When you are applying for car loans, you will probably become pretty familiar with your Beacon score. This three digit number is a rating which provides the lender with general information about your credit history. This number is typically between 300 and 900.
How is the Beacon score, or the F.I.C.O. score, calculated?
There are several factors which can influence this score. These include your payment history from most of your past bills. If you have paid late, missed payments, or had to work with collection agencies, then your score will be affected.
Another factor influencing your Beacon score is the amount of money which you currently owe. The providers of car loans are often concerned with your ability to add another monthly payment to your budget. Understanding how much money you are making and how much of that you are already spending will help the dealership to determine what size of car payment you can add to the mix.
The length of time which you have had a payment history will also affect this score. If you have a long and good credit history, then you are in good shape. A short history, even with great ratings, can often reduce the quality of loans which you qualify for.
If you have recently made purchases on credit, then this new credit can also influence the Beacon score and have an impact on the type of car loan which you qualify for.
Finally, the mixture of different types of credit will also influence your Beacon score. This refers to the ration between credit cards, auto loans, mortgage loans, and other types of loans. In general, it is better if you have a balanced mix.
When you are applying for car loans, the Beacon score will be an important number to become familiar with. Some car dealers may not work with you if you have a poor Beacon score, but other dealers will be able to work with you to help you get the car that you need. You won’t know until you come in.