GreenPath discusses the steps consumers can take to boost their credit scores which could help them qualify for auto loans even if they have credit issues
The fact is that in some cases a few tweaks can make a big difference in the terms offered by lenders even for individuals with credit challenges that plan on applying for high risk car loans.
At Auto Credit Express we know this can happen because for over twenty years we’ve been helping buyers with less than perfect credit find new car dealers that can give them their best opportunities for approved car loans. Not only are we familiar with bad credit, but we often pass along the advice from other sources that are familiar with the credit repair process.
How to get the best car loan interest rate
In this case the advice isn’t specifically about poor credit, but how car buyers can qualify for better interest rates. We’ll explain how this applies to car buyers with less than perfect credit later on.
According to Dorothy Guzek who’s a credit counselor for GreenPath, it’s important to understand that there are two very different pre-qualifiers to getting a better interest rate on a car 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.”
She also answered a number of questions about auto loans that could even help car shoppers with bad credit. Here they are:
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.
As we see it
So here is where it gets interesting. If you have good FICO scores tweaking your credit by following these tips could help you qualify for a lower interest rate. If you have credit problems, following these tips could turn a potential credit denial into a car loan approval.
So there you have it.
One more thing we want you to know: Auto Credit Express specializes in matching applicants with auto credit issues to dealers that can offer them their best chances at car loan approvals.
So if you think you’re ready to begin that process, you can start now by filling out our online car loans application.
Get your free credit score now! Get a copy of your most recent credit score.
Are you paying too much on auto insurance? Compare rates in your area and save.