Rachel had been driving the same car for about five years, and decided that it was time to trade it for something brand new. A recent job promotion had made her feel more financially secure, and she believed that driving an up-to-date vehicle would only add to the professional image that she was striving to cultivate.
Before doing any serious car shopping, Rachel decided to check her credit score because she hadn't done so in a while. Confident that her score would be relatively high, she was shocked to discover that her credit was rated at a 620 FICO. What the heck had happened?
Score Killers - What Dropped Her Credit
As far as Rachel knew, she hadn't done anything that would seriously damage her credit. She suspected that some sort of error had occurred, so she ordered a copy of her credit report to find out where the glitch was. Unfortunately, Rachel's report revealed no mistakes, but a series of legitimate black marks that had been caused by actual credit mistakes. Such mistakes included:
- Too Many In-Store Credit Cards: Because of Rachel's shopping problem, she had opened several retail accounts in order to save 10% here and 15% there, and many of these accounts were still open and had balances. She always made her payments, but she only paid the minimum amounts due every month. This would look like risky behavior to a potential lender.
- Closed Accounts: At a certain point, Rachel realized that she had too many credit cards, so she closed five of the accounts that she didn't really use. It may not have been an issue if she had only closed a single line of credit, but closing five accounts sent another red flag to the lender.
- High Credit Card Balances: Because Rachel had only been paying a little bit on her card balances every month, these balances had been steadily growing. So even though she had a good income, her debt to income ratio (DTI) was incredibly high. And she knew that this factor would count against her if she were to seek an auto loan.
- An Unpaid Parking Ticket: This was the score destroyer that surprised Rachel the most. She had been issued the ticket over a year ago and had forgotten all about it. The city had sold the overdue fee to a collection agency, and their communication attempts went unnoticed because of a mailing issue.
Rachel learned that in order to fix her credit, she would need to pay the collection agency for the delinquent parking fee, and start paying down her credit card balances. She was still interested in replacing her car with a newer model, so she sought the assistance of Auto Credit Express to acquire special financing from a trusted lender.
We're bad credit experts, and we were happy to work with Rachel. If bad credit has snuck up on you, we can help you get back on track. Just fill out our fast and secure online application to get started now.