6 Tips to Improve Your Credit Score

Bad credit or no credit can cost you a lot of money and headaches, when trying to get a new auto loan. Just because you have damaged credit doesn’t meant you have to stay that way. Sometimes it may seem like you will never recover, but here are some things you can do to improve your credit situation.

1. Check Your Credit Report Yearly

You can always get your credit checked free once a year. If you know exactly what’s on your credit you can work towards improving the areas that are damaged. You don’t want to have any surprises when you need your credit to be there for you. This can also tell you just how badly your credit is being affected by a known issue, as well. check out Annualcreditreport.com

2. Don’t Max Out Your Credit Cards.

The closer you are to having your credit cards completely full the lower your credit will go. This is called “Credit Utilization”. If you have maxed out credit cards it shows the credit companies that you can’t afford the lifestyle you’re living. In an effort to stop you from getting loans you can’t afford, they’ll lower your credit. Use your extra income to pay down balances and watch your credit increase!

3. Pay Delinquent Bills.

If you get behind on payments it will significantly decrease your score and the further behind you get the more it hurts you. On-time payments account for over 30% of your credit score. The best thing you can do is get all your accounts current. You can also work with your credit card company, to see if they have any hardship programs, to help you get there quicker.

4. Don’t Apply for New Credit Cards.

If you’re trying to improve your credit situation applying for new cards is not a good idea. Just applying for more hurts your credit, as well. a “Hard Inquiry” can stay on your credit for years. Opening new accounts also decreases your average account age and drops your score.

5. Don’t Cancel Your Credit Cards.

Once you pay off a credit card you may think closing down that card is the best option, to remove the temptation of using that card again. You’d be better off to hide that card away and keep your account open, for a couple reason. 1. The longer your accounts stay open the better average account age you’ll have, the longer you have accounts open the better your credit will get. 2. Once you close that card down the card company will likely stop reporting your available credit and your utilization will increase, hurting your credit.

6. Pay off debt.

30% of your credit score is based on how much debt you have. Paying off debt will increase your score fairly quick. You may need to make a change to your budget or find a way to bring in extra income to pay it down faster. You will be happy you did it, in the long run.

There are many ways to improve credit. Here is a great graphic and a few more ideas.

Credit Tips

Posted in Financial Help

Will I Qualify For a Bad Credit Auto Loan and (HAMP)?

Getting bad credit auto loans while in the process of getting a loan modification through the government assistance program (HAMP) may seem like a no brainer to some, but not all may understand how this situation works. I know someone who recently applied for modification on their mortgage, in an effort to make payments more affordable. What they didn’t know, going in, was how long the process takes and just how much it affects credit and borrowing power.

Many lenders will allow you to take advantage of the government home loan modification program that is available, if you pre-qualify… In order to move forward, with government assistance, your lender may require that you show hardship, by being late on some mortgage payments. The government program (HAMP) does not require this, but their lender did. If you have to do this, they are reported on your credit and will significantly reduce your score, until the delinquencies can be removed. The good news is; after you are accepted for a modification these are removed from your credit and it will recover. The hope is, the modification will go through quickly and you will have those removed in a matter of months. Although, modifications are a slow process and are rarely completed in less than 3-4 months.

What does this mean for other borrowing opportunities, like getting vehicle financing? Most likely nobody will lend money to you while this process is happening. Your credit shows that you’re late on paying your mortgage and you’re too high a risk, to lend to. Bottom line, don’t plan on making any purchases that require you to get a loan. While you may be able to get a higher interest car loan, from some places it’s best to plan ahead and make sure you have all needed lending taken care of, before you start or wait until your modification is completed and your credit restored.

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3 Ways Credit Affects Your Car Loan

3 Ways Credit Affects Your Car Loan

When buying a new or used car, the first thought in most people’s mind is not, “Is my credit good enough, to get the loan I want?” You may know that your credit is good, bad or non-existent; depending on things that have happened in your life. You may not know how much this affects the car you want. It probably doesn’t come as a surprise to most people, but credit affects your car loan…

If you have a score of 700 or above, you are considered to be a “prime” candidate and can get better interest rates, higher loan amounts and more lenders to choose from. This is the ideal position to be in, when looking for a car loan. 550 or below is considered “sub-prime” making it difficult to get financing.

Unfortunately life happens… bankruptcies, job loss, and foreclosure can drop your score significantly. With a low score a lender is taking a higher risk to loan you money and many will not loan to you at all. Going back and forth with different lenders, can be an overwhelming and frustrating experience.

Having no credit score can be just as risky to a lender, as low credit. Because there’s no history showing that you’ve been reliable at paying obligations, they’re taking a leap of faith. Telling them, “I’m good for it!” won’t usually work in this situation. No credit is usually due to the fact that you’ve never borrowed money, or never had a credit card. Many lenders will give smaller amounts at higher interest rates, until you’ve built up a good track record. Although credit history is important, some banks are willing to give you a shot. There are a lot of great banks that will loan to people with no prior credit history. The trick is, knowing where to go.

Mark Miller Subaru’s Loan Center, understands all aspects of securing a good vehicle loan, no matter what your credit history looks like. Most people will be able to find an option, which will work for them. They can help you understand your situation and guide you to a lender that will treat you fairly. Once you’re approved, for a loan, you’ll be on your way to credit recovery and a better future.

Posted in Financial Help

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