Car loans are popular in the country. Most citizens have acquired their vehicles through credit. However, your credit score is considered for approval.
According to your credit history, you can acquire or not your car loans; the agency will evaluate your debts and payment history on previous loans. Generally, they use Equifax, Experian, and TransUnion reports.
The most commonly used credit bureaus for car loan approval
Experian and Equifax are the most used bureaus by car lenders because their services are geared especially to the automobile industry, and most of their profits come from that industry.
TransUnion is also used. However, it is not consistently chosen. Equifax is the most recognized and used; if you have a bad history with them, you may not get the loan you requested, or your interest rates may be higher.
Take care of your Fico Score if you want a car loan
If you are thinking of applying for a car loan, you should know your Fico Score; beyond the information offered by the credit bureaus, the Fico Score is considered by the lenders.
The score will determine if you are eligible for the credit requested; it is usually three digits ranging from 300 to 850. The process represents your credit history, the same as that offered by agencies such as Equifax, TransUnion, or Experian.
In short, they work hand in hand to provide important information to your lenders regarding your credit history and whether you make your payments on time.
Do credit bureaus use Fico?
Fico can be thought of as using the data provided by the credit bureaus to determine your credit score. Likewise, it is more significant to know your FICO score than the bureaus used by the car dealer.
The mission is to improve your loan rates to access quality loans and services, and dealers are interested in knowing that you have the ability and responsibility to meet your payments.
Tips to improve your credit score
To eliminate your credit problems at Equifax or any other credit bureau, you must start taking responsibility for your payments and avoid some applications and loans. The bottom line is this:
- Make your payments on time, both for your credit cards and other loans you apply for; the prices must be on the corresponding dates. To improve this point, you can start automating your payments
- Check your credit report at each credit reporting agency and ensure no erroneous information. If there is any inaccurate information, contact the agency to make the necessary corrections
- Do not leave outstanding debts; they are sent to the credit bureaus and will remain on the report for a long time after a certain time. Try to keep your credit cards up to date and always make payments on high-interest debts immediately
You should know that applying for an auto loan usually temporarily lowers your credit score. It is common that when acquiring new debt, payments are skipped. As soon as you start making payments on time, you can improve your score in a short period.
Find the dealer with the best interest rates for your loan
Beyond the credit bureau they use to evaluate your loan, you should know the interest they will charge each month.
You must maintain a good credit history, and if your car loan has high-interest rates, the chances of it getting worse over time are greater.
María Laura Landino is a journalist who graduated from Boston University with more than four years of experience in the financial sector. He has been responsible for several research papers published by major universities.
Content Manager of allaboutgroup company. You will find me in job and Finance sections.
