Refinancing rates for loans on your home or vehicle are based on your credit history and how much time you want to have to repay the loan. However, it is not just a matter of how well a customer has paid past credit obligations when loan companies or banks determine the rates and terms that will be offered to that customer. Financial institutions judge eligibility for the best rates by a special credit score called FICO. This score is the result of information contained in credit reports maintained by the major credit bureaus.
FICO is an acronym for Fair Isaac Corporation. Each credit bureau report on the same individual may result in a different FICO score. It is worth the effort and cost to find out each FICO score from Equifax, TransUnion, and Experian. Even a minor difference in the scores could affect your access to the best refinancing rate. Over the length of time of the loan, a single percentage point in interest rates could mean the difference of thousands of dollars in either savings or in additional costs on a loan. If you are aware of your FICO scores before you apply for a loan, you may be able to do some planning a few months ahead of time to improve your scores and increase your chances of finding attractive refinancing rates.
FICO scores begin at 300. The highest score is 850. The best rates are usually offered to a potential borrower who has at least a score in the 700 range. Be aware that the ratio between how much debt you already owe and how much available credit you have not utilized has a dramatic impact on your FICO score and the refinancing rates available to you. Set your sights on achieving as high a FICO score as you can so that you will qualify for the best type of loan. If you want to get refinancing for both your home and your vehicle, choose to do both loans in the same 30-day period so your FICO score and any refinancing rates will not be affected by the separate loan applications.
Negotiating the best interest rate requires understanding the loan fees as well as educating yourself about how rates are determined. The amount of the fees could affect which refinancing offer is best. On the other hand, you may not mind paying the fee to have the lender lock in that best refinancing rate while you wait for the loan process to be completed. As highly competitive as banks and loan companies are with each other to obtain your business, you must do the work of planning your best FICO score, comparing refinancing rates, checking on fees, and reading the contract carefully to find the best the best terms.
http://www.christianet.com/refinancing/bestrefinancingrates.htm
