Credit Reports and Scores - Know Yours Before Buying a Car
Credit reports and scores are critically important to your car buying process. And it is best to know your credit score before car shopping to eliminate the risk of being disappointed. You don't want to find the car you have been looking for at the right price only to find out that your credit score ratings aren't good enough to be considered for a car loan. Here are some helpful tips to follow that will help you be in the best credit position possible as you buy your next vehicle.
Credit Reports and Scores - Tip #1: Begin Two Months in AdvanceCompile your credit reports and scores two months in advance of buying a car. This will give you time to correct any errors in your credit score ratings, especially if the errors are lowering your score. Most people would be surprised at how often errors are found in credit reports and scores. Be proactive and leave yourself enough time to fix any blemishes on your credit score ratings.
Experian, TransUnion, and Equifax are three major credit bureaus that track your payment history and financial obligations. Credit score ratings range between 300 and 900, with 300 being the lowest credit score. 700 and above is typically considered a decent score. However, scores under 620 may struggle during the loan application process, and if they are approved, the borrower will likely have to deal with a higher interest rate.
You can maintain good credit score ratings by not missing payments and by paying down balances each month. You can't do one without the other and expect to have a good credit score ratings. Your credit rating will surely show the effects.
If there are errors on your credit score ratings, you will need to send a certified letter to TransUnion, Experian, and Equifax asking them to help you fix the problems. So, the two-month advance cushion is a safe bet so that you can get mistakes fixed in time for when you are ready to purchase a car. It is law that credit bureaus fix errors within 30 days. Sending a certified letter versus snail mail can help ensure that the error correction process runs as efficiently as possible.