The Importance of Credit Reports with Poor Creditby Steve Cypher on Tuesday, December 18th, 2012
For consumers with less than perfect credit it’s especially important to know exactly what is and is not contained in all three of your credit reports before beginning the application process for high-risk car loans.
At Auto Credit Express we know this is true because for more than twenty years we’ve been helping bad credit car shoppers find dealers that can offer them their best chances at car loan approvals.
And while we know that most car buyers are well aware of this, the fact remains that many buyers with past credit issues still don’t understand just exactly what a credit report is – some even confuse credit reports with credit scores.
So here goes:
A credit report is basically a snapshot of your borrowing and repayment history over a seven year period (some items, such as bankruptcies, remain for ten years). Banks, credit card issuers and other institutions that extend credit typically report loans and payments to at least one – sometimes more – of the three major credit bureaus here in the U.S. – Equifax, TransUnion and Experian.
Every credit report contains what is known as “applied for” credit. This is credit that is extended to individuals from credit grantors based on a request. This applied for credit includes information from automotive lenders, home mortgage lenders and credit card companies.
Credit reports may also list “not applied for” credit entries. These are accounts that are not a result of a request for credit. Not applied for credit entries in a credit report can include items such as bad checks, unpaid medical bills, tax liens or civil judgments.
If all bills are paid on time, the credit report will not contain any of these “not applied for” account entries.
Requesting credit report information
Requesting a copy of all three of your credit reports will allow you to see if any of them contain information that is inaccurate. Many of these inaccuracies can result in lower scores that might cause a credit grantor to either turn down a credit request or charge a higher interest rate if the request is approved.
Ordering one, two or even all three is actually quite simple. Federal law requires the three major credit bureaus to furnish consumers with one credit report per year per bureau (Equifax, Experian, and TransUnion) at no charge. This can be done in writing or by going online to www.annualcreditreport.com (if you want your credit scores at the same time you’ll need to pay for them).
If you don’t mind paying a fee, you can simplify the process by visiting sites such as www.FreeScore360.com where you can receive all three credit reports along with their corresponding credit scores at the same time.
Knowing that your credit reports are accurate and up to day will also indicate that your FICO scores truly reflect what is contained your credit history. More importantly, knowing your credit scores can tell you if you will qualify for a traditional car loan or if you need to find a dealer that offers car loans for consumers with bad credit.
The division between these types of loan is not a fixed point, but if your credit scores fall below a 640 FICO, you’ll usually need something other than a traditional auto loan. If this is the case, you usually have three choices:
1. You can pay cash. The downside to this is that most people don’t have the kind of cash required for either a new car or a low-mileage reliable used car
2. You can visit a BHPH dealer for a no credit check car loan. The problem with this is that most of these dealers don’t report auto loans or loan payments to the credit bureaus – meaning you’ll be in the same credit situation the next time you need a vehicle.
3. You can find a franchised new car dealer that treats poor credit customers with respect and is signed up with a wide range of higher-risk lenders. Unfortunately, many new car dealers don’t cater to customers with credit issues and finding the right one can be difficult.
So how can you make this search easier?
Glad you asked.
Helping car buyers with damaged credit
Auto Credit Express specializes in matching consumers with challenging credit situations with those franchised new car dealers that can offer them their best chance for car loan approvals.
So if you’re ready to reestablish your auto credit, you can begin now by filling out our online car loans application.