At Kent Brown Toyota, we believe that getting behind the
wheel of a new Toyota should be a simple and straightforward
experience. That's why we want to provide you with the info
you need to make a decision that works best for you.
"Credit 101" is a source for information about the basics
of credit, tips for maintaining strong credit, and the lowdown
on vehicle financing and leasing. We've also compiled
some commonly used terms in our
glossary to help you translate credit-speak.
So whether you're obtaining credit for the first time, or
looking for a quick refresher course, take some time to
learn about the basics of credit, and how to make it work
Maintaining good credit is important.
Here are some tips for building and maintaining a strong
- Pay Your Bills on Time
Make your payment well before the due date to avoid
late fees and the accrual of additional finance charges
or other charges owed when you pay after your payment
due date. This is the best way to be considered a "good
credit risk" by future lenders.
- Be Proactive
Take an active approach to understanding and managing
your credit. Educate yourself about the importance of
credit by reading appropriate publications and visiting
applicable Internet sites. Take the time to know what
is on your credit report and check for inaccurate, incomplete
or outdated information. Report errors promptly to all
credit agencies. Under law, the credit reporting
agencies and your creditor must investigate your complaint
and correct or remove any information that isn't accurate.
- Use Credit Wisely
- Keep track of your spending and outstanding
- Set a budget and work to pay off your credit
card revolving debt within a reasonable amount of
- Immediately Inform Your Creditors of an Address
- Notify your creditors when you move, so you
can receive and pay bills on time
YOUR CREDIT HISTORY
Developing a positive credit
history is one of the most important personal financial
steps you can take. Read on to learn more about the role
of credit reports and credit scores in the credit application
- What is a credit report?
A credit report reflects the status of your credit accounts
as reported by your creditors to credit reporting agencies.
It also includes relevant public records (such as bankruptcies)
and inquiries made to your credit history. Its main
purpose is to help creditors to quickly and objectively
decide whether to grant you credit. The majority of
credit reports are maintained and supplied by the nation's
three major credit reporting agencies: Equifax, Experian
and Trans Union. These companies receive information
about you and your history from public records, your
creditors, and other sources.
- What is a credit score?
An important part of service provided by a credit reporting
agency is the generation of your credit score based
on the information contained in your credit report.
A credit score is a number that provides creditors with
a quick way of judging your credit worthiness.
Credit reporting agencies calculate your credit score
based on a scoring system devised by Fair, Isaac, and
Company, Inc., most commonly referred to as the FICO
® score. However, most large creditors use the credit
reporting agency score in addition to their own internal
scoring system in order to evaluate your eligibility
Credit reporting agencies use a mathematical equation
that evaluates many types of information that are on
your credit report to calculate your score. (You may
find that each reporting agency generates a different
credit score for you. This is because the information
contained in your credit report varies from agency to
agency, causing the score reported by each of the agencies
to differ.) By comparing the information in your credit
report to the patterns in hundreds of thousands of past
credit reports, the score seeks to identify your level
of future credit risk.
FICO scores range from 300 to 850. The higher the score,
the lower the predicted credit risk for creditors.
It's important to note that the credit reporting agencies
themselves don't approve or deny your credit. They report
on your background objectively, providing the data that's
then used by creditors to make credit decisions. Each
creditor has its own eligibility requirements and can
use these tools, and/or their own internal scoring tools,
to set up their own approval and pricing structure.
- What factors contribute to
your credit score?
According to Fair, Isaac and Company (FICO), the institution
which provides the mathematical formula that all three
major credit reporting agencies use to determine your
score, the factors that contribute to your FICO credit
score may include:
- Past payment history (has the applicant paid
past credit accounts in a timely manner?)
- Amounts owed (how much of the applicant's available
credit is being utilized?)
- Length of credit history (how established is
the applicant's credit history?)
- New credit and credit inquiries (has the applicant
recently taken on more debt?)
- Types of credit established (does the applicant
have a healthy mix of credit?)
Visit call or e-mail Kent Brown Toyota
for more information on getting your loan.