In the past 12 months, the world has been on high alert while the COVID-19 pandemic causes economic hardship throughout the country and the world. Due to these unprecedented times, the national credit bureaus – Experian, TransUnion, and Equifax – are giving you the chance to take control of your financial health. And it's totally free.
Extended: Free Credit Report Viewing
Many major purchases in life, like auto loans, often rely on credit. Generally, the lower your credit score, the more credit may concern you – bad credit can make it hard to qualify for financing on items you need.
Bad credit can be turned around, though. Sometimes just knowing where to begin can be the most difficult step. When you're struggling with a poor credit score, staying on top of your financial well-being is important. And this means regularly checking your credit score, and knowing what's listed on your credit reports.
This important first step to getting the lines of credit you need is now even easier to take, thanks to AnnualCreditReport.com. This service typically allows borrowers to get one free credit report from each of the national credit bureaus every 12 months. However, after shutdowns began to impact the nation's financial health in 2020, the service was offered on a weekly basis.
Initially, the program was set to expire in April of this year, but due to uncertain times ahead, the credit bureaus have decided to extend it until April 2022.
Know Where Your Credit Stands
Knowing what is on your credit reports, and what your credit score is, can really make it easier to stay on track when you need a loan. Plus, when you need to take on new lines of credit, you keep the bargaining power in your court. How you ask?
Knowing where your credit stands allows you to research the current auto loan averages for people in similar situations to yours. It also lets you see what's holding your score down, so you can find what can be done to fix it. When you know where your credit score is you can make a more accurate guesstimate of your budget based on real-life numbers.
Things that could be affected by your credit when it comes to an auto loan include:
- Approval or denial
- Interest rate
- Loan amount
- Loan Term
- Down payment amount
- Need for a cosigner
If you have a lower credit score, this list may be stress inducing but you don't have to worry in every case. These factors are less affected by your credit score when you're working with the right kind of auto lender for your specific situation.
We'll get into the specifics about these bad credit lenders, but first, let's look at what's in your credit reports. Here's how you can use this information to start building your credit so that you don't get turned down for your next car loan.
Get to Know Your Credit Reports
When you visit a site like www.annualcreditreport.com, you're given the opportunity to really see what's impacting your score. Your credit reports are detailed records of your credit and debt accounts, as well as personally-identifying information. By seeing what lenders see, you can decide where your biggest chance for credit repair is, and have a chance to fix small details that could be bringing down your credit score.
Your credit score is based on the information in your credit reports, and is weighted – some information affects your score more than others. When a lender does a hard pull on your credit they're looking at the following information:
- Payment history: 35% – Your payment history on current and previous accounts, including on-time, missed, and late payments.
- Amounts owed: 30% – The amount of money you currently owe in outstanding debt.
- Length of credit history: 15% – How long you've been using credit for.
- New credit: 10% – How often you apply for new lines of credit.
- Credit mix: 10% – How balanced your mix of revolving (credit cards) and installment (mortgages, auto loans) credit is.
If you find errors on your credit reports, or closed accounts that should have long ago fallen off your report (accounts remain on your credit report for seven years), contact the credit bureau to report it. This is called a dispute, and all three bureaus allow for online disputes. Removing inaccurate, negative accounts can improve your credit.
However, to really make an impact and bring up your score, you can see where you struggle in the credit game and take the steps to start handling things in a more positive manner. If you don't have the time to comb through your credit reports yourself, you can also invest in a credit repair service to get the ball rolling.
Then, once your reports are cleaned up, you have until April 2022 to check up on your credit health each week and make sure your credit score can start to soar!
A Car Loan Can Kickstart Your Credit Repair
If auto loan denial sparked your need to improve your credit and financial health, you may be wondering how a loan can help when you've already been turned down. The truth is, many people who start the car loan process before checking their credit situation can be turned down because they aren't working with the right kind of lenders.
Not all lenders can work with people in challenging credit situations such as with lower credit scores, past bankruptcy, or repossession on their credit reports. There are some that can though, called subprime lenders. These lenders work with special finance dealerships, so in order to get into an auto loan that can repair your credit, you need to find the right dealership. And that's where we come in handy.
At Auto Credit Express, we've been connecting bad credit borrowers with the dealers that have subprime lending partners for over two decades and we want to give you the same opportunity. To get started on a hassle-free way to find a local bad credit car dealership, simply fill out our fast, free, no-obligation car loan request form today!