Boat Loan Basics - Credit Score
August 7, 2015
Credit score is very big in the boat loan world. Before the recession, you could get a loan based upon credit score alone and an application. Today, a little to a lot more is needed depending on the lender. We work with many of the national marine lenders and some local banks and credit unions. Each one is a little different.
Most national lenders are looking for credit scores above 700 for their boat loans. Some are looking for above 720. Some are willing to work with 680 plus. Many of the national lenders will reduce the interest rate by 1/8 or 1/4 if your credit score is above 800. The good interest rates really stop below these levels.
There are definitely lenders working from 575 to the 680 credit score area but most are in the 15% to 19% area for interest rate. Typically, if you are in this score range, there has been some sort of credit issue. For you to get a loan, there can be no current late payments and no open collections, liens or judgments. Some exceptions are made for medical collections.
If you are in that middle ground of 640 and 680, your best bet may be to check with your own lenders especially if you have been with them a long time or you have personal contacts there. Local banks and credit unions may also be a good source here too. Simply do a Google search for "boat loan credit union your state", or "boat loans credit union your city", or simply "boat loans your state". Be very aware that there are many many many websites that are just link or Google type pay sites where they are making money from putting Google or other ads on their site. Real sites have phone numbers to call!
From a credit score standpoint, here are some basics:
- "Know your FICO or Beacon score. Credit scores are something different! FICO is what most banks are using. Credit scores are typical inflated scores used for marketing in my opinion. Beware of free scores as they tend to be credit scores and we have seen big big differences. I always recommend going to Equifax.com and purchasing their single use product called score power for $19.95. It is not a hard credit pull and it will absolutley not hurt your score in any fashion.
- Credit card balances - try to keep below 1/3 of credit limit. If not a 1/3, then try to keep below 50%. A card with a $10,000 limit works the same as one with a $500 limit. If you have quite a few cards, keep the lower limit cards below the 1/3 and let the higher limits be below 50%. Also, maxed out cards definitely hurt your score and over the limits are definitely frowned upon by the banks.
- Beware of interest free credit – it’s great to use this free money, however, don’t max out to the limit unless you have great credit or room to play with your score.
- Credit pulls - please, please, please get the facts before you let someone pull your credit. Talk to someone and make sure you are qualified based upon their lenders and are happy with the rates and terms. There are many types of boats and places that are harder to finance. Wood boats, boats older than 30 years, high performance, and Alaska are a few types and places where our banks won’t provide boat financing. Call and ask before applying or if you are at a dealership, talk to the finance person before your credit is pulled.
- Put your bills on autopay for at least the minimums so you are never late! Lates are a big part of credit review. Lates on a mortgage are really hard to get by in our industry.
- If you ever do have a collection, do not pay it until you have in writing that they will remove it from all credit bureaus. You will most likely have to speak to a supervisor. The first line of agents will tell you that the can not do it. They can. A paid collection will still show on your credit report. A removed collection will not. Understand that a bank reviewing a credit report will still see a paid collection as you are not responsible.
Remember, this is a puzzle and everything working towards good credit is a plus towards the boat loan process
If you have any questions, please give me a call at 954-847-1521.
Thanks and have a great day,
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