The Role Credit Score Plays in Solar Installations
Last Updated on
Last Updated on February 10, 2021
Since solar is a large ticket item, few can pay for it upfront. Many solar companies promote getting a loan or leased system so more people can afford to install solar. Although a solar loan is better for those looking to own their solar panels, both of these payment options allow homeowners to make smaller payments over time.
Why You Need a 650 Credit Score To Qualify for Our Programs
Credit plays a large role in our lives. There’s a credit score requirement to buy a car, a home and even qualify for a credit card. It should come as no surprise that credit plays a large role in solar qualification.
Go Solar Group partnered with a financial program to make the credit score requirement lower. If your past credit came up too low to go solar with us, you might qualify now. We now require a TransUnion-verified score of 650.
Whether you’re a new prospect or have spoken with us before only to find out your credit score wasn’t high enough, click the button that leads to the area you live in and fill out the form to start a quote.
How Solar Financing Works
Those who don’t pay upfront have opted into a solar loan or a leased array, sometimes known as a Power Purchase Agreement (PPA). This bill, essentially, replaces the customer’s utility bill.
Although the monthly payments for a leased solar aren’t as much, customers end up paying more overall. The worst part about leased solar is that afterward you still don’t own the system.
Acquiring a Solar Loan
When applicants apply for a loan, the lender looks at the debt-to-income ratio and credit score. These help lenders determine if the applicant has a history of paying off debts and whether they can afford more debt.
Solar costs less than what customers would have paid their utility over the life of their solar array. However, lenders don’t care that solar isn’t an added expense. Hence, the reason why solar loan qualification needs a credit score.
What Credit Score You Need To Qualify for Solar: 650
The necessary credit score depends on the loan. Solar companies work with different lenders, and each has its qualifications.
Go Solar Group’s New Solar Loan Partner
In 2019, Go Solar Group switched loan partners. Loanpal, Go Solar Group’s new lending partner, offers loans to individuals with credit scores as low as 650.
This credit score requirement is 20 points lower than we’ve used before. If you didn’t qualify for solar in the past, you might now.
TransUnion Versus Self-Reported Credit Scores
When Go Solar Group qualifies potential customers for solar, they may ask for a self-reported score if your credit doesn’t pull up in TransUnion through the verified information you provided the internal solar consultant. Because estimated scores typically run high, self-estimated scores need to be at least 675 with Go Solar Group.
How To Boost Your Credit Score To Qualify for Solar Power
If your credit still isn’t high enough, there are some things you can do to increase your credit score.
Most Commonly Used Credit Score: FICO
Of the different credit scores, the FICO score matters the most to lenders. The FICO score gets used by 90 percent of top lenders.
Components of the FICO Score
Five categories directly affect the FICO score. Of this score, 35 percent comes from the timeliness of past credit payments. Thirty percent of the score comes from how much the applicant currently uses of their available credit.
On the smaller end of the spectrum, 15 percent comes from how long they have used credit. The last 20 percent splits between their mix of credit lenders and recently acquired credit.
How To Raise Your Credit Score
The best way to improve credit is to make consistent and timely payments. It especially helps when these payments equal more than the bare minimum. If you have a hard time staying on top of your bills, you can set up reminders on your phone or sign up for automatic bill pay.
The second best thing for improving credit is to start paying off debt instead of moving it around. Although moving your debt to a different card may solve the problem short term, it won’t last. Moving debt enables individuals to accumulate even more debt that they can’t afford.
Thirdly, keep your credit card balance lower than the credit limit. A low credit balance tells lenders that you responsibly borrow money.
How To Check Your Credit Score
Frequently checking credit can negatively impact your score. These credit checks often register as a hard credit inquiry. To a lender, frequent hard credit inquiries look like desperation. It signals that the borrower potentially can’t afford the loan they want.
However, if you check your credit in the right places, you don’t have to worry because they use a soft poll, which doesn’t affect the FICO score. Often banks and credit unions do a soft pull to provide customers with their current credit score at the end of each month.