If you plan on using financing to buy a car, your credit score is key to getting the lowest interest rates. Your credit score is a three-digit number that uses your credit information to assess how risky a borrower you are, and it can significantly influence how lenders decide the terms of your loan. The higher your credit score, the lower your risk and the lower your interest rate. The lower your credit score, the riskier you are and the higher your interest rates. Be proactive in checking your credit score beforehand so you know where your credit stands before you apply for a loan.
You can check your credit score for free at my company's website, CreditKarma.com, or other credit score websites. Aim for a 720 credit score or higher, which is considered the threshold for the best interest rates. If your credit score still needs work, consider holding off on your new car purchase and taking the next few months to build better credit to score better interest rates, which can save you hundreds of dollars in interest over the life of your loan.
