Do you know what factors determine your credit score? If you have plans to finance a new vehicle in the future, you should probably become familiar. Your credit score is what financers use to determine if you are worth their risk or not, so it’s important to know how to change it if need be.
Though not at equal amounts, these financial aspects of your history determine your credit score:
- Payment History: This one is easy. To improve it, all you need to do is make your payments on time.
- Amounts Owed: The less debt you have, the higher your credit score will be.
- Length of Credit History: The longer your first credit account was opened, the better. You can’t do much about this beyond waiting, unfortunately.
- New Credit: It’s better to have as little “new credit” accounts as possible, though this only refers to the past few years.
- Types of Credit: Lastly, your credit score will go up if your credit accounts are more diverse. For example, it’s better to have a credit card, a student loan, and a mortgage (all in good standing, of course) than to have just three student loans.
Keep in mind – payment history and amounts owed combined determine more than half of your credit score. So while length of credit history, new credit, and types of credit are noteworthy, it’s far more important to meet your minimums and pay off debts.
If you are confused or would like to learn more, you can contact our finance department anytime or simply visit us, here at Dick Dyer Volvo!