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What Determines Your Credit Score?

For most people, financing their new vehicle is a major part of the car buying process. Central to a person’s ability to secure a loan is their credit score – the number that describes the amount of risk a lender faces by offering a loan to the individual. Before you head to the dealership, make sure you understand your credit score and what determines it.​ 

Here are the five major factors that determine your credit score (in order of importance):​ 

Payment history: Payment history has to do with how many late payments you’ve made, how late they were, and whether or not any debts have been sent to collections. Charge-offs, debt settlements, foreclosures, bankruptcies, and wage attachments all weigh heavily against your score.​ 

Amounts owed: This factor looks at the amount of your total available credit you are using.​ 

Length of credit history: The length of time which you have a credit history shows how long you’ve been managing debt. It’s good to carry the same accounts for a long period of time, as opening and closing accounts too often shows lack of stability.​ 

New credit: FICO scores look at the amount of new credit you have. The more new accounts you’ve opened up recently, the greater risk you might be to another lender.​ 

Types of credit in use: Credit scores also take into account the amounts you owe on different types of debt, including mortgages, car loans, and credit cards. A good mix of debt managed responsibly works in favor of your credit score.​ 

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