I’m looking to buy a car in the next few months. I’ve read and heard that a score over 720 gets the best interest rates. Let’s suppose I have 720 credit rating and 80% credit debt and only 20% available credit. (Cards almost maxed out).
How does this affect the interest rate?
Will I even be approved?
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Banks look at not only score, but your debt to income ratio. So 80% usage is not a big deal unless that balance and applicable payment is a huge chunk of your monthly income. If your income is being dragged down by lots of other debts, they may just decline you altogether regardless of your credit score. Banks have their own formulas, so you can’t predict what their requirements are outside of credit score.
We declined a loan one time for a customer with a score of 810 because even with a great score, all his income looked be siphoned off with other payments. You can see on a credit report all the payments that are due on his debts. Then you have to use a general rule of thumb to factor in groceries and daily expenses. If we made the loan, he would not have had the money to pay everything as well as daily living expenses.