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typically command the best rates and terms. If your credit isn’t
what it should be, there are some ways of improving the credit
score. In a very general sense, a good credit score reflects no
excessive debt and a history of making payments on time. Each time a
debt is turned over to a collection agency or a payment is made more
than sixty days past the due date, the information figures into your
report and drags the credit score down. By the same token, a person
who pays on time is raising their credit score.
While most people understand that a poor credit score means that
a lender won’t approve an application for a loan, some don’t realize
why the credit score has such an impact on the loan terms. Remember
that you as the borrower are promising to repay the loan amount plus
interest and fees over a set period of time. Typically, payments are
made monthly. A person with a good credit score has proven their
willingness and ability to make timely payments and to honor their
commitments. The lender has less reason to worry that this borrower
would default on the loan. On the other hand, the borrower with a
seriously low credit score has indicated that they may or may not
make timely payments and may even stop making payments all together.
If that happens, the lender will repossess the vehicle, sell it and
try to recover at least some of the outstanding debt. |
