What Is A Good Credit Score In Texas?
Before applying for an auto loan and shopping for a new car in Texas, you have to be familiar with how your current credit score will affect the price you will pay for your new vehicle. To increase your chances of getting approved for any kind of loan, you have to prove to your lenders that you are a safe risk to your company by maintaining good credit ratings. After all, your lenders will assess your capability to repay a loan by checking out your credit scores. Here are some of the most important factors you need to consider before applying for a loan in Texas.
Why Is Your Credit Score Important?
While shopping for a new car, you will spend most of your time comparing different models and options before talking to your dealer and agreeing on a price. Once they ask you about financing and you show them that you do not have a slightest hint of what your credit score is, they will charge you with high interest rates. The same rule applies when you are applying for an auto loan, mortgage, or other kinds of personal loans. Any lending company in Texas will determine how much your insurance premium would cost by running credit checks and investigating on your financial history. The higher your credit score, the bigger your chances of obtaining the best rates for auto loan will be.
If your score ranges from 720 to 850, you will be considered as an applicant with excellent credit. This gives you the chance to get an APR that is as low as 3 to 4%. It will also qualify you for low monthly payments. On the other hand, if your score is between 675 and 699, you will have an average credit score and you will still be eligible for an auto loan with a decent APR and monthly payment. However, a credit score of 500 to 559 means that you have poor credit and you will be likely to receive a double-digit APR. This will add thousands of dollars to monthly payment over the duration of the loan.
A score of 499 or lower means that you have bad credit so financing a new car will be difficult. You may be lucky enough to find auto dealers or credit unions that offer financing for people with bad credit. However, you should be prepared to see high APR rates and monthly payments. Whether you are planning to apply for an auto loan, mortgage, or even a payday advance, it is still best to find out what your credit score is before negotiating with auto dealers. In the end, walking into a dealer without knowing about available financial options will only put you in big trouble.
(Click the button above to see your Experian, Equifax, Transunion credit scores for free)Average credit scores in Texas
Now that you know what is a good credit score, let's talk about average credit scores around the country. Statistically speaking, the average American credit score is 678. While New England states such as Maine, Vermont, Rhode Island, Connecticut, and Massachusetts had the highest average, West South Central States such as Oklahoma, Louisiana, Arkansas, and Texas had the lowest credit score average. When individual states were compared, South Dakota was found to have the highest average of 710. Texas had an average of 651, which is lower than the average score of other states in America. These figures will actually relate to your personal credit score. A score that is higher than 660 will make it easier for you to obtain an auto loan and scores below 620 may give you a tougher time looking for financing options with decent APR.
In general, interest rates will rise depending on your risk factor. Individuals with high credit scores will receive the best loan or mortgage refinance rates, those falling below the average rate will only qualify for sub-prime loans with significantly higher interest rates. In fact, the interest rate for people who have average credit scores is 1.5 higher than the rate for those who were able to reach the top of the credit score scale. Your score should always be 720 and above in order to get the best APR and interest rates available in the market.
(Click the button above to see your Experian, Equifax, Transunion credit scores for free)Qualifying for loans and credit cards
If your credit rating is less than perfect, it is still possible to obtain decent mortgage or auto loan rates. Those who wish to qualify for mortgage financing can also do so even if their score ranges from 620 to 650 but they need to be prepared for higher rates and fees. Fortunately, some lending companies are already specializing in sub-prime loans, which cater to individuals whose scores are below 620. Of course, their generosity comes with a price. The lower your credit scores are, the higher your interest rates and down payments will be. The interest rate of your auto loan will greatly depend on your credit rating so you have to know where you stand before applying for loans.
You will also need a decent credit rating to qualify for a WalMart credit card. Their requirements were based on the FICO recommendation, which suggests that applicants should have a clean history with no negative marks on their credit report. WalMart credit cards do not require annual fee regardless of credit rating or spending limits and their due dates for payments will depend on your preferences. If your credit score is 619 or higher, you will have more chances to get an approval but it is not really required. Other financial factors will also be considered while assessing your ability to repay your debts.
Now that you already know why credit ratings are important when applying for an auto loan, credit card, or any other financing option, you have to do your best in improving your credit worthiness. Start paying your bills on time because this will be a strong indication of how you handle your financial responsibilities. Always pay for the minimum due payment of your loans and review your credit report on a regular basis. Regardless of what type of financing option you wish to apply for, you can increase your chances of getting a decent auto loan and APR rate in Texas by keeping your credit scores as high as possible.
(Click the button above to see your Experian, Equifax, Transunion credit scores for free)