Find out the information that you need when it comes to the credit score required for a boat loan.
The credit score for boat loan is one of the biggest factors when it comes to getting a loan for the boat that you are eyeing.
People who are planning to get a boat but can't afford to purchase it on one go can avail of a boat loan. There are now a lot of boat lending companies who are willing to grant applications for people who are qualified. Let's find out more about credit score and boat loans by reading the information below.
Credit Score Needed for Boat Loan
The credit score needed for boat loan is 700 and above. Most of the lenders are willing to reduce their rates by 1/4 or 1/8 especially if your score is above 800. They may also provide better interest rates, which is, of course, a good thing.
Low Credit Score
For people with low credit scores, which ranges from 575 to 680, lending companies can still reconsider them, but the interest rate can go up from 15% to 19%. These companies might also request for more requirements.
Boat financing options based on credit score
If you are thinking of getting a boat loan, then you should know that this will come with a bigger interest rate. The reason behind this is because of the rate of the boat itself. Of course, the rate will still depend on the credit standing that you have.
Typical Boat Financing Rate
For people who are planning to get a 10-year loan for USD 15,000, the interest rate would be 6.49%, and your monthly payment dues would be USD 170.25. For higher loans of 20 years with USD 150,000 loan, the rate is, of course, lower at 4.37%, which will make your monthly dues at USD 938.48.
What Affects the Rates
The rates are usually affected by the information that the financing companies require. A typical financing company will need you to submit your credit score. If you have a high credit score, then they will give you lower rates. It will also depend on the make and model of the boat that you desire, plus the state where you are currently living.
What is a credit score
A credit score is needed for you to be able to get a loan or credit. The reason behind this is because it will help financial institutions to determine your creditworthiness. They will also see every loan that you made and the payment history that you have. Find out more about it by reading the information below.
Credit scores are calculated based on the proprietary algorithm. This will include the person's outstanding debts, payment history, and the length of the individual's credit history.
Credit scores can range from 300 to 850. The higher the individual's score, the lower the risk. People who have lower credit scores are considered high risk, which will make lending companies ask for more requirements.
About Fico scores
Fair Isaac Corporation is the one who established FICO, and it is one of the most commonly used credit scoring systems today.
According to FICO, 90% of the most reputable and respected lenders today are making decisions according to this kind of credit scoring system. Get to know more about Fico scores by reading the information below.
How are credit scores calculated?
The weight of each of the five categories are; 30% of amount owned, 10% is for the new credit, 15% accounts for the length of credit history, 10% is the credit mix and the last 35% accounts for the person's payment history.
The FICO score takes into consideration positive as well as negative aspects of the credit report. The percentage or the weight of any of the categories mentioned above may differ from a person to another depending upon the information available in the credit report.
The FICO score takes all of the information from your credit report. However, the banks or any other lending institution might look at your income, type of credit and employment history when you apply for a loan or mortgage.
Once a certain lender asks for a client's credit report, they can also ask for the Fico score. Other sources say that your Fico score will include 35% of your payment history, 30% of your credit utilization, and 15% as to how long have you been borrowing.
Explanation of credit score ranges
It is important to know the category that you fall into when it comes to credit score for you to be aware. The range of a credit score can go from 300 to 850. Always remember that the higher your score, the higher the chances of you to qualify for a loan. There will also be instances where a financing company is okay with 650 scores, while the other is fine with a 750 score. It will all depend on the lender itself.
A lender or a bank will check your credit score if you qualify for the application that you are requesting. Here are some of the credit score ranges that you should know.
Bad credit score
People with a credit score below 579 is known as high risks. Foreclosures, poor payment history, and bankruptcies are the reasons why people fall into this category.
Good credit score
A good credit score ranges from 680 to 719. People with this credit score can expect approvals and interest rates that are better.
A very good credit score ranges from 720 to 799. People with this credit score is known to be small risks, and they often get loan amounts that are higher than usual.
An excellent score ranges from 800 and above. Financial freedom is expected to people with this score.
Things you can do to improve your credit score
Having a bad credit score is similar to having poor health. Therefore, you need to take measures that ensure you are continually improving on it. The most efficient way of repairing bad credit is good management over time. Improving your credit score is necessary for you to be eligible for better terms and rates for loans in the future.
Regular credit report checks
You are advised to monitor your credit report regularly to see if it has any errors. A credit report brings you up to speed on your status as a debtor. Ensure that the payments are reported correctly and the amount owed to each creditor is correct. Errors must be disputed to your credit bureau promptly.
Reduce your debt
Most people usually take loans just because they are eligible for them without considering the potential damage to their credit score. For a start, you can reduce your reliance on credit cards. Design a plan that ensures you give priority to your debts that have the highest interest rates.
If your monthly premium is not automatically debited from your account, you need to set up a payment reminder. Timely credit repayment improves your credit score over time. Some financiers usually send emails or texts to their clients to make payments.