Getting a car loan with a credit score of 693 can be challenging, but if you consider these factors above, then you won't be having problems in getting the loan that you need.
A credit score is needed for you to be able to get a loan or credit. The reason behind this is because it will help financial institutions to determine your creditworthiness. They will also see every loan that you made and the payment history that you have. Find out more about it by reading the information below.
Credit scores are calculated based on the proprietary algorithm. This will include the person's outstanding debts, payment history, and the length of the individual's credit history.
Credit scores can range from 300 to 850. The higher the individual's score, the lower the risk. People who have lower credit scores are considered high risk, which will make lending companies ask for more requirements.
Car loans with a credit score of 693
If you are one of the people who is wondering how interest rates can be affected, then the information below will surely be useful to you.
There may be a lot of financing companies today that can provide you with the loan that you need, but not all of them have the best interest rate that you can afford. That is why it is important to know how the rates can be affected.
Type of Car
One of the factors that can affect the interest rate is the type of car that you are going to purchase. Companies can offer you a low-interest rate with your credit score of 693 if you choose a car that is hybrid or the one that is fuel efficient.
Amount of the Loan
The amount of the loan that you need can also affect the interest rate that the company might offer you. It would be best to choose a reasonable amount to avoid overspending and to lessen the interest rate that the lender can provide you.
About Fico scores
Fair Isaac Corporation is the one who established FICO, and it is one of the most commonly used credit scoring systems today.
According to FICO, 90% of the most reputable and respected lenders today are making decisions according to this kind of credit scoring system. Get to know more about Fico scores by reading the information below.
How are credit scores calculated?
The weight of each of the five categories are; 30% of amount owned, 10% is for the new credit, 15% accounts for the length of credit history, 10% is the credit mix and the last 35% accounts for the person's payment history.
The FICO score takes into consideration positive as well as negative aspects of the credit report. The percentage or the weight of any of the categories mentioned above may differ from a person to another depending upon the information available in the credit report.
The FICO score takes all of the information from your credit report. However, the banks or any other lending institution might look at your income, type of credit and employment history when you apply for a loan or mortgage.
Once a certain lender asks for a client's credit report, they can also ask for the Fico score. Other sources say that your Fico score will include 35% of your payment history, 30% of your credit utilization, and 15% as to how long have you been borrowing.
Explanation of credit score ranges
It is important to know the category that you fall into when it comes to credit score for you to be aware. The range of a credit score can go from 300 to 850. Always remember that the higher your score, the higher the chances of you to qualify for a loan. There will also be instances where a financing company is okay with 650 scores, while the other is fine with a 750 score. It will all depend on the lender itself.
A lender or a bank will check your credit score if you qualify for the application that you are requesting. Here are some of the credit score ranges that you should know.
Bad credit score
People with a credit score below 579 is known as high risks. Foreclosures, poor payment history, and bankruptcies are the reasons why people fall into this category.
Good credit score
A good credit score ranges from 680 to 719. People with this credit score can expect approvals and interest rates that are better.
A very good credit score ranges from 720 to 799. People with this credit score is known to be small risks, and they often get loan amounts that are higher than usual.
An excellent score ranges from 800 and above. Financial freedom is expected to people with this score.
What does it mean to have a credit score of 693
In the United States, individuals with a credit score of 680 are regarded as the average population for determining the health of a national credit score. Therefore, if the average is approximately 680, individuals with 693 can see it an opportunity to apply different types of loans including mortgages. These individuals can also own homes and cars obtained purely from bank loans. The more good news with a credit score of 693 is that it is easy to change this credit score from 693 to above this figure. It will take only three months to reach 700. This drastic positive change is impossible when an individual has a lesser credit score.
Improving your credit score of 693
With a credit score of 693, you do not need to sit down and put your back that, you're on the safer side of financial books. The best thing you need to do to keep the credit score financial information on your fingertips and always work on improving this score. There is a lot to do with a positive credit score. Therefore, to improve from 693 and above, correct your credit history reports at least four times a year. You should know what is in your report so that you can know what is wrong and where you went wrong.
Financials are complex whether they are for individuals or companies. Therefore, ensure you work on obtaining your financial reports. Determine where you went wrong and start fixing errors. Some errors may be hidden, but it will be very embarrassing when lenders find these errors, especially when you're trying to make a huge loan application.
What you need to do
Work on staying on the positive side of credit score above 693. The best way to do this is continuing to work on growing your credit score through making timely payments as well as reducing credit debts. Nowadays, there is plenty of information on many websites to keep you posted on the best ways to maintaining your positive credit score and staying above 693.
Things you can do to improve your credit score of 693
With some discipline and commitment, you can keep on improving your credit score of 693. A score starting from 600 and above is considered average and can secure you many options for credit. Therefore, it is your obligation to ensure it keeps improving until it is excellent. Here are a few ways to assist you.
Open few credit cards concurrently
It is not recommended for you to open multiple credit accounts at the same time. When you do this, it reduces the average age of the accounts thus reducing your credit rating.
Avoid canceling credit cards with no annual fee
The proportion of credit that use to the total credit available to you also contributes to your credit score. When you get rid of a credit card, your credit line gets reduced thus raising the proportion. It doesn't work in your favor, and your credit score is lowered.
Maintain a low credit balance
It is recommended for you to keep your revolving credit balance to under ten percent of the total available credit. Higher ratios point to elevated credit risks. Using all of your limits reflects negatively o you credit score.