You can actually do better than just watch your mailbox for due notices to know if you are battling poor credit. It is a good idea to explore each of your credit reports to know what’s really happening.
Fortunately, realizing your credit standing has never been easier. A benefit of many credit cards is the ability to check your score with the use of their online portals. You can equally pay the credit reporting companies to check your score (though you can get your report for free).
The moment you see your credit score, you can delve into your credit reports to have why you have that score.
Federal law lets you to see your reports from each of the three major credit bureaus once each year for free. You can equally get a report from any credit bureau that gave the information to a lender that declined your application .AnnualCreditReport.co is the only site that is authorized by federal law to offer your free annual credit reports. You’ll see many lookalike sites on the internet that claim to do the same, but most of them will ask for money at the end, ask for critical information that can result to identity theft, or automatically sign you up for hard-to-cancel, unnecessary, and expensive credit monitoring services.
Check closely at your reports for errors. They do happen, and they can take some time to clear up. That’s a good reason to begin examining your credit well before you begin your vehicle shopping.
Catching up on your account and making timely payments are two of the easiest ways to get bad credit back on track. You may have to undergo sacrifices elsewhere else in your budget, but the effects on your credit score can be great within a few months.
“They are more empowered to know their credit score and what is in their credit file,” says Brian Landau, senior vice president and automotive business leader at TransUnion, about today’s vehicle buyers. “They know that if they wait they can get a better rate.”
It is good not to panic and begin closing credit cards. Your credit score reflects both the amount of credit that companies have offered to you and the amount of that credit that you are using. Closing accounts lowers your available credit, and it raises what is known as your credit utilization rate, or the ratio of credit card balances to credit limits. Think of it as a percentage that informs lenders how much of your credit you are using.
For instance, if you have credit card balances of $5,000 and the limits on all of your cards total $20,000, your credit utilization rate is 25 percent. If you were to close a card with a $5,000 limit, your credit utilization rate would leap to 33 percent and have a negative implication on your credit score.
Chances are you won’t have time to produce tremendous advances in your credit score before you intend to buy a car, so next, let’s look at how to get an auto loan while you are is still thought of as a high risk by lenders.
What Kind of vehicle Should I Be Shopping For?
When you have bad credit, it’s important to find a car that doesn’t get you into deeper financial issues. While you can probably discover a dealer that can get you financing for a loaded sports vehicle or SUV, that might not be the best choice for your financial future.
Getting a vehicle loan while you have poor credit offeres you two opportunities: You can get an affordable car and you can improve your credit standing by using the auto loan to show to the credit bureaus that you are a good credit risk. Purchasing a more expensive car than you can afford can make these goals less attainable.
Rather, you want to look past just the monthly payment and consider the total cost of the loan and the total cost of owning the car, including vehicle insurance, maintenance, and fuel. Knowing the cost of these components can assist you know your budget.
Rather than looking at the latest and greatest cars, you might need to consider a used vehicle instead. By going for a well-kept factory certified pre-owned car (CPO vehicle) rather than a brand-new model, you can save a great amount of money. You’ll equally get a warranty to lower your exposure to unexpected repair costs, along with several other benefits, such as roadside assistance