Thinking About Getting A New Car In The Next Six Months? How To Improve Your Credit To Get The Best Auto Loan Rates

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Thinking About Getting A New Car In The Next Six Months? How To Improve Your Credit To Get The Best Auto Loan Rates

20 August 2017
 Categories: Finance & Money, Blog

If your credit is not the greatest, getting an auto loan may be challenging. In some cases, you may have trouble getting the auto loan without a co-signer. In other cases, your interest rate will be high. Fortunately, your current car will typically let you know it is on a downhill slide before it suddenly dies on you, giving you some time to get your credit in order to obtain the best possible rates for an auto loan. Here are a few ways you can work to clean up your credit if you plan on taking out a loan in the next six or so months. 

Dispute Discrepancies on Your Report

Anytime you are looking to clean up your credit report, you should pull your report. If there is any information on your report that is incorrect or that you do not recognize, you should dispute it. Companies who report information to the credit bureaus can make mistakes. They may report you owe more than you do or report someone else's bad debt on your report. If you dispute the information and it is found to be incorrect, it will be removed from your report, which will help to improve your overall score. 

Negotiate Your Charge-Offs

If you have debt on your credit report that you have not paid, it may be listed on your report as a charge off. This means that the company has closed your account because you have not paid it. This has a negative impact on your score. Fortunately, you can work to remove this bad debt for less money than you owe. Many companies are willing to accept payment for less than you owe in order to get some money for the bad debt. As you negotiate how much you will pay, get in writing that the company will also remove the debt from your credit report as part of your settlement agreement. 

Pay Off Credit Cards That Are Near Their Limit

Lastly, begin to pay down your cards that are near their limit. Ideally, you want less than one-third of a card's balance to be used. If you have one or more cards near their limits, pay them down to improve your credit score. Paying down the debt also affects your total debt to income ratio, which can also positively impact your score. 

It is important to note that you cannot completely turn around your credit in just six months. However, making these changes may be enough to slightly increase your score, which may be the difference between you getting approved or denied, or getting a higher interest loan. Working to keep your credit great is the best way to ensure you are able to get the best possible rates for auto loans at any given time.