If you're like a lot of Americans, you probably have big plans for your next tax return. You may be planning to use this extra cash as a down payment on a car, truck or SUV, and that's a good idea. A down payment will be helpful when you're buying your next vehicle, but getting your credit in shape will be even more beneficial.
Now is the Best Time to Start
You won't be able to fix your credit problems overnight, so if you're planning on making a big purchase in the future, you should start to make some positive financial changes as soon as possible. If you can raise your credit score even just a little between now and when you’re ready to buy, you have a better chance at loan approval, and you may get a better interest rate.
- Pay down your debts. If you have old or current debt plaguing your credit report, get in touch with your lenders and try to set up manageable payment plans. With just a little planning and organization, noticeable progress will happen sooner than you think.
- Refrain from creating new debt. If you have available credit, resist the urge to swipe that plastic. While you shouldn't close the account(s), you should be focused on reducing what you owe as opposed to increasing that number. Remember that your debt to income ratio (DTI) will be taken into account when you apply for a loan.
- Create a budget plan and stick to it. Take the time to write down literally everything that you're spending money on. You may surprise yourself when you discover how much you're spending on expensive coffee or getting take-out for lunch every day. For example, if you're spending $4 each morning on a latte, five days a week, you could have an extra $80 every month by making coffee at home.
- Pay your bills on time, every time. Poor payment behavior (tardiness and delinquency) is noted on your credit report, but so is good payment behavior. Consistent evidence of financial responsibility will boost a future lender's confidence in your ability to pay back a new loan.
- Start or increase your savings. If you don't have money set aside for emergencies, start to put a little aside every pay period. You don't want to work hard at building up your credit only to have an unexpected expense obliterate all of your efforts. If you have a savings account already, try to add to it whenever you can.
When the Time Comes, Get the Right Financing
When you’re all set to take the leap and purchase that new or used car, let Auto Credit Express help you get an affordable auto loan. Even if your credit isn't quite perfect, our experts can find a solution that works for your situation. And remember, your auto loan will serve to build up your credit too! Just fill out our fast and secure application to get started today.