You can certainly improve parts of your credit before you apply for a car loan. However, there are auto loans that can improve your credit score while you have them – two birds with one stone!
Credit Repair and Car Loans
You don’t have to have good credit to get into a car loan, but it definitely helps. There are some things you can do to repair your credit before you apply for an auto loan, but building a good credit score can take years.
It’s a good idea to always be working on your credit, but improving your credit in a short period of time may not be enough to get approved by traditional lenders if your credit score is too low.
While there are lending options for bad credit borrowers, there’s nothing saying you can’t give your credit score a quick boost before you head out the door and look for a lender.
Prepare With Quick Credit Repair Tips
If you need a vehicle right away, you may not have an entire year or more to work on your credit score. However, there are few quick things you can do to boost your credit before you apply for a car loan.
- Pay down your credit cards. If your credit card balances are at 30% or more of their borrowing limits, it can really be lowering your credit score. Pay down your credit cards as much as you can before you apply for auto financing. It may take a few weeks for your paid down credit cards to reflect on your credit score, since most creditors usually only report balances once a month.
- Fix errors on your credit reports. Errors can happen on credit reports, and they can sometimes hurt your credit score. Old accounts that have already been paid off, or one that doesn’t even belong to you, can lower your score. You can dispute inaccurate accounts and have them removed with proof, which can boost your credit score.
- Pay your bills on time. Payment history is the biggest factor in determining your credit score. While this isn’t a quick fix, make sure to not miss any payments before you apply for a car loan since missed payments can hurt your credit quite a bit. Missed or late payments stay on your credit reports for up to seven years.
- Don’t close old, unused accounts. If you have old lines of credit that you hardly use and you’re considering closing them, don’t! The length of your credit history is also a determining factor in your credit score. Closing old accounts can decrease your average credit history age. Even if you don’t use the accounts often, keeping them open could save you from a drop in your credit score.
These credit repair tips can give your credit score a boost before you apply for an auto loan. However, if you need a vehicle quickly and don’t have time to fix your credit score, then subprime car financing could be your next step.
Subprime Auto Financing
If your credit score isn’t repairing as quickly as you hoped, or you just don’t have time for your credit reports to heal, then try subprime auto loans.
Subprime lenders look at more factors than just your credit score when you apply for a car loan. These factors typically include your living stability, work history, income, credit reports, and more.
Stability is one of the key things lenders look at when you apply. The longer you’ve lived in the same area and held a job in the same line of work, the better your odds of getting approved for a subprime auto loan generally are.
In addition to getting a second chance at vehicle financing, subprime car loans are reported to the credit bureaus. Some used vehicle lots that use in-house financing don’t report their loans, which means that your credit score doesn’t improve from making your car payments on time. Subprime lenders, though, report their loans so your on-time payments can build a positive payment history and repair your credit for the long haul.
Finding a subprime auto lender means locating a dealership that’s signed up with them, also called a special financing dealer. If you’re not sure where to start looking, don’t worry, because we know how to help.
Finding a Bad Credit Car Loan
Over the past 20 years, we’ve created a nationwide network of special finance dealerships here at Auto Credit Express. We work to match borrowers struggling with credit issues to dealers that have the lending options they need for their credit.
To get started, complete our car loan request form. After you do, we’ll look for a dealership in your local area at no cost, and with no obligation.