Credit scores are based on your individual circumstances and payment history but is there an average? Is there an expected average for different ages? Our auto loans team went to find out.
The vast majority of financial decisions will come down to your credit score. Whether that’s a mortgage, auto loan, credit card, student loan or something else. They all base their lending decisions on your credit score, among other things.
What’s in a Credit Score?
A credit score is a figure of between 300 and 900 that reflects your credit risk. Lenders use it to assess whether you are a good bet and will pay back any debt on time. The higher the score, the more likely you are to repay.
The more likely you are to repay, the more lenders are willing to work with you and the lower the interest rate you’ll pay.
Your credit score is made up of:
- Payment history – The more debt you have paid off and the more you pay on time, the more this contributes to your score.
- Debt totals – The amount of debt you currently have can impact your credit score. The more you have, the riskier it would be to lend to you, which lowers your score.
- Credit history – The longer you have successfully paid off debt, the more this helps your credit score. Conversely, the shorter the debt record, the lower the score as you’re more of an unknown quantity.
- Credit mix – This counts what type of credit you have used. The mix aspect means the variety of debt you have used, credit cards, Burford car loans, mortgages and so on. The wider the mix, the more positive impact it will have.
What is The Average Credit Score in Canada
Credit scores are international but each country is worked out slightly differently. Here, our average scores are:
- Poor credit is regarded as under 500
- Average credit is around 650
- Good credit is 660- to 734
- Excellent credit is over 760
If you want to know average credit score by age, you have to dig a little deeper.
- Age 16-25 – credit score of 692
- Age 26-35 – credit score of 695
- Age 36-45 – credit score of 705
- Age 46-55 – credit score of 719
- Age 56-65 – credit score of 738
- Age Over 65 – credit score of 750
These average credit scores by age are likely because older people have more of a credit history and learn to be financially sensible. There are exceptions of course, but these are averages.
Credit Scores & Car Loans
As we all known, the higher your credit score, the more likely you are to qualify for a car loan. Also, the lower the interest rate you’ll pay.
Having a poor credit score does not mean you cannot get a car loan. It just means fewer lenders will be willing to work with you and you will likely pay a higher rate.
There are very few circumstances we have come across where someone was not able to get credit when they needed it. That’s especially true when you work with our car loan experts.
For those of you who know that you have a challenging credit situation, please visit Dixie Auto Loans where we have a team of credit specialists ready to help you get approved for a car loan today!