Bad Credit? Here’s What to Do Next

It may not be the most fun activity, but checking your credit score is a vital part of preparing to apply for credit. After all, lenders and dealers will check your credit score and history to determine whether or not to lend you money, so you need to be in-the-know as well. Your credit score is influenced by many factors, including the timeliness of payments you make, the amount of your credit limit you use, how many financial accounts you have and how long you’ve had them. If your credit score is 700 or above, you’re considered a safe bet for lenders.

If your score is below 700, it’s best to try to improve it before applying for a loan. There are many ways to improve your score, including making on-time payments, paying off credit card balances, using less of your credit limit and correcting errors that might be on your credit report. It’s better in the long run to improve your credit score before getting a big loan, plus interest rates are higher for those with bad credit. The truth is, once you’ve done everything else you can do, your credit score may just need to improve slowly through time and consistent financial habits. Waiting is difficult, but it pays off! Once you’ve seen an improvement in your score, you can move forward with your purchase with confidence (and save money on interest, too).

Once your credit score is where you want it to be, create a budget that you’ll use to decide how much you can spend on a new or used vehicle. Consider your needs, how big of a down payment you can make and how long you want to make payments. If you have a growing family, remember that large vehicles are more expensive, so you may need to allocate more money for an SUV. Don’t forget about the cost of car insurance, annual repairs and maintenance. You can use our payment calculator to easily estimate your monthly payments, and once you’ve made a budget,  apply for pre-approval with our online finance application.

Did you get pre-approved? Congratulations — you’re on your way to owning the car of your dreams! Come take a test drive and find the perfect vehicle for you, then talk to one of our experts about financing. In order to keep your credit score in good shape, we recommend making the largest down payment you can and agreeing on a loan term that’s no longer than 60 months. Depending on your situation, these numbers may change, but it’s always a good idea to pay off your loan early if possible. Doing so can be a major benefit to your credit score.

If your pre-approval application was denied, don’t give up. There are options available if you are denied a loan, such as asking someone you trust to co-sign. If it comes down to improving your score by paying off debt, keep in mind that your patience and perseverance will be rewarded. Don’t be discouraged if it takes a few months (or a few years) to see the credit score you want. You can also give our experts a call and they’ll be happy to talk through your options in detail.