As we all know, our credit history tends to be boiled down to a simple number: Your credit score. And if your credit score is at or below 550, you’re going to have a hard time securing a car loan. So what can you do to better improve your ability to get a car, especially with a low credit score.
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How Do You Get A Low Credit Score?
Contrary to popular belief, low credit scores only generally come about in one of three ways. Either you just have no credit to speak of, or you’ve had a bad time in the past, financially. Either way, though, there are ways to improve it.
Start with your credit report. Under the law, the major credit bureaus have to provide you with a free copy of your credit report once a year, and you should request it and look it over every single year. Checking your credit report is a good way to spot problems keeping your credit score down; for example, it’s not uncommon to find errors on your report, especially if you happen to share a common name with other people. Even just plain entry mistakes can be surprisingly common, and need to be excised from your credit report.
This is worth doing even if you’ve had credit trouble in the past. There’s no reason, after all, to accept punishment you don’t deserve.
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It might surprise you how many people simply have no credit in our plastic-obsessed world … but it’s more common than you may think. If you don’t use credit cards, or just haven’t had a chance to get one and use it, and you don’t borrow money in other ways, then you’re an unknown quantity to lenders.
Fixing this is as simple as making yourself known and establishing a credit history. For example, you can easily get a secured credit card, with your credit limit determined by the money you’re willing to put up. Just use the card for a few small purchases a month and pay it off in full; you’ll have a credit history before you know it. In some cases, you can also get a loan if you can demonstrate that you have a job and a consistent financial history. But what about those of us with a tough past?
Some of us just have bad credit. It could be thanks to a layoff, or due to a medical issue, or even just one bad decision that snowballed. But you’ve been in collections, you’ve been late on bills, and now you’re dealing with the damage. What do you do?
First of all, contact your creditors and see about possibly repairing the damage. Even just paying off some of the debt and having them discharge the rest is better than not having the debt paid at all. Secondly, look for lenders who will take your past difficulty into account; if you can demonstrate that it wasn’t a lack of will to pay off what you owed, but a lack of funds, some lenders may be sympathetic.
Either way, don’t assume a bad credit score means you can’t get a car. Everyone deserves to be on the road, good credit or not.