Shopping for a Car? Check Your Credit Report First

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Even with poor credit.

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


, - November 7, 2018

You might be aware that auto lenders use your credit score to determine your eligibility when you're shopping for a car loan. What you may not know is how much you can find out about your credit score from your credit reports. If you're thinking of getting an auto loan, understanding where your credit stands and checking for errors on your credit reports are essential first steps.

What Your Credit Reports Can Tell You about Your Credit Score

Your credit score is a number between 300 and 850, which is determined by certain factors contained in your credit reports. Each of these factors carries a weighted percentage that makes up your total credit score. Most lenders use an auto-enhanced FICO credit score to base a loan decision on, so make sure you're looking at the right score before you apply for a car loan.

Some credit bureaus, like TransUnion, use a scoring model called VantageScore. If you get a VantageScore, you should know that this score might look very different from your FICO score.

The factors that determine your FICO score are weighted as follows:

  • Payment History – 35 percent
  • Amounts Owed – 30 percent
  • Credit History – 15 percent
  • Credit Mix – 10 percent
  • New Credit – 10 percent

Knowing what's on your credit reports can also help you decide your best course of action for credit improvement. If your credit reports show a spotty payment history, an easy way to bring up your score is to start paying all your bills on time.

On the other hand, if your credit reports show mistakes or things you don't recognize, you should contact the reporting bureau to have them corrected. Incorrect information on your credit reports can lower your credit score, and getting the information corrected can help improve it.

Why Check Your Credit Before Buying a Car?

Before you finance something big like a vehicle, it's important that you know what lenders look for when they check your credit reports and score. Your credit score determines so much of your car purchasing experience – from loan tier to interest rates to vehicle selection even. You shouldn't let the lender be the only one calling the shots.

This doesn't mean you should go in demanding things that aren't realistic in your situation. It simply means that if you're on the same page as the lender from the start, you're more likely to get a fair deal that you both can live with.

Besides, if you don't know where your credit stands, how are going to know if a lender is offering you an interest rate that's much higher than average for people with similar credit scores? Or, for that matter, how would you even know if you're getting a good deal?

How and When to Check Your Credit

It's a good idea to request your reports ahead of time, so you can look them over and address any issues before you attempt to buy a vehicle. If you're serious about getting a car loan soon, we recommend you get your credit reports at least a month in advance of applying. Realistically, you should give yourself as much time as possible in order to take care of any issues you might find in your credit reports, but not so much time that everything in your reports has changed.

Every 12 months, you're allowed to request a free copy of your credit reports from each of the three national credit bureaus – TransUnion, Experian, and Equifax – by visiting www.annualcreditreport.com. In order to remain current all year long, we also recommend that you get a report from a different bureau every four months. Getting your credit score at the same time may cost you a fee, but you can avoid this by going to a trusted source online, such as Discover Card, to get your credit score for free.

Before Applying for a Car Loan

Once you know what's on your credit reports and what your FICO credit score looks like, you can decide how to proceed on your car buying journey. If your credit's low, it doesn't have to stop you from getting the vehicle you need. There are plenty of lenders across the country that work with people whose credit is less than perfect, but they have a number of qualifications you need to meet in order to get approved for auto financing.

These requirements vary by lender, but typically include:

  • Proof of income
  • Proof of residency
  • Proof of a working landline or contract cell phone in your name
  • A list of personal references
  • A valid driver's license
  • A down payment

Gathering these things is a good second step to preparing for a car loan. Since it can be more difficult with bad credit to get an auto loan from a traditional lender, you also need to make sure you're looking for the right dealer to begin the car financing process.

Work with CarsDirect

Here at CarsDirect, you can begin your auto loan search with confidence. When you're ready, use our new and used car buying guides to help you narrow down your vehicle selection. Then, fill out our easy auto loan request form to get the process of being matched with a local special finance dealership under way. These dealers have the lending resources available to help people in all kinds of credit situations. Don't delay – get started right now!

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


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