A low or absent credit score should not be a hindrance if you need a car. Bad credit auto loans can still help you purchase your dream vehicle. Its only setback, however, is that it usually comes with higher fees and interest rates. This is because the financing company is taking a risk approving you for a loan. It may take some time, but you can still improve your credit score. A small improvement there will help you secure better bad credit car loan interest rates. This will also improve your credit rating even further. Here are a few tips to get you started:
Check Your Credit Report
To improve your credit report, you have to know what it contains. Request a copy of your credit report and check it for errors. Make sure that there are no late payments incorrectly listed for all of your accounts. If there are any errors on the report, dispute them with the credit bureau.
Create Payment Reminders
Making payments on time is one of the best ways to improve your credit score. Several banks offer payment reminders through online banking portals by sending you an email or text message. You can also enroll for automatic payments through your credit and loan provider to have the payment automatically debited from your account.
Reduce Your Debt
Reducing the amount of your debt will produce a considerable improvement in your credit score. Create a payment plan that includes your available budget for debt payments for your highest interest cards. Make sure, however, to maintain at least the minimum payment on your other accounts.
Pay Bills on Time
Always pay your bills on time. Delayed payments, even if only for a few days, can have a negative impact on your credit score. To help you with this, arrange your bills in a special file or organizer right after you receive them.
Don’t Move Your Debt Around
Pay your debts on time and avoid moving them around. Don’t close unused cards as a strategy to improve your credit score. Having the same amount of debt but having fewer accounts may hurt your credit score.
Don’t open new credits cards that you don’t need, just to have credit that is more available. This approach could backfire and lower your credit rating.
Strengthening your credit score can help you secure better interest rates and explore other attractive dealer offers. Search for the best bad credit auto loan providers to know the average amount you need to pay.