It is a wise decision to improve your credit score before buying your next car. Whether you are buying a new or used car taking the time to improve your credit score can help save you money. Your credit score will be a big factor when the lender considers your interest rate and terms for your car loan.
Your credit score is known as a FICO score and can range from 300 to 850. Anything below a 500 score is considered a low score and high-risk loan by the lenders. In most cases, a 620 score is required in order to get a car loan with a decent interest rate.
To begin to improve your score, pull your credit report from all three credit bureaus. The three bureaus, Transunion, Equifax and Experian are the companies that determine your credit score. You can obtain your credit reports on websites such as freecreditreport.com.
To improve your score, comb through your credit reports looking for errors. If you find errors you can use each of the bureau's websites to find step by step instructions on how to dispute these mistakes. By law it is the bureau's responsibility to prove that a payment was late and they have 30 days to do so, otherwise they must remove the negative report.
Be sure no one is using your credit. Check to see if there are credit cards on your report that you are not aware of. Someone may have stolen your identity without your knowledge. If so, report this so the bureau can remove these from your credit report and begin an investigation.
Next step to improve your FICO score is to look for small balance accounts you may have over looked. These can appear as late payments and in addition take up space on your available credit. Paying these off can help raise your score.
Check to see if you have credit card accounts still listed on your credit history report even though you have destroyed the card and don't use these accounts. Shredding the card so you do not use it should be followed by a phone call to the Credit Card Company and close the account so it is noted on your credit history.
Avoid taking out any other credit as you improve your FICO score before buying a car. Each time you request credit for a loan or credit card your history report is pulled. Frequent inquiries can lower your credit score. Refraining from opening any new credit will keep your available credit amount higher.
The final way to improve your FICO score before buying a car is to always make your payments on time. This is the number one way to improve the number on your credit score. Payment history represents 35 percent of your total score.
Using these tips can help you to raise your credit score before buying your next car. This extra undertaking can be well worth your time and effort, and save you money on your next auto loan.
By Mike Reitz
Your credit score is known as a FICO score and can range from 300 to 850. Anything below a 500 score is considered a low score and high-risk loan by the lenders. In most cases, a 620 score is required in order to get a car loan with a decent interest rate.
To begin to improve your score, pull your credit report from all three credit bureaus. The three bureaus, Transunion, Equifax and Experian are the companies that determine your credit score. You can obtain your credit reports on websites such as freecreditreport.com.
To improve your score, comb through your credit reports looking for errors. If you find errors you can use each of the bureau's websites to find step by step instructions on how to dispute these mistakes. By law it is the bureau's responsibility to prove that a payment was late and they have 30 days to do so, otherwise they must remove the negative report.
Be sure no one is using your credit. Check to see if there are credit cards on your report that you are not aware of. Someone may have stolen your identity without your knowledge. If so, report this so the bureau can remove these from your credit report and begin an investigation.
Next step to improve your FICO score is to look for small balance accounts you may have over looked. These can appear as late payments and in addition take up space on your available credit. Paying these off can help raise your score.
Check to see if you have credit card accounts still listed on your credit history report even though you have destroyed the card and don't use these accounts. Shredding the card so you do not use it should be followed by a phone call to the Credit Card Company and close the account so it is noted on your credit history.
Avoid taking out any other credit as you improve your FICO score before buying a car. Each time you request credit for a loan or credit card your history report is pulled. Frequent inquiries can lower your credit score. Refraining from opening any new credit will keep your available credit amount higher.
The final way to improve your FICO score before buying a car is to always make your payments on time. This is the number one way to improve the number on your credit score. Payment history represents 35 percent of your total score.
Using these tips can help you to raise your credit score before buying your next car. This extra undertaking can be well worth your time and effort, and save you money on your next auto loan.
By Mike Reitz
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