It can be hard to find a car loan in Los Angeles if you have bad credit. In order to improve your odds of getting approved for an auto loan, it's a good idea to work on improving your credit score before applying. We have some tips to help you accomplish this!
Know Your Credit before Anything Else
The very first thing you need to do before you look for a car loan in LA, or anywhere else for that matter, is to look at your credit reports and credit score. Without them, you don't know what a lender sees when they evaluate your application, and can’t prepare to negotiate the best auto loan possible.
Each time you apply for – or get – credit, it can affect your credit score, whether you're applying for revolving credit (credit cards) or an installment loan (car loans, mortgages).
You should keep up with your credit reports and your score throughout the year because it changes often. Small changes are common, but if you notice big swings in your score, you should be able to find out why by inspecting your credit reports regularly.
Things you should look for are mistakes or errors on your credit reports, such as negative accounts over seven years old that haven't fallen off, or accounts that aren't yours, which could be a sign of fraud. If you find any incorrect entries, you should dispute them with the reporting bureau right away. Fixing these negative errors can help improve your credit.
Another reason it's important to know where your credit stands is so you can prepare for the auto loan process. Knowing your credit score gives you the power to research average interest rates for your credit range, so you know if you're getting a good deal or if you should walk away. One good thing about living in a city as big as LA is that there are plenty of choices for car loans!
Simple Steps to Improving Your Credit Score
Now that you know what's on your credit reports and where your credit score stands, it's time to work on credit building so you can get the best deal you can!
Here are some simple tips for getting your credit in shape before you apply for an auto loan:
- Pay all bills on time – Payment history is the biggest factor that makes up your credit score, so the more bills you pay on time, the better. The longer you keep up this practice, the better your credit score can become. The good news about this is that it's never too late to start practicing this tip.
- Reduce credit card balances – Overspending on credit cards seems to be a bad habit for many people, especially those that struggle financially. Your credit score starts to get negatively impacted if you use more than 30% of your available credit limits on credit cards. You should work on reducing credit card balances down to zero, or at least below 30%. Lenders like to see that you can responsibly handle credit before extending you a loan, and they look into if you're over-reliant on credit.
- Add another line of credit – If your spending is in check but you don't have a lot of opportunity to make payments to build your credit, try opening another line of credit. This can be a store charge card, a credit card, a secured credit card, or even a loan. Try adding a type of credit you don't already have, so that you're also adding diversity to your credit file. If you have a number of credit cards, for instance, getting a car loan is a great way to begin improving your credit score!
Get the Car Loan You Need in Los Angeles
If you need a vehicle in Los Angeles but bad credit is holding you back, you're in luck! Auto Credit Express can help you get the auto loan process started right now without having to fight through traffic searching for a dealership.
We can connect you to a local dealer that has lenders available to work with people in bad credit situations. Just fill out our fast, free, and easy car loan request form to get rolling!
