Checking Your Car Loan Credit Score

Your car loan credit score is one of the primary ways in which a potential lender evaluates whether or not to approve your application for a car loan. Before applying for a car loan, order a copy of your credit report to evaluate the information on your report yourself. With this information, you can proactively correct any incorrect credit information or add positive credit to improve your credit score before applying for a car loan.

For the most part, auto loan creditors are looking for credit scores that are a minimum of at least 680, and a score over 700 is considered a "well qualified" buyer. By looking at your credit score in advance of applying for a car loan, you can evaluate your own credit history.

If your credit score is lower than 680, you may still qualify for a car loan. However, instead of receiving a loan through a car dealership, you may need to turn to a bank, credit union or online lender for your loan.

Every person in the United States is entitled to a free credit report from each of the 3 credit reporting agencies every year. You are also entitled to a free report if you have been turned down for credit or a job as a result of a credit report.

These agencies-Experian, TransUnion and Equifax-collect information that is reported about financial and credit activities on every person in the United States. However, it is estimated that approximately 25% of credit reports have numerous erroneous or incorrect information included. As a result, it is wise to check your credit report annually for accuracy.

If you anticipate that you will be applying for credit and have not received your free annual report, order your credit report for review. You can do this online at the website of any of the credit reporting agencies and there are also websites where you can order a report that contains information from all 3 agencies.

Since so many credit reports have errors and incorrect information on them, carefully review your credit report once you receive it. If you find incorrect information, you are entitled to challenge that entry. Incorrect entries can include items that were paid, accounts that were never opened, incorrect loan information and inaccurate address information.

To challenge an entry, write a letter to the credit reporting agency. Include your relevant information (name, address, social security number, date of birth) and the information that is incorrect. If you have proof to back up your challenge, include copies (checks, payment agreements, etc). Credit reporting agencies are required to conduct an investigation and correct the entry within 30 days. You are allowed another free credit report to check to verify that the entry was corrected or removed. However, it may require challenging an entry several times before it is corrected, so be persistent.

Another way you can improve your credit score before applying for a car loan is to add positive credit information that is not currently on your credit report. Write a letter to the credit reporting agency, including your relevant contact information (name, address, social security number, date of birth). Include information about positive credit accounts such as the name of the creditor, credit limit, payment history and proof of payments. Adding this information should increase and improve your credit score.

Your credit score is one of the central factors in being approved for a car loan. By looking at your credit report in advance of applying for a car loan, you can conduct any needed credit repair or improve your credit score.