While many know that being late on credit card payments and bills can hurt your credit, there are still other, less obvious things that can affect your credit score and your chances of being approved for a loan.

Finding auto financing is hard enough as it is, and it is downright frustrating when you are denied approval for no obvious reason. You make your monthly credit card and bill payments on time and you make enough money to easily afford the car payment, so...what's causing the problem with your credit score?

Beyond Your Payment History

While your payment history is a major factor on your credit report, attributing for 35% of your credit score, there are other factors that can keep you from getting auto loan approval even if you are making consistent, on-time payments.

  • Inaccurate Information
    If you know you are not late on accounts that are definitely yours, there is always a possibility that there are errors on your credit report. When checking it, look for any inaccuracies, including discrepancies in reported names and addresses. This could indicate that there are accounts on your report that are a result of identity theft and have nothing to do with you. Also, it will help you spot any debts or collections that should have been removed from your report years ago. If you have spotted errors on your report, you only need to report them to one of the three major credit bureaus. Once the errors are confirmed, they are obligated to notify the other agencies and have them removed. This may be all it takes to improve your credit score and history.
  • Utilization Ratio
    Of course, if you don't have any errors on your report, it could be that you have opened too many lines of credit and have high balances. A credit utilization ratio is the amount of outstanding balances on your credit cards divided by the sum of each card's limit. The best practice for maintaining a good utilization ratio is to keep the balance on any open line of credit at 30% or less of the maximum credit limit. If you have high balances, this will negatively affect your credit score, which will result in lenders being wary of approving you for a loan because there is a higher risk that you may be overextending yourself.

Check Your Credit Report Regularly

credit score
In order to avoid this kind of headache in the future, you should know that you can obtain complimentary annual copies of your credit report from each of the three major reporting bureaus (Equifax, TransUnion and Experian). A good tip you can use to monitor your credit all year round is to pull one report from each of the bureaus every four months (example: Experian in January, TransUnion in May, and Equifax in September). Another great tool is Credit Karma, where you can monitor two of your credit reports anytime for free. The sooner you determine what areas of your credit need to be fixed, the better it is for you financially.

Get Connected with the Right Dealer

If you have experienced issues with getting approved for a car loan because of damaged credit, Auto Credit Express can connect you with a dealer that can help. We have a nationwide network of car dealers signed up with lenders who specialize in helping car buyers in situations like yours get approved for the financing you need. Complete our fast and secure online application from the comfort of your own home. It only takes a few minutes of your time, so don't wait any longer and start today.