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Things to Do Before Applying for Auto Loans |
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When you go to apply for any auto loans, you want to know that you have an excellent chance of approval. Unfortunately, however, not everyone's credit is good enough to attain this goal. There are some pretty easy things that you can do to help your chances of being approved for an auto loan within the next 3 to 6 months. The first way to prepare your credit, so that you can successfully apply for auto loans, is to actually repair the bad items that are listed on your credit report. You should begin this credit repair process by obtaining your credit report from each of the three credit reporting bureaus -- Experian, Equifax, and TransUnion. Once you have these reports, you can then examine them to find out what you need to get removed or changed, so that you can raise your credit score and get an auto loan. There are several things that you can take off of your reports, this includes accounts that are not yours, accounts that are yours but are reporting incorrectly, and that are yours but are very old. Depending on what kind of bad marks are on your report, this can raise your FICO scores from just a few points to over a hundred points. It is also important to keep in mind that you may not see a rise in your FICO scores simply because you got a negative account deleted -- you may, in fact, see a FICO score drop. This is especially true for those with young credit reports (where your oldest account is less than 10-15 years old), because the "average age" (the age of all of your accounts added together and then divided by how many accounts you have) of your credit history will be shortened. If you go from a higher "average age" to a lower "average age", you will be considered a bigger credit risk and your FICO score will drop. If this happens to you, your FICO scores should rebound rather quickly as your file ages, you will usually see a pretty good gain within 6 months. The second way to get your FICO scores to rise dramatically, so that you can apply for auto loans, is to add new accounts your credit report. When someone who has no good accounts on their report (whether it is because they have no credit history at all or because they only negative accounts on their report) adds new positive accounts, it can raise their score. While this can have the opposite effect on someone who already has positive accounts, for some this can help. Furthermore, auto loan lenders will want to see that you have some positive history. They want to know that you have the ability to pay your bills, pay them on time, and keep your payments up month after month. Therefore, you will likely need to have some kind of positive accounts on your credit report for an auto loan lender to even consider giving you a loan without a co-signor. Although getting approved for any auto loans can seem hopeless for those who are very inexperienced with credit matters and have little to no credit history, it is important to keep in mind that you can do it. With a little time, patience, and effort you can achieve the FICO score you need to get an auto loan. |
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