Your credit Score and the 0% APR Financing Terms
By now this is probably well known so I won’t spend to much time on this. If you want the 0%, 2.9%, or 3.9% car financing deals, you will usually have to be a Tier 1 credit customer. Banks have slightly different classifications but here is a rough guide of tiers for credit scores:
Tier 1 – 720-850 (Will always Qualify for 0%, 2.9%, and 3.9% APR deals)
Tier 2 – 700-719 (Most of the time will Qualify for 0%, 2.9%, and 3.9% APR deals)
Tier 3 – 675-699
Tier 4 – 620-674
Tier 5 – 560-619
Extremely Poor credit below 559
With a lot of competition between car makers a score of 700 or above can typically qualify for the best financing rates.
How Do I Check My Score?
There are plenty of credit score checking services that you can find online. New rules require each reporting agency to give you a free credit report once a year, however, the report does not usually contain the score. To get the score you typically have to sign up for a trial service which is free for 30-days, just make sure to cancel the service before the free trial is up.
Some places to get free credit reports/scores:
Bank of America, freecreditreport.com, experian, equifax, and transunion.
(I have used all services above and they all work good. Just watch your free trial period if you plan on not using the service after the free period.)
If it is bad, what can I do?
This is a whole separate topic, but a few things that can have a quick effect are:
Lowering any debt that is close to the limit of your cards. If you can’t afford to pay off the debt, move some around to other cards you have to spread out the total debt. Any card that is near the limit carries a heavier weight that works against you.
Pay bills on time. This one is easy and usually counts for about 30-35% of your overall score. If you are having trouble, contact your creditors and make arrangements for easier payment plans. Typically they will work with you and they will not report the late payment if you have a pre-arranged deal. Make sure to get that in writing so if they do report the late payments you can hold them to their word.
Call companies that have reported late payments. If you see on your report that Visa reported a late payment, call them and ask if they can remove it. Sometimes it works if you can talk to them with respect and don’t have a long history of late payments. If that does not work, try writing letters to the appropriate credit departments. It does not hurt and sometimes you can get them removed.
Pay down any over the limit fees. If you have any cards over the limit, this will have a large impact on your score. Pay them down, even if it is only to the limit.
There are many good articles on credit management. If you fall under 600, I encourage you to do some research and see what things you can change to start improving your score.
So, in summary if you are going for the 0%, 2.9%, or 3.9% financing terms, check your credit score and call the dealer and ask them what the credit score requirement is. This will save you some time if you know you don’t qualify and you can consider finding alternate financing methods.