Credit repair may seem daunting, but it doesn’t have to be hard to get your credit back on track. It’s especially important to start working on your credit if you’ve been turned down for a bad credit car loan. We'll break down our top five ways to improve your credit score for an auto loan.

Why Weren’t You Approved for a Car Loan?

Do you know why you were turned down for a car loan? The lender should have let you know, but if they didn’t, there are some easy ways to find out what might be holding you back from getting approved.

First, make sure you know what your credit score is and what’s on your credit reports. With this information, you can see what the lender sees when they determine your eligibility for an auto loan.

There are many services designed to help you get your credit scores – some that you have to pay for, and some that are free. No matter how you get yours, be sure you know whether or not you’re looking at your FICO score. FICO is the most commonly used credit scoring model among lenders today.

To request a copy of your credit reports, you can visit This is a government-hosted website that allows you to get a free copy of your credit report every 12 months from each of the three major credit bureaus: TransUnion, Experian, and Equifax.

Once you get your reports, it’s important to check them over thoroughly to make sure there are no mistakes. If there are any, you should contact the reporting bureau right away to dispute it – just having mistakes corrected can raise your score a bit.

Now that you have your credit reports and score, you can see how things stack up. Look over your reports to see where you’re struggling with your credit. Your credit score is made up of five categories, which are reflected in your credit reports. These categories are:

  • The Top 5 Ways to Improve Your Credit for an Auto LoanPayment history – 35% of your credit score is based on how you’ve paid your bills in the past.
  • Amounts owed – 30% of your credit score is based on the amount you owe across all credit accounts, including how much of your available credit card limits you’re using.
  • Length of credit history – 15% of your credit score is determined by the age of your oldest credit account and the average age of all of your accounts, among other factors. The longer your credit history, the better.
  • Credit mix – 10% of your score is from the mix of revolving credit (credit cards) and installment credit (car loans, mortgages, etc.) you have.
  • New credit – 10% of your credit score comes from how you shop for credit; opening several new accounts in a short amount of time could signal a risk to lenders.

5 Tips for Improving Your Credit for an Auto Loan

Now that you know what makes up your credit score and credit reports, you have a good starting point for credit improvement. Even though bad credit isn’t a deal breaker for getting an auto loan if you’re working with the right lender, a better credit score can make the process easier and less expensive.

Try these five tips to help get your credit back on track:

  1. Pay your bills on time – The more credit cards, loans, and regular bills you pay on time, the better. The good news is that you can start doing this any time. The longer you keep this up, the more you’re building your payment history, which is the biggest factor impacting your credit score. Your rent payments aren't normally factored into your credit score, but they can be. There are services that report your rent payments to the credit bureaus, which allows you to get the credit you really deserve. If a wide range of monthly payment dates has you scrambling, try contacting your creditors and lenders to see if you can adjust your due dates. Not all of them may be willing to work with you, but you may be surprised by what happens when you communicate with them.
  2. Take care of past due balances – Once you’re in the habit of paying your bills on time, you should prepare a budget to pay off past due accounts. Overdue, unpaid accounts that have been sent to collection agencies stay on your credit reports for seven years – that’s a long time to be haunted by past mistakes. Getting these off your credit reports can instantly help boost your score. This is something you can do yourself, or you can use a credit repair company to help.
  3. Lower your credit card balances – With amounts owed being the second most important factor making up your credit score, the lower your credit card balances are in relation to your available credit, the higher your score is going to be. A good practice is to use your credit cards only for purchases you can afford in cash. This way, you can pay the entire balance each month and lower your credit utilization ratio. Generally speaking, lenders view borrowers that use less than 30% of their available credit more favorably.
  4. Apply for new credit – If your credit is only based on credit cards or installment loans, improving your credit mix can help. If you open another credit card account, you’re also increasing your available credit, which can automatically lower the ratio of used to available credit that you have. Just make sure that you’re responsible with another line of credit – if you aren’t, you could hurt yourself more rather than help. If opening a new line of credit is difficult, try a secured credit card first.
  5. Become an authorized user – An authorized user is someone who gets the benefits of better credit without the responsibility of managing an account. This is done by having your name added to someone else’s credit card account, so that you get the benefit of better credit as they use and pay the account. This is common with parents who want to help their children establish credit, but there’s no right or wrong time to become an authorized user. Talk to a trusted family member or friend if you’re considering this.

A Car Loan Can Help You Build Credit

While you’re working on credit improvement, remember that you don’t have to wait for a perfect credit score to apply for financing. You may still be able to get a car loan with bad credit, but you need to find the right lender.

Lenders that work with bad credit are called subprime lenders, and when you get a loan with one, you add another line of installment credit to your credit account, which gives you another opportunity to build payment history.

To get an auto loan with one of these lenders, you have to go to a dealership with a special finance department. This is the only way these lenders typically work, as most of them are indirect lenders. You deal with the salesperson or special finance manager, and they act as your go-between with the lender.

So, now all you have to do is find a special finance dealer in your area – and that can be a simple task when you count on Auto Credit Express!

We work with a nationwide network of special finance dealerships that have the lenders you need. Fill out our easy and fast car loan request form, and we’ll start the process of matching you with a local dealer that can help.