When purchasing and owning a vehicle, we tend to forget how our credit score will affect our state of ownership. Our credit score is always a factor to consider, even if it is just looming in the background. It can be difficult to know what your credit score says about you, so we at Murray Chevrolet Cadillac Lethbridge are providing information that will shed light on it and the way you are treated by financial assistance providers. Let us pick apart the details and see just how important your personal credit is.
How to fix bad credit
The short of it is this: your credit score is essentially a direct reflection of your current financial status. Represented as a three digit number between 500 and 900, the higher the credit score you have the better off you will be. Banks, credit unions, etc. use your credit score number to determine your default risk, more plainly put as how likely you are to repay your loans and do so in a timely manner. The higher your credit score is, the more likely you are to be approved for financial support and be deemed as a low-risk client or borrower.
Bad Credit and the Automotive Industry
On most occasions, the first place you are going to encounter your credit score being brought up in the automotive industry is when you are applying for an auto loan. As we now know, the lower your credit score the likelihood of you being approved for a loan is significantly less. That is not to say that bad credit results in an absolute failure rate, but it certainly hurts your chances. You may be asked to provide a credit report or credit score on application, so having that information readily available is important as well.
Another point at which your credit score can come into play is through automotive insurance providers. These insurance companies tend to use your current credit score to better determine insurance premiums; the amount you will be paying each month to keep insured. So how does your credit score have anything to do with how safe you are behind the wheel? Insurance providers have used credit scores to estimate the chance of a claim being filed. Studies have shown that there is a greater number of insurance claims from drivers with low credit scores.
Similar studies have also been done on the amount of money saved through insurance premiums by those with high credit scores compared to those with low credit scores. The results may be a surprise to you. On average, drivers with a high credit scores are paying roughly $400 less per year on insurance than those with a low credit score. As if it weren't apparent enough already, having a high credit score definitely pays off. But how can a credit score be raised once it is low? And how do you keep a high credit score in the green?
How Can You Keep Your Credit Score High?
There are a number of ways to raise and keep your credit score high, and by practicing the following you will be more likely to find loan applications, insurance premiums, and various financial aspects of your life to be much easier with a lower credit score.
- Pay down and keep credit balances low
- Make sure to pay your bills on time
- Pay more than the minimum if you can
- Only apply for or open new accounts if necessary
- Under-use your credit cards
These are just a few of the ways you can improve your credit score. There are many different avenues you can take, and we at Murray Chevrolet Cadillac are the key to hassle free when it comes to a genuine automotive experience.