Your credit score is the most important factor to getting the best car loan rate. Many shoppers make the mistake of going to the car dealership and applying for a loan before checking their credit report and score. By checking your credit score ahead of time, you will know where you stand before seeking a lender. If you have an excellent credit score, you should expect the best car loan rate possible. Do not expect the lender to tell you that you could save money by applying for a loan elsewhere. Make sure you do your homework before applying for the loan. The little time that it takes to receive your credit report from the three major agencies could end up saving you a lot of money.

Understanding Your Credit Score

Your FICO credit score is more than just a number. Understanding how your credit score is determined can help you to maintain or improve your credit rating. Most credit scores will range in number from 300-850 points. The higher your number, the better your credit rating. Your credit score will be determined by five different categories. Some items will have a greater affect on your credit score than others.

1) How timely you pay your bills carries the greatest amount of weight on your credit rating. While it is a good idea to always pay your bills on time, lenders will look more at your recent payment history.

2) Amount of debt- lenders will look at your total debt and the outstanding debt on your credit cards. It is a good idea to keep credit card balances well below the maximum amount allowed.

3) Length of your credit history- how long have you had open credit accounts? Do you use credit on a regular basis.

4) How many credit accounts do you have open? What types of credit accounts do you have?

5) Recent credit inquiries and newly opened accounts lenders will look unfavorably upon your credit record if you have had numerous recent credit inquiries or if you have opened several new credit accounts in a short period of time.