You've shopped for hours and finally decided on a car of your choice and now the fun begins; choosing the right finance package. The choice of determining the right loan can be intimidating but We've listed a quick tidbit on the most important factor banks look at when determining how they look at your loan. Aside from a large down payment, the most important thing on your credit is your use of credit, aptly known as Credit Mix.
Credit mix refers to the types of accounts that make up a consumer's credit report. Credit mix determines 10% of a consumer's FICO score. The different types of credit that might be part of a consumer's credit mix include credit cards, student loans, automobile loans, and mortgages.
Important Factors:
1) Loan Balance. Make sure your loan balance don't exceed 50 % of total credit granted. Leave your availability at this number and lower.
2) Loan Length. Banks often like to see loans go full term. So paying off loans too early may not always help improve your overall score.
3) Available Credit. This is closely tied into your loan balance but differ when your credit is available through multiple sources, e.g. ( credit cards, line of credit, )
If you pay attention to these few key areas, you'll be well on your way to capturing the best available finance terms out there.
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