Posted on: 26 June 2018
Whether you are in the market for a car or a truck, purchasing a new vehicle is a major financial commitment. If you are planning on financing your new vehicle, your credit history will play a major role in how affordable your new car or truck will be. The better your credit, the better your interest rate on an auto loan will be. If you have poor credit, you may end up saddled with a high interest rate or be unable to qualify for a loan at all. If you want to purchase a vehicle but have poor credit, you may need to take steps to improve your credit score. Here are three tips for repairing your credit.
Check Your Credit Report
The first thing that you should do if your credit is holding you back from purchasing a vehicle is look at your credit report. Around 21 percent of Americans have some type of error on their credit report. If you find an error, it's important to report it to the credit bureaus as soon as possible. Getting these errors fixed can improve your credit score. Even a modest gain in your credit score number can mean a better rate on an auto loan.
Focus On Paying Off Debt
If you plan on buying a car in the future, you may may want to focus on paying off as much debt as possible. Credit card debt in particular can lower your credit score. Paying bills on time, paying down credit card debt, and keeping your credit card balances at or below 30 percent of the limit can have a major impact. This is a great strategy to take if you have a few months before you plan on purchasing a new vehicle.
Have Goals In Mind
If you are trying to repair your credit in order to make buying a vehicle easier, it's important to have goals in mind. The average credit score for obtaining an auto loan for a new car is 713, while the average score for a used auto loan is 656. If your credit score is lower than these numbers, you may have some trouble finding financing. However, if your score is lower, these are also good benchmarks for where your credit score should be.
If you want to buy a new vehicle, financing may be difficult to obtain if your credit score is low. If you want to repair your credit, there are a few things that you can do. Checking your credit report for errors can increase your score. Paying off debt and staying current with your bills can also lead to an improvement in your credit score. It's also important to have goals in mind when you are working to improve your credit. For more information, contact a local credit repair company like Optimal Credit.Share