Making your financial health a priority is a must when you are looking to finance the purchase of a new or used vehicle. There are a variety of reasons your credit profile may not be where you want/need it to be. We here at Vegreville Ford are here to help. Today we will discuss how to fix your credit score in preparation for a vehicle loan approval.
Monitor your payment history
Your payment history is the most important factor in determining your credit score. Missed or late payments can greatly lower your score.
To improve your payment history;
- ALWAYS make your payments on time
- Make at least the minimum payments monthly.
- Contact the lender right away if you are not able to make a payment to make alternate arrangements.
- Never skip a payment, even if the bill is in dispute.
Use credit wisely
Don’t go over your credit limit. Use only a percentage of your available credit. The general “rule of thumb” is to use less than 35% of your available credit. This includes all credit limits such as;
- Credit cards
- Lines of credit
For example, if you have a credit card with a limit of $5,000 and a line of credit with a limit of $10,000, your TOTAL AVAILABLE credit is $15,000. Try not to borrow more than $5,250 at any time as this is 35% of $15,000.
Limit your number of credit applications or credit checks
When lenders and others ask a credit bureau for your credit report, it is recorded as an inquiry. If there are too many credit inquiries on your report, lenders may think you are trying to live beyond your means. NOTE: When you make a personal inquiry on your own credit this is not recorded for lenders to see.
To control the number of credit checks on your report;
- Limit the number of times you apply for credit
- Apply for credit only when you are ready to make a purchase and really need it
Know your credit score and keep track of your credit history. Click this link for information on how to obtain your credit score and credit report. There is also information here on how to report errors to your credit report.