October 3, 2023

One factor that can hold back your ability to purchase a new or used car is a poor credit score. A bad rating comes from unpaid bills and loan defaults. Your credit score measures your ability to repay a loan. If you have any errors on your report, contact the creditor directly and follow up with a collection agency if necessary.

Why Credit Scores Can Differ Between Experian, TransUnion, and Equifax

Credit scores from different credit bureaus can differ because of credit scoring models. For example, a credit card company that reports credit to only one credit bureau may give you a score according to that credit bureau’s formula. This means their credit score will likely not be the same as your credit bureau score because all three credit bureaus use different credit scoring models.

Do My Loans Affect Credit Scores?

Your credit scores can be affected by credit cards, but your credit card usage will not affect the credit score for any other credit card. If you have a bad credit card, having a good credit card may improve your credit score in unison with a good credit card because it counters the bad one.

What Does Tier 1 Credit Mean?

Tier 1 Credit is the highest tier of credit, while Tier 3 is the lowest. If you have a credit score that has made it into Tier 1, this ranking means you will only need to provide minimal information if applying for a loan. For example, a car dealership may require nothing more than your name and contact information, whereas a bank may want more in-depth financial records, such as tax returns.

What Credit Score Do I Need for Tier 1 Credit?

By credit standards, only credit scores close to or higher than 700 will be considered for Tier 1 credit. This means credit scores between 680 and 719 so long as the credit report shows few negative marks. If you have a credit score of 620-679, this is still considered subprime credit.

What Is a Good Credit Score?

According to Experian, the most frequently used credit scorer, anything above 740 out of 850 is considered excellent credit. However, if you have a lower amount of debt than the average individual your age, this means you can get away with having less than an excellent credit score. For example, if you have a job and make at least $20,000 a year with no debt other than student loans or medical bills, your credit score should be acceptable.

What Is the Difference Between Good and Excellent Credit?

A person who has good to excellent credit will generally get better loan rates and lower fees when applying for any loan.

What Is a Tier 2 Automotive Credit Rating?

Tier 2 credit is given to borrowers who fall into the acceptable range, meaning they can finance purchases but will not get as generous of terms as their Tier 1 counterparts, including higher interest rates. Credit scores for Tier 2 typically range from 640 to 690. While you may have to pay more for Tier 2 financing arrangement, making payments on time consistently at this Tier can help you qualify for superior terms on the next loan that you apply for.

How to Get Tier 1 Credit

You can increase your credit score by paying down debt, paying bills on time, and not using too much of your available credit. Like with other credit card companies, when the amount of money you owe them compared to how much you can spend without going into debt is lower, the more likely it is that your credit score will increase.

A poor credit score doesn’t have to prevent you from getting a great auto loan. If you have a subprime credit score, you can take advantage of New Roads’ bad credit and no credit auto loans. Apply now to get pre-approved in as little as 30 seconds!