How to Improve Your Credit to Get an Auto Loan

Get Car Financing
Even with poor credit.

By

Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


, - June 10, 2019

If you have bad or even no credit, how can you qualify for a “normal” auto loan? While the minimum credit score needed to qualify varies by lender, generally, the higher your score, the better your chances of approval. If you’re looking for tips on how to improve your credit score, keep reading.

Improving Your Credit Score in 5 Steps

Depending on how bad your credit is, it may take many months to improve your credit score so that you can get a car loan. The good news is you can fix your credit yourself. To do this, follow these five steps:

  1. Know where your credit stands – You should know where your credit currently stands. You can get a free copy of your credit reports every 12 months from the three major credit bureaus (Equifax, Experian, and TransUnion) at www.annualcreditreport.com, and if your bank or credit union doesn’t offer a free FICO check, you can purchase your FICO score and auto-enhanced FICO score at www.myFICO.com.
  2. Dispute any errors – If you find any errors on your credit reports, you should dispute them immediately to the credit bureaus. They're required to investigate and remove them if you can prove it's inaccurate.
  3. Keep up on all your bills – Make sure all of your monthly payments are made on time each month. Your payment history makes up 35% of your FICO credit score, so this can really improve your credit.
  4. Lower or remove balances – If you have any credit card debt or outstanding loan balances, paying them off can increase your credit score. Amounts owed makes up 30% of your FICO score, so keeping your debt level low is a key to a good credit score.
  5. Apply for new credit carefully – Applying for new and different types of credit (revolving and installment) can improve your credit score over time. Make sure you’re able to handle additional lines of credit and can afford the monthly payments before you apply.

Qualifying for an Auto Loan through Your Bank

Now that you know how to improve your credit, can you get an auto loan through your bank or credit union? It depends. Banks and credit unions place a heavy emphasis on your credit score, and if it doesn’t fall in the “good” range they’re looking for, you probably aren’t going to get pre-approved. But this depends on where your credit score falls, and your relationship with your bank or credit union. Sometimes, if you only have okay credit but have a solid history with your lender, they may offer pre-approval for a car loan.

If your bank or credit union turns you down, you aren’t down for the count on auto financing. You just need to find the right lender to work with.

Finding the Right Lender with Us

Here at CarsDirect, we know how tough it is to get approved for a car loan when your credit is less than stellar. We can help you get started on the auto financing journey by connecting you to a local special finance dealership. All you need to do is fill out our free and easy car loan request form, and we’ll get right to work matching you to a dealer near you.

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It only takes a minute.

Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


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