What is a Bad Credit Score?

You hear people talk about credit scores all the time when it comes to getting loans for items such as a house or a car. Depending on whether you have a good credit, bad Automotive Financingcredit, or even no credit at all, you can either be approved or denied for such loans. At Community Honda of Orland Park, we’re proud to be able to work with car buyers with varying ranges of credit scores, including those who have poor credit.
But what exactly is a bad credit score? Let’s take a closer look at what determines whether you have good or bad credit.

Credit Score Scale and What it Means

The system or scale that is most used with credit scores is the FICO scale, which produces scores from 300 to 850. What this indicates to lenders is the level of risk they are taking by loaning a person money. The higher your number on the scale, the more likely it is that a lender is going to give you money knowing that you’re more likely to pay it back. The lower the score, the worse off you’ll be.

So, where on the scale should you be? What do lenders consider to be a bad credit score? It all depends on who you’re attempting to borrow money from and what type of loan you’re attempting to secure. Many lenders will consider anything under 620 to be a bad credit score. Now this doesn’t mean that you won’t be able to finance your new car, but it will be more difficult securing funds.

Despite possessing a bad credit score, many times you’ll still be able to acquire the loan you need. What you’ll see is the lender will approve you for the loan, but apply a higher interest rate due to the increased risk they are taking by loaning you money.

Just because you have poor credit now doesn’t mean it’ll stay that way forever. One of the easiest ways to improve your credit score is to pay your bills on time. Do that and you’ll start to see your numbers improve drastically, making it easier to secure that loan in the future.

Learn More About Financing at Community Honda

If you have any questions about automotive financing, don’t hesitate to stop by Community Honda of Orland Park or contact us at (855) 207-0308. Our finance team will be glad to answer any questions that you have about your credit score and how to improve it.