Tips For Improving Your Credit

April 9th, 2015
Credit Application

 

One of the considerations when looking to purchase or lease a new or used automobile is how good your credit is. Your credit score can influence the interest rate, loan amount and repayment period you may qualify for, and keeping up on your credit and working to improve it is one of the main ways that you better position yourself to get into the car you have your eye on.

 

If you don’t know your credit scores, finding them out is a key first step. Knowing where you stand and finding out if you have any errors or problems on your report can help you plan your way to improving your score. By law, you can receive a free copy of your credit report from each of the three credit bureaus – Equifax, Experian and TransUnion every 12 months. The federal government offers this on its website, AnnualCreditReport.com.

 

Next, you’ll want to pay attention to your payment activities and history. Ensure that you continue to pay your balances or minimum payments on time and, if possible, work to pay down any outstanding debts. Credit bureaus factor both on-time payments and a debt-to-income ratio, so keeping your account current and reducing your debts will, in turn, improve your score.

 

Bankrate.com also recommends being aware of how applying for new credit can impact you. Every time you apply for new credit lines, like credit cards or personal loans, it leaves an inquiry on your credit report. This can lead to a small decline in your score for up to a year. However, with larger expense loans, like auto, mortgage and student loans, that often involve receiving multiple credit checks, lenders will ignore the repeat inquiries during a small window leading up to your loan. This window spans between two weeks and 45 days, depending on the lender’s scoring software, so try to do your loan shopping in a small window right before you intend to buy.

 

In addition, lenders also look at the length of your employment and how long you’ve lived at your current residence. They will also factor in your reported income versus your rent or mortgage obligations and other monthly payments to determine how much of a loan you can qualify for, further driving the point that doing all you can to minimize other outstanding debts will only serve to improve the likelihood of being approved for the vehicle you want.

 

 

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