Consumer Car Buying Advice Blog

What one credit counseling firm recommends you do before applying for any type of auto loan including a bad credit car loan

New beginning

If you believe you have bad credit, there are a number of things you should do before applying for car loans with bad credit.

We can tell you this because here at Auto Credit Express we’ve been working with credit-challenged car buyers for the past twenty years. We’ve also personally helped hundreds of retail buyers get financed while helping them avoid a tote the note dealer (buyers outside our retail areas can fill out a bad credit auto loan application on our web site) and advising them on the bad credit auto loan process (to reduce their risk of repossession).

We also don’t mind passing on to them advice we’ve read about from others, besides ourselves, that know about bad credit.

Here is some advice from credit repair company GreenPath Debt Solutions:

Check your credit report before auto shopping

Good credit score and “debt to credit ratio” can save money and obtain better interest rates

According to Dorothy Guzek, GreenPath credit counselor, it is important to know that there are two very different pre-qualifications for obtaining a favorable interest rate on an auto loan. “One is to have a good credit score,” said Guzek. “The second is to have a favorable ‘debt to credit ratio.’ Both of these components are equally important.”

How long before making an auto purchase should buyers start getting their credit in order?

Everyone should look at their credit report at least once a year.  You can get a free copy of your credit report at www.annualcreditreport.com, but you do have to pay for a score. Guzek recommends paying for the score and suggests pulling the report at least six months before you start auto shopping.  “This will allow you ample time to correct any incorrect information that you might find.”

How high should auto buyers aim to get their credit score before buying a car?

Currently there are three major credit bureaus, Equifax, TransUnion and Experian, and each has a slightly different scoring system.  As a rule of thumb, a grade A score is between 680 and 719. “Credit scores are like your high school report cards. There was nothing wrong with a B or a B+, even though an A+ score may bring you a better interest rate,” said Guzek. “The bottom line is to make sure you work towards getting the best score possible under your current circumstances.”

Why shouldn’t consumers open or close credit cards before purchasing a car?

Guzek explains that if you close a card without a balance, you are raising your debt to credit limit ratio, which lowers your credit score. If you close your oldest card, your length of credit history becomes shorter and this lowers your score. If you open up new cards, it signals to the lender that you may need credit cards to pay your existing bills and this, in turn, lowers your score.

The Bottom Line

This is good advice to all buyers, but especially those applying for a bad credit auto loan.

Auto Credit Express has helped thousands of people with bad credit buy cars and reestablish their car credit at the same time. Our nationwide network of affiliate dealers specializes in second chance auto loans.

So if you are serious about getting your auto credit back on track, you can begin now by filling out our secure online bad credit car loan application.

Tags: Bad Credit, bad credit auto loan, bad credit car loan, Credit Repair

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