Are you trying to get a new car, but your credit score just isn’t up to par? Let’s face it the lower your credit score, the more interest you will pay, and sometimes you won’t even get approved. One late payment can drastically affect your credit score, and it can take months of making all your payments on time before it goes back up.
So, what do you do when you have a clunker that you just need to get rid of, but still need to fix your credit? Below, you will see just how to get your credit score up for an auto loan.
#1 Check Your Report
Before you do anything else, you need to check your credit report. You can do this by going to Crediful and requesting a report from all three major credit reporting companies. Their company website
will guide you through the process.
By law, you are allowed to request an annual report from the following companies each year at no cost to you:
Once you have your report, it’s time to start delving into it and finding out what is going on with it.
#2 Examine Your Report
I like to examine my credit score regularly using Crediful. However, each year you should be delving into that credit report from Equifax, Experian, or TransUnion. You need to do a full examination of your report. Here is what you should look for:
● Look for accounts that show late payments
● Unpaid bills
● Inaccurate information
Once you have carefully examined your report, it is time to start cleaning it up.
1. If you have late payments, call the credit company and ask them to remove them.
2. Pay all unpaid bills, then call and ask the company to remove the unpaid report on your credit report.
3. If there is inaccurate information, the credit report will tell you where you can send a dispute. Dispute it!
4. Negotiate debt you can’t pay and get it current. You can call the creditors and offer a settlement or set up a payment plan that works with your budget. Once a debt is affecting your credit, you can usually get them to negotiate anything.
#3 Pay Down Balances
Credit reporting agencies don’t just care that your bills are current, they care that you are using your credit responsibly. This means that even if you have a big credit line, you aren’t maxing it out.
For example, if you have a credit card with a $5,000 limit and you have $2500 on it, you are using 50% of your credit. Credit reporting agencies want you to only have 30% on any given credit line.
So, if you have $2500 on one card and nothing on another card, it actually looks better if you transfer some of the debt to the other card. This way, you are only using 30% of your credit.
#4 Ask for Credit Increases
As stated above, you only want to use 30% of your total credit. If you can’t pay down the debt to 30%, call your creditors and ask for a credit increase. If you have made your payments faithfully, most creditors are happy to give you an increase.
Not only does an increase lower your debt ratio, but it shows you have a good standing with the company.
#5 Pay Your Bill More Often
Creditors only send your credit information in once a month. So, if you use your credit card then pay it off at the end of the month, credit agencies may be seeing a high balance. Instead, pay your bill twice a month. That way you the credit usage is lower when it gets reported.
#6 Get a Secured Card
If you don’t have a credit card and your credit is not showing much of anything, you can always get a secured credit card to build your credit. You will want to look for a card that reports monthly. Use the card instead of your debit card, but pay it down to the 30% each month. This will help build your credit. Once you have shown payment history, you can start applying for credit cards that are not secured.
Remember, the higher you can get your credit score, the less you will have to pay in interest. Auto loan companies charge more interest if you may be a liability. The interest is there so that if you stop paying, the auto loan company still gets the money they wagered.
Keep Crediful in mind as a way to keep track of your credit all year long and daily. If you have any credit issues, Credit Karma will walk you through how to fix them.