According to a report by Capital One Auto Finance, only one-third of first-time car buyers check their credit score when applying for a loan. The fact that many Americans don’t bother with their credit score is one of the reasons that many end up saddled with loans that they can’t afford, which further damages their credit. But beyond just knowing a credit score, it’s important to understand the factors behind credit scores.
Major credit bureaus track consumers’ spending and payment habits before converting that data into an overall credit score. Yet when the score is calculated can have a big impact on the final numbers. Many Americans rack up large credit card bills, only to make a payment later in the month. But if a credit score is calculated when there is a large amount of debt, like a credit card balance, the score can drop considerably.
Gail Cunningham of the Federal Consumer Credit Bureau recently told AOL Autos that car buyers should schedule their car loan application at a time of the month when they know their credit card bill will be paid. This way, the credit check will not find any large balances still left to be paid off.