When the time comes to finance a vehicle at ALBI Auto Crédit -- or anywhere else -- your credit score plays a major role. In fact, it's the foundation of the analysis our experts perform. But do you actually know how it's calculated?
Understanding how it works will help you better plan your purchase and increase your chances of getting a good financing rate -- all while driving off with the vehicle you need.
A credit score is a number between 300 and 900 that reflects your financial health. The higher your score, the more lenders consider you a trustworthy client. In Canada, the main credit reporting agencies that calculate this score are Equifax and TransUnion.
But this number isn't chosen at random. Several factors are taken into account when calculating your credit score. In fact, five key elements are used in the formula:
Payment history (35 %) : This is the most important factor. If you've always paid your bills on time, it works in your favor. However, late or missed payments weigh heavily against you.
Credit utilization (30 %) : It's recommended not to use more than 30% of your total credit limit. If you're constantly near your maximum, even if you pay on time, it can negatively impact your score.
Credit history lenght (15 %) : The longer your credit accounts have been open, the better. A long credit history shows financial stability.
New credit inquiries (10 %) : Every time you apply for credit, a check is done. Too many inquiries close together can be seen as a sign of financial trouble.
Types of credit used (10 %) : Having a mix of credit types (credit card, auto loan, line of credit) shows you're capable of managing various forms of debt.
When you're looking to finance a vehicle, your credit score directly impacts the interest rate you'll be offered. A high score could give you access to better promotional offers. A lower score doesn't necessarily shut the door, but the conditions will be different.
In short, your credit score is a snapshot of your financial habits. Most people start building their score when they're young -- and that's a good thing, since age and consistency work in your favor.
But you have to take care of it over time. Because your credit score is your best ally when it's time to sit down with the ALBI Auto Crédit specialists and get the financing you need.
Rest assured, though -- no matter your situation, our advisors will be there to support you every step of the way.
