So, this may seem super odd, but we have a very good reason to advise this for you. Check your credit score at least three months before you step into a showroom to buy a car.
Generally, people budget for an auto purchase, find a car that fits their budget and only then applies for their credit score. This is actually a rather iffy way of going about things. Here is why.
Incorrect or outdated information on your credit score lowers it thereby making you pay higher interest rates. Removing this takes 60 to 90 days.
Typically credit score is determined based on the following factors: past payment history, outstanding debt, the time span of having had credit, new credit sought recently, types of credit currently possessed. It is important to note that the best auto financing rates are available to those scoring over 700 on the credit score. When you come across used car lots that are okay with financing irrespective of credit scores, know that the prices are already marked higher to deal with defaulting and high-risk customers.
If you are married, you would need the credit score for both and your spouse.
Always check for misinformation. Accounts that don’t belong to you resolved billing disputes, incorrect credit limits, and balances, closed accounts that still reflect as being open must be removed from your credit score report.
A negative report stays on your record for 7 years and bankruptcy for 10 years.
When you are buying a car, the credit reporting company would have to support the information set it has regarding your credit habits. So, do ask to see the report in advance and if you find errors, write to the company you were originally involved with in terms of any disputes, accounts or credit along with supporting documents requesting them to send the corrected information to the credit bureaus.
You have the right to challenge the credit reports and have them corrected. Recheck your credit score at the end of 60 days and 90 days. If you have taken the effort to have the misinformation corrected, it would reflect on a better credit score thus make you eligible for lower interest rates or even 0 interest loans!
As a rule of the thumb, always take the following steps to keep your credit score at an optimum
- Make credit card payments before it hits its limit
- Don’t apply for new credit since credit provider inquiries lower your score
- Close old accounts that you don’t use
- Keep older accounts with a good credit history
- If you have a credit such as say a Master Card which is new, hold on to it and cultivate a good credit score on it by making payments on time and using it wisely. This will help you get a good score in the longer run.
So, before you zero in on your dream car, check out your credit score and pull in your tact and supportive documents to make it good. Also, there are loans for bad or no credit, you just need to do some research and find the best place to start. Over at Mr. Ed’s they can help you get the loan you need.