Your Credit Score and Auto Loan Interest Rates

Auto loans are no exception to the rule that having a higher credit score makes borrowing less expensive.  In fact, an average borrower with a credit score below 500 will typically pay 10% more to borrow than those with the highest scores.

 

Auto loan interest rates, or APR, can vary on the term length of the loan, age of the car being financed and other considerations however the biggest factor is your credit score.  Before you start shopping for a car, you’ll want to check your credit score. If your credit score is low than waiting to buy while you work on improving your credit could save you a lot of money.

 

For example, here are the average interest rates for each credit score for the same (new car) $15,000, 48-month auto loan:
 

 

Credit Score Category
Average Loan APR
Monthly Payment 
Deep Subprime (300 to 500) 
14.25%
$412
Subprime (501 to 600)
11.51%
$391
Non-prime (601 to 660)
7.55%
$363
Prime (661 to 780)
4.75%
$344
Super Prime (781 to 850)
3.82%
$337
 

 

A person with a credit score above 781 would pay $337 per month while someone with a score between 300-500 would pay $412.

 

When shopping around for a car you also want to be shopping for a car loan. Get pre-approvals from several lenders and compare them to find the best offer for you.

 

 
If you currently have a low score and have time to delay your car purchase, work on improving your credit.  Which means:

 

  • Paying every bill on time, every time
  • Keeping credit card balances low relative to credit limits
  • Avoid applying for other credit within 6 months of applying for a car loan
  • Keeping old credit cards open unless there’s a compelling reason to close them
If you have any questions, reply to this email as we are here to help!

 

-Erik Kaplan

Credit Check for Renters: What landlords look for

Are you or someone you know looking to rent a new home or apartment?

 

Did you know that potential landlords can request a “tenant credit report” using only an applicant’s name and email address?

 

Many landlords do in fact check a prospective tenant’s credit history with at least one credit reporting agency to see how responsible the applicant is with managing money.

 

Here is what they looking for?

 

A credit report contains a gold mine of information for a prospective landlord. Here are some of the things they can find out:

 

  • Has the person ever filed for bankruptcy
  • Are they late or delinquent in paying rent or bills, including student loans or car loans
  • Have they been convicted of a crime, or even arrested
  • Have they been evicted (legal rights to get information on evictions varies among states)
  • Are they involved in a lawsuit such as a personal injury claim
  • Are they financially active enough to establish a credit history
Information in credit reports covers the past seven to ten years and all 3 of the credit bureaus offer landlord tenant screening services. So, it is a simple process for any prospective landlord to screen potential tenants.

 

As a result of viewing these reports, landlords can either not rent to you because of negative information in a credit report or they can charge a higher rent because of such information.

 

How can THD Help?

 

THD can pull a rental credit report for you to see if there are any mistakes or discrepancies so you can be prepared before you apply for your next home or apartment rental.  It’s simple, just email us at asktheexpert@thdcreditconsulting.com and we can get started!

 

-Erik Kaplan

Does Experian Boost Work?

Boosting your credit score often requires months of ‘good’ financial behavior. But a new tool from Experian allows you to instantly add utility and cellphone payments to your credit report, potentially increasing your credit score and helping you pay less to borrow.
 
How it works?
 
You first give Experian permission to scan bank account transactions so it can identify utility and cell phone payments. Information about these payments will then appear in the Experian credit report and be used when certain credit scores are calculated from that data.
 
The idea is to help customers with thin credit files by incorporating signs of responsible financial behavior that traditionally aren’t seen by credit reporting bureaus. Boost also may help people who are rebuilding their credit after financial setbacks. Experian estimates the product could affect up to 100 million consumers’ scores.
 
Experian Boost works with the most commonly used credit scores by lenders: FICO 8, FICO 9, VantageScore 3 and VantageScore 4. The average increase was more than 10 points and 13% of users on average moved up a credit band.
 
If a lender relies on a TransUnion or Equifax credit report for its application process, the tool won’t help your approval chances.
 
Who will benefit?
 
Experian expects that two-thirds of consumers will see an improvement. Those with thin credit histories (defined as less than five accounts) and FICO credit scores between 580 and 669 will benefit the most, Experian said.
 
Ten percent of people who previously didn’t have enough information in their credit file will now have a score. Fourteen percent of those with scores of 579 or lower moved into the 620 to 679 range, enough to get better credit terms.
 
How Do I Sign Up for Experian Boost?
 
Signing up for Experian Boost is simple. Just go to the Experian Boost page and create a free Experian account to start the process. You’ll then connect your online bank accounts so Experian can search for any qualifying on-time payments. Once you verify that you want to add the accounts to your credit file, your credit scores will be calculated using the newly added payment information.
 
The process is simple, and if you receive a boost, you’ll see your FICO® Score increase in just a few minutes. If you have any questions about this product or process email us at asktheexpert@thdcreditconsulting.com.
 

-Erik Kaplan

Coming Soon!

Is Tax Debt Holding You Down?

Do You Owe Tax Debt?

Are You Responsible for Penalties from Late Filings?

Do You Have Tax Levies & Liens or a Wage Garnishment?

We know how intimidating and stressful tax debt can be. Which is why THD Credit Consulting has teamed up with a nationally recognized tax relief company that will offer you a Free Consultation!

They have helped thousands of people lower stress, lower tax debt and will provide guidance and expertise within the government’s continually changing tax laws.   

If you are interested in finding out more about this company and would like a free consultation from them, email me at erik@thdcreditconsulting.com and I will make the introduction. 

We know IRS tax debt can be confusing. That’s why our partners are here to help!

-Erik Kaplan

Will Authorized User Status Help You Build Credit?

While it’s certainly not a substitute for building up your own credit history, being an authorized user can be a good way to give your credit a boost if you have little or no credit history.
 
Here’s what you need to know about an authorized user:
 
What exactly is an authorized user?
 
Being an authorized user means you can use someone else’s credit card in your name. You can make purchases and use the card as if it were your own, but you’re not the primary account holder.
 
As an authorized user, you’re not legally responsible to pay the credit card bill or any of the debts, as this is the responsibility of the primary account holder.
 
What effect does this have on your credit?
 
If the credit card provider reports authorized users to the three major credit bureaus (TransUnion, Experian, Equifax) then the primary account holder’s strong payment history (on-time payments) can have a positive effect on your credit. In addition, if the account holder has a low utilization rate on this card, that too could be a positive for you.
 
On the other hand, if the primary account holder misses’ payments and has a high utilization rate, then this can be a negative for you. Before you make this decision, be sure there is a potential upside as putting yourself on the wrong person’s account could have a detrimental impact on your scores.
 
Being an authorized user might not increase your chances of getting approved for credit cards and loans in the future, as lenders checking your credit history will want to see that you’ve managed your own credit accounts responsibly. However, in the right situation you can start building a credit history all while having the convenience of a credit card in your wallet.
 
If you have any questions or would like to schedule a free consultation, click here.
 

-Erik Kaplan