Jamie had a difficult time finding a full time job after graduating from college. For about a year, she struggled to pay her bills, and she ended up missing several credit card payments. One of her accounts went into collections. And while she eventually paid that account off, and she had been responsible with her credit up until that one tough year, she was under the impression that her credit was ruined. Was it?
Situational vs. Habitual Bad Credit
When it comes to your credit report, one bad thing that stands out against an otherwise tranquil history looks a lot different than the repeated black marks of serial delinquency and non-payment.
If a bad credit event seems isolated and atypical, than your status is considered “situational,” and your score will be higher than that of someone who has made a habit of being financially irresponsible. Because of that, you need to determine your credit profile to find out what category you might fall into.
ABC: Always Be Checking
It is a good idea to check your credit report annually so you’ll know for a fact what potential lenders will see. According to a recent Google Consumer Survey conducted by TransUnion, nearly one third (32.7%) of Americans admitted that they have never checked their credit reports. This information is scary when you consider what this negligence could entail.
- There could be mistakes. It is not uncommon for credit reports to contain errors. And while these mistakes can be corrected with relative ease, the first step to finding them is asking yourself “are there mistakes on my credit?“
- Unfortunately, fraud happens. If your identity has been compromised and your credit rating has suffered due to illegal activity, you’ll need to be aware of it as quickly as possible. Monitoring your credit reports can shelp you protect your financial profile.
- Knowing is half the battle. If you suspect that your credit history contains a blemish or two that might compromise your ability to get a good interest rate on a loan, or to be approved for a loan at all, you need to know how to improve your situation. If one mishap has caused your score to temporarily drop, you will be fine with responsible credit use and time. However, if your bad credit is the product of a perpetual struggle with money and debt, you’ll need to be more proactive in your rehabilitation and set up a budget to before you worry about auto financing.
What Happened to Jamie?
Jamie checked her credit reports and discovered that, while her credit wasn’t perfect, it wasn’t nearly as bad as she had anticipated. Emboldened by this knowledge and the fact that things were going well at her new job, she decided to finally replace her old car with something newer and more reliable. Jamie applied for financing online with Auto Credit Express and got approved for her loan and behind the wheel of her new car in just a couple of days.
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