NAFA member, Adam Meredith, President of AOPA Aviation Finance Company, discusses credit scores and how they affect your loan.
Depending upon which bucket your score falls into, there are two ways credit score will affect the loan—your interest rate and/or your loan structure.
Credit doesn't typically have a significant impact on the interest rate associated with an aircraft loan, although it could potentially be a gating issue. In our experience, the biggest way someone's credit score affects the ability to secure a loan is if it's below 700. Broadly speaking, credit score parameters fall into one of four buckets:
- Under 680
- 680 to 700
- 700 to 730
- And over 730
Depending upon which bucket your score falls into, there are two ways credit score will affect the loan—your interest rate and/or your loan structure.
In reality, a 730 score is as good as an 800 score and vice versa. It's a truism not widely discussed. What really matters is a credit score below 680. Below that, deals are difficult to secure.
This article was originally published by AOPA Finance on October 28, 2021.
