Four Things That Can Qualify You For A Bad Credit Auto Loan

Equifax beacon score

 

 

 

 

 

 

 

 

Beacon score, also referred to as credit score is the very first impression your credit gets when perused for a credit application. If you are diligent with your credit and are wondering why you may have a lower beacon score than you deserve, then keep on reading to see if one of the four reasons I’ve listed below pertain to you. A lower beacon score, is a result of simply not knowing what constitues as a risk factor to a lender.  Often, I will see the lowest beacon scores from people who have no delinquencies on their credit bureau. And even though they are being  responsible with their credit obligations, they manage to have low beacon scores and only qualify for a bad credit auto loan.

Usually, what this means is their credit is over extended and even though the monthly obligations are met, a lower beacon score suggest there are too many open trade lines and or the balances are high.

Below are four things that can lower your beacon score despite good timely payments to your monthly obligations.

Why These Four Things Can Lower Your Beacon Score

First is having too many  open trade lines and can at times, lower your beacon score.This may have lender’s thinking that you are spending more than you potentially can pay back. thus, qualifying you for a higher rate and a bad credit auto loan.

A solution would be to pay off and or close unnecessary trade lines.

Second, When account balances are too high. This again could also signal to potential lenders that you are spending more than you can afford. The use of credit cards regularly is a good idea in establishing your credit however, try and keep the balances below 35 percent of your available credit limit.

Third, new credit applications always show on the credit bureau. The more enquiries to your credit bureau, the lower your beacon score becomes. Be selective in giving  out your credit information.

Fourth, The lack of recent revolving account information can also lower your beacon score because this information helps lenders evaluate your current credit worthiness. Without this information, the interest rate will reflect the risk to the lender.

Other Factors That Qualify For A Bad Credit Auto Loan

These are just four of the many reasons why someone might only qualify for a bad credit auto loan. The best practice is to be pro active and aware of your credit score and limit the amount of credit you apply for.

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