICO score. It was first introduced by Fair Isaac and Company in 1989 and is now used by 90% of lenders. The score takes into account not only the information held in credit reporting databases but applies more weight to late payments on mortgages, credit cards, and auto loans. The good news is that FICO scores can be improved by paying down the revolving debt like credit cards. This gives consumers a better debt ratio which makes lenders more comfortable with a loan applicant that may have had some issues in the past.

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