Prepare Your Credit for Used Car Financing
May 20th, 2009, Written By: Kerri Randall
When you’re looking to buy a car, it can be cheaper and wiser to buy used. Your credit, though, still needs to be in top shape. Chances are you’re going to need to finance the car, and your credit score will be scrutinized no differently than if you were buying new.
Prepare yourself ahead of time. It’s better to check your credit before you ever go into the dealership because if your score is not as good as you think and you are denied for a loan, this will have a negative effect on your score and push you another step backward. You can obtain a free copy of your credit report from one of the three bureaus (Trans Union, Experian, and Equifax). You won’t see your actual score, but you will see your history, and this should give you a good idea of where you stand.
If you find negative history on your account, start taking steps to improve it. Pay off any outstanding debts as soon as you can and pay your bills on time to start building a positive history. Close any old or unnecessary accounts that may be hurting your score, such as those store credit cards.
Check your report for errors and get them removed. For example, you might find an account listed that you know has been paid off and should have been closed. Contact either the creditor or the credit bureau to clear it from your report. If you have negative information that cannot be removed, such as a foreclosure or bankruptcy, make sure you come prepared with a good explanation for it and any documentation that can back you up. The same goes for any errors that haven’t been removed by time you’ve begun to apply for your loan.
A large down payment can also help you get approved. It will lower the amount of your loan and thus increase your chances of approval.
If your score is as high as it is going to get for now, you can still get a loan. Make sure you’ve taken as many steps as possible to improve your credit, save for a down payment, and bring a cosigner if it looks like you might need one. Be realistic about what kind of car you’re looking for. Even if you previously owned a high-end car but your credit has slid since then, you may have to consider a mid-level car for now.
Your lesson: come prepared and you can still be approved, even if your credit needs some help.
Categories: Auto Loans
