If you’re relying upon a loan to purchase your next vehicle, you may want to improve your credit score before you apply.
Credit score is normally a leading factor for lenders weighing your application and, if approved, it will also affect the terms of the loan offered. Amount financed and APR, for example.
In that light, a cared-for score could make the difference between a new set of wheels or no wheels at all, and potentially save you thousands of dollars on finance costs.
Here are six ways to get credit savvy and move your score higher.*
1. Clear up past-due amounts
Late and missed payments can have a significant impact on your credit score, according to FICO, one of the most popular credit scoring companies, so it makes sense to catch up as soon as possible.
2. Dispute any errors on your credit reports
Check your credit reports with the major reporting bureaus, Experian, Equifax and TransUnion, for possible errors and inaccuracies. Disputing and correcting any discrepancies you find may lift your score for little effort.
3. Pay bills on time
Consider setting up payment alerts, automatic payments and moving your due date to a more convenient time to stay current. Timely payment is important for all your bills, not just credit card and loan accounts, according to Experian.
4. Pay down debt and keep balances low
Keep your credit utilization ratio, which is how much credit debt you have compared to your overall limit, at no more than 30 percent, recommends the Consumer Financial Protection Bureau. Pay off maxed-out cards and high balances first, says Debt.org, a debt-help organization.
5. Leave unused credit cards open
Even if you have credit cards that are not seeing action, leaving them open can have a couple of benefits. Firstly, they will help your credit utilization ratio. Secondly, if you’ve had the accounts for a while, they’ll have a positive effect on your credit history age.
6. Only apply for the credit you need
Applying for credit results in a hard inquiry on your credit report, and multiple inquiries in a short space of time can drag down your score. If you’re seeking credit from various sources at once, it may also suggest you’ve run into financial difficulty. When you’re seeking an auto loan, however, you do have the freedom to make multiple applications in a limited period – generally 14-45 days. In this situation, credit scoring companies will realize you’re shopping for the best deal and your applications will be viewed as a single inquiry.
Apply for an auto loan with RoadLoans
When you’re ready to apply for an auto loan, whether it’s after improving your score or, if time is pressing, while you still have poor credit, take a few minutes to apply with RoadLoans. As a full-spectrum lender, we accept applications from consumers with a broad range of credit, including bad credit,† no credit, even those with a discharged bankruptcy or repossession on file. Our online application is easy to complete and we provide instant decisions. If approved, you’ll receive multiple offers so you can select the best option and shop for your vehicle with confidence.
Apply for a car loan online.
* These statements are informational suggestions only and should not be construed as legal, accounting, or professional advice, nor are they intended as a substitute for legal or professional guidance.
RoadLoans is not a credit counseling service and makes no representations about the responsible use of or restoration of consumer credit.
† “Bad” or “poor” credit generally is considered a FICO score around 600 and below by sources including the Consumer Federation of America and National Credit Reporting Association (reported by the Associated Press), Bankrate.com, Credit.com, Investopedia, NerdWallet.com and others. The Congressional Budget Office identifies a FICO score of 620 as the “cutoff” for prime loans. FICO scores are not the sole factor in lending decisions by RoadLoans.com and Santander Consumer USA.
Written by:
With 10 years of experience in auto finance, Rob Looker helps car shoppers find the right vehicles with the right financing so they can enjoy the road ahead. When he’s not creating content, he’s often behind the wheel, exploring new…
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