Many of our customers do not have optimal credit scores and might think they can’t get approved for a car purchase, but buying a car from our dealership is actually a great way to start rebuilding your score. For those who have endured a foreclosure or bankruptcy, it will be a bit more difficult and could take half a year or more to make serious upward progress, however, for those without a foreclosure or bankruptcy, your credit scores can be easily bumped upwards in merely a month or two if you follow the advice below.
One of the best ways to boost your score is to finance a used car purchase. Purchasing a used car at a “buy here, pay here” dealership like ours will jump start your path to an improved credit score. The fact that a monthly used car payment is typically $100 or more will do much more to help your credit score than merely paying the minimum amount due on a small line of credit from a bank. Once a used car loan is secured, you only need to pay the bills on time and in full in order to boost your credit rating.
Delinquencies have the most significant negative impact on one’s credit score, so an important tip to remember is to always make your payment on time. Once you start to make a few on-time monthly payments towards your used vehicle, you score will begin to rise.
Another more obvious way to boost your credit score is to take a close look at your credit report. This is an easy task that is commonly overlooked. There may be many mistakes that are hurting your score such as erroneous charges on your credit report that should not be there. After you request a report from each of the three major reporting agencies, analyze them very closely. Correct errors including debts that aren’t yours, any late payments that are not legitimate and any incorrect credit limits. Credit reports are available for free once per year and your score won’t be impacted when you check them.
Whenever you request a loan or a line of credit, potential lenders pull your credit report. Each time a potential lender looks into your credit history, your credit score is eligible to be decreased. This typically happens when inquiries into your credit history are made over an elongated period of time. You’re better off having multiple inquiries made in a small window of time because a cluster of inquiries grouped within a couple weeks’ time or less will typically not result in a significant decrease in your score.
Do not max out your credit cards. You should always try to keep your credit card balances at a third of your total maximum credit limit. If you max out your credit cards, your credit rating will drop as it indicates that your current income is not sufficient to sustain your lifestyle. You are usually better off having multiple credit cards with low balances than a single credit card that is maxed out.
You should try not to close credit card accounts that you do not use. If you close an account there is a good chance that it will lower your credit score. After all, you never know if you will need that line of credit in the future in an emergency. You should use your old credit cards every once in a while so that the lender doesn’t close the account for inactivity. As long as the account remains open, the lender will be able to report positive information to the credit bureaus, who in turn will adjust your credit score positively. The farther that your credit history goes back in time, the better your score will be.
The name of the game is paying on time and at least the minimum amount that is due. Try to look at your financial situation from the perspective of creditors and think about how maxing out credit cards and missing payments makes you look to potential lenders. You are capable of increasing your credit score if you spend within your means and follow the advice outlined above. It is an uphill battle but it gets easier with each step of the way. Good luck!