A poor credit history makes the car loan process much harder. Before you buy, there are steps you can take to repair your credit, such as reining in problem spending. Whether the issue stems from a sudden financial hardship or the overuse of credit cards, the following tips will improve your chances of securing a car loan.
4 Steps to Take When Looking for a Car Loan With Poor Credit
1. Check Your Credit Report
A credit score of 740 or higher is considered good to excellent. Conversely, anything lower than 670 is considered fair to poor, and people falling in this range have the most difficulty securing loans. You can get a free credit report once a year. You also want to look for inaccuracies on your credit card bills; if you notice mistaken charges, be sure to contact the credit bureau to have them removed as soon as possible.
2. Avoid Red Flags on Your Credit Score
Certain items on your credit report are considered red flags by lenders. For instance, opening a new credit card before applying for a loan can appear fiscally irresponsible. Also, watch out for late and missed payments, which call into question your ability to take on another recurring loan.
3. Make a Budget
Be realistic about the type of car you can afford. Once you’ve established your budget, make sure you stick to it. Also, consider making a larger down payment. This can impact the interest rates on your loan, while also lowering your payments.
4. Consider Credit Counseling
If you do have bad habits related to card use and overspending, consider credit counseling as a solution. By working with a consultant, you can pinpoint the exact spending areas where you need improvement. Credit counseling can also help you take the proper steps to increase your credit score, which will lead to loan approval and better overall rates.
You're Approved helps car buyers in Melville, NY, secure loans despite their credit history. These credit management specialists can help you improve your financial situation in a number of areas, from getting an increase in your credit card to obtaining a car loan with the best rates possible. Counseling involves educating clients on how to spend less and save more, as well as the importance of budgeting and taking an active interest in your credit score. If you’d like to schedule a consultation, call (631) 683-3303 today. You can also visit them online for more information on the services offered.